Shell awards engineering pact to Kvaerner for gas processing plant in Norway

Shell has awarded Kvaerner with an engineering, procurement, construction and management (EPCM) deal for modifications and projects at its Ormen Lange/Nyhamna onshore facilities on the west coast of Norway.

The contract is a framework agreement with duration of six years, and options for additional two plus two years.

The estimated contract value is Norwegian krone (NOK) 6 billion, excluding options, or just over $1 billion in US dollars, based on current conversion rates.

"This is a major onshore contract, and the largest of its kind in Norway this year,” said Kvaerner CEO Jan Arve Haugan. “We are proud to have won this important contract, which we believe demonstrates a faith in our project execution model and ability to deliver complete solutions to the client.”

"Kvaerner has a strong HSE performance, which was an important factor in the tender process,” said A/S Norske Shell's project director Bernt Granås.

“We are particularly pleased that key personnel with significant experience from similar operations and projects will be made available for us by Kvaerner,” he added.

The Nyhamna gas plant processes natural gas from the Ormen Lange gas field located in the Møre Basin in the southern part of the Norwegian Sea.

The contract scope includes all modifications and projects on the Ormen Lange/Nyhamna facility and is established to meet the expected, significant increased project activity over the next 5-to-10 years.

This includes the facilities at Nyhamna for gas from new fields such as Linnorm and Aasta Hansteen (formerly Luva).

Several locations involved

Front-end engineering and design (FEED) will commence immediately, officials said.

The FEED work will take place integrated with Shell in their offices in Aberdeen, and is expected to run until engineering starts at the end of 2012.

Meanwhile, a site team will be mobilized to begin some minor modification work at Nyhamna.

Engineering and project management activities will be conducted by Kvaerner at Stord and engineering and modification work will be delivered by Aker Solutions' offices in Oslo, Kristiansund and Tromsø.

When finalized, the sub-contract with Aker Solutions is expected to represent approximately NOK 850 to 950 million. In addition, a large number of suppliers from mid-Norway will be involved in various project activities.

Once fully mobilized, at least 500 employees are expected to be working in rotation on site at Nyhamna.

In addition, more than 200 engineers and management will be working on the contract throughout the period. Of these, around 80 will, by the end of next year, be working out of Tromsø, the company said.

"It is our ambition to establish a presence in central and northern Norway, and to strengthen our ties with companies and communities in these regions,” said Haugan. “The oil and gas business is migrating north, and this contract will contribute to the exciting developments in the Norwegian Sea and the Barents Sea.”

"We are pleased that Kvaerner as part of this contract strengthens its presence in mid- Norway and that they have chosen to locate much of the engineering work through Aker Solutions' offices in Tromsø, which we hope will create significant ripple effects in North Norway", said Granås.

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