Statoil Natural Gas Field Shut In by Pipeline Leak

Aug. 20 (Bloomberg) -- StatoilHydro ASA, Norway's largest oil and gas producer, may shut its Kvitebjoern natural-gas field in the North Sea until spring next year after a leak was discovered in a pipeline, sending U.K. gas prices to a record.

The pipeline to Kollsnes will shut down until repairs scheduled for spring 2009 are completed, spokeswoman Rannveig Stangeland said today from Stavanger, adding that the company may be able to get the work done earlier.

A leak was discovered yesterday at the same spot on the pipeline that was damaged last year, about 10 kilometers (6 miles) away from Kvitebjoern. The company in June postponed scheduled repairs to the pipeline amid record gas prices.

Kvitebjoern produced about 13 million cubic meters a day of gas, on average, and about 40,000 barrels of oil a day, in the first six months of year, according to the Norwegian Petroleum Directorate. Kvitebjoern's gas is sent to the Kollsnes plant on Norway's west coast from where it can be sent to the U.K., Germany, France and Belgium.

U.K. gas for delivery this winter, the six months through March, rose 15 percent to a record 104 pence a therm at 12:59 p.m. U.K. time, according to ICAP Plc. That's equal to $19.32 a million British thermal units. A therm is 100,000 Btus.

StatoilHydro kept an outlook for output of 1.9 million barrels a day of oil equivalent in 2008, while saying the shutdown will affect production for the ``remainder of the year.''

``As an isolated incident it will impact production negatively, but it won't impact the total full-year production,'' Stangeland said. ``We have a big portfolio, we're just going to have to adjust it to the targets we have set.''

StatoilHydro's share of Kvitebjoern production is about 98,000 barrels of oil equivalent a day, she said.

The company will flare gas, or burn into the air, that was left in the pipeline over the next week, she said. Maintenance was being carried out at Kvitebjoern and Kollsnes and pressure in the pipeline had been reduced.

The company started flaring at around 8:30 a.m. local time, Stangeland said. She would not give an estimate as to the amount of carbon dioxide that would be released. ``Our focus for the time being is the security aspect of the pipeline,'' she said.

Oil production at the Visund platform is being maintained ``at a somewhat lower level than usual,'' though not more than 10 percent lower, Stangeland said. Visund uses the Kvitebjoern pipeline for gas exports and has during the maintenance reinjected gas.