The Norwegian government on 8 August sanctioned the Equinor-led project to modernize the operations of the Snøhvit gas field and the Hammerfest LNG (HLNG) plant at Melkøya.
Equinor and its partners—Petoro, TotalEnergies, EP Norge, Neptune Energy Norge, and Wintershall Dea Norge—will invest $1.3 billion in the Snøhvit Future project.
Geir Tungesvik, Equinor’s executive vice president for projects, drilling, and procurement, said the project will strengthen the country’s position as a reliable, long-term supplier of gas produced with low greenhouse gas emissions.
“The project will ensure the long-term operation and export from Melkøya towards 2050,” he added. “We fully understand that there have been many factors to consider, and we will recommend the partnership to meet the conditions for the authorities' approval.”
Equinor, as the operator, submitted a plan for development and operation of the project to Norway's Minister of Petroleum and Energy on behalf of the partnership in December 2022. The project’s approval clears the way for the onshore gas compression from the Snøhvit field starting in 2028, and the electrification of HLNG plant starting in 2030.
According to Equinor, the authorities postponed the start of electrification by 2 years, from 2028 to 2030, and during this period, the HLNG plant will continue to run on gas turbines. The approval allows for maintaining the gas turbines as backup power from 2030 to 2033, a need Equinor said would be assessed by 2028 at the latest.
Electrification of the plant will reduce its CO2 emissions by around 850,000 tonnes annually, making it the “most substantial individual emission reduction decision that has been made aimed at decarbonizing oil and gas production in Norway,” Equinor said.
The project's approval also ensures continued operation on Melkøya. Today, 350 permanent employees and 150 contractors and apprentices work at the plant. The operator said Bodø Science Park has documented the ripple effects in Northern Norway at almost 900 person-years of employment. Additionally, the project generates substantial spin-offs and jobs, locally and nationally, said Tungesvik.
“Around 70% of value creation in the development phase is expected to go to Norwegian companies. Regional employment is estimated at almost 1,700 person-years of employment, mainly in Finnmark," he said.
In February 2023, for example, Equinor awarded Norwegian oil services firm Aibel an engineering, procurement, construction, and installation contract for two new processing modules related to the onshore compression and electrification of the plant.
The contractor will also build a new receiving station for power from shore and carry out the integration work at the plant. The contract was an option in the front-end engineering and design contract awarded to Aibel in September 2020. Aibel will also further upgrade existing systems at Hammerfest LNG to make the plant more resilient for extended life until 2050.
