SHELL has postponed the offshore compression project for the Ormen Lange gas field offshore Norway, saying current concept development plans do not provide an economic return.

The supermajor and its project partners had aimed to develop a project which would provide compression for a major Norwegian gas field using a subsea compression solution or a tension leg platform solution.

But Ormen Lange management committee chairman Odin Estensen said the decision had been reached following the receipt of new cost information for the current concepts and an updated analysis of the reservoir.

“The current concepts do not provide an economic return based on the required capital investment and expected production volumes,” he said.

“The updated reservoir analysis also shows that offshore compression timing is not critical to the ultimate recovery of the field.”

This, combined with the complexity of the concepts and uncertainty in the production volume, meant all partners except government-owned Petoro had concluded the project was not economically feasible at this time.

“Significant new information both on reservoir behaviour and technology developments will become available in the next few years, and provide basis to re-evaluate new options,” Mr Estensen said.

“The Ormen Lange Licence believes in the subsea compression technology, and still regards the qualification of this technology to be an important stepping stone for the Ormen Lange future development alternatives.”

Shell holds an operating 17.81 per cent stake in the project while Petoro holds 36.49%, Statoil 25.35%, DONG Energy 14.02% and ExxonMobil 6.34%.