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Norway oil giant Statoil nixes building a second LNG processing plant

Alaska Dispatch

Statoil, Norway’s state-controlled oil giant, announced Tuesday that it would not build a second liquid natural gas (LNG) liquefaction facility, which would have doubled the capacity for Hammerfest Plant in Norway's island of Melkoya, Platts reports. The Hammerfest plant processes LNG from the Snohvit field in the Barents Sea; it is Europe’s only LNG processing facility.

A second plant would have cost $5 billion. Instead, Statoil will spend $7 billion to expand and upgrade its existing facility, called Train I. The Snohvit field is one of Europe's biggest suppliers, and is expected to produce around 5.85 billion cubic meters of gas in 2012. Statoil estimates its production life at more than 30 years.

Statoil’s announcement that it won’t construct a second facility was "a very difficult decision,” spokesman Ola Anders Skauby told Norwegian newspaper Aftenbladet. 

In early September, the oil giant announced that given Shell’s challenges drilling in the Arctic, Statoil would not pursue oil production on its Arctic leases until at least 2015.

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