Gas infrastructure

The authorities play an important role in establishing transport capacity and increasing system capacity. The authorities are responsible for making sure that alternative transport solutions are studied, in order to ensure that the system is being developd efficently. At the same time, it is important to ensure efficient operation, including achieving economies of scale. The Ministry of Petroleum and Energy employs a number of instruments to achieve this. Three central instruments in the Norwegian gas transport system are: the operator Gassco, the coordinated ownership Gassled and regulated conditions for access to the transport system. The Ministry assesses the use of these instruments in connection with development of new infrastructure and when the use of the existing infrastructure is changed.

Gassco
Gassco AS is the operating company for Gassled, which comprises most of the transport system on the Norwegian continental shelf. Gassco was established in 2001, and is wholly owned by the Norwegian state. Gassco is responsible for operations (planning, monitoring, coordination and administration of transport from the fields to the receiving terminals), allocation of capacity and development of the transport system.

Gassco shall contribute to comprehensive further development of the Norwegian gas infrastructure. In cases where major developments are considered, this means that gas in addition to those fields that trigger transport needs must also be taken into consideration. Further development of the gas infrastructure must also take place in a manner that is expedient for the existing gas infrastructure on the Norwegian continental shelf.

A neutral company ensures that consideration is given to the totality in the submitted development alternatives for infrastructure, as well as exploitation of economics of scale. Gassco’s task is to coordinate the processes for further development of the upstream network of gas pipelines, and to assess the need for such further development. Gassco recommends solutions, but does not itself invest in infrastructure.

A neutral and independent operator of the gas transport system is important to ensure that all users of the system are treated equally, both in regard to making use of the system and to the consideration of capacity increases. This is necessary to ensure efficient exploitation of the resources on the continental shelf. Efficient exploitation of the existing gas transport system may also contribute to the reduction, or postponement, of the need for new investments.

Gassled
The transport system for Norwegian gas, i.e. the pipelines and terminals, is mainly owned by the Gassled partnership. Gassled encompasses all rich and dry gas facilities that are currently in use or that are planned to be used by parties other than the owners (third party access). New pipelines and transport-related facilities are intended to be included in Gassled from the time they are being used by third parties, and are thus part of the central upstream gas transport system.

Common ownership of the transport system ensures that the gas is transported as efficiently as possible. The greatest value is created when conflicts of interest about which pipeline should be used to transport the gas can be avoided.

All licensees on the Norwegian continental shelf are responsible for selling their own gas. StatoilHydro sells the State's oil and gas together with its own petroleum, in accordance with the Ministry's instruction concerning marketing and sale of oil and gas.

Regulated access to the transport system
The pipeline system is a natural monopoly, with high, irrevocable investment costs and low operating costs. This is why gas transport tariffs are governed by special regulations issued by the Ministry of Petroleum and Energy. This ensures that the economic returns are earned from producing fields and not from the transportation system. The oil companies’ access to capacity in the system is based on their needs for gas transport. In order to secure good resource management, transport rights can be transferred between users when needs change. Gassco is responsible for allocating capacity.

Gas transport
Norwegian gas is mainly transported from the field to the consumer in pipelines. The authorities place great emphasis on evaluating a number of transport alternatives, so that the selected solution is as robust as possible. Costs involved in constructing pipelines are considerable, and there are significant economies of scale involved in investment in the transport system. Current capacity in the Norwegian pipeline system is about 120 bcm. The Langeled pipeline was completed in October 2007 and has a total capacity equivalent to one-fifth of the United Kingdom’s gas consumption. It is the world's longest offshore pipeline. There are four receiving terminals for Norwegian gas on the Continent (two in Germany, one in Belgium and one in France) and two receiving terminals in the UK. The Norwegian gas transport system is extensive and, following completion of Langeled,consists of a network of 7 800 km of pipelines. Treaties have been developed to govern rights and obligations between Norway and the countries that have landing sites for gas.

With the opening of the liquefaction and export plant at Melkøya in northern Norway in 2007, Norwegian gas now reaches markets outside Europe for the first time. The export facility in the Barents Sea is Europe's first for LNG, and has an annual capacity of 5.7 bcm.