Norway Eyes Offshore Wind to Power Gas Plant

Norwegian gas system operator Gassco and Canadian energy firm Enbridge (ENB) are working on reviving a 350 megawatt (MW) offshore wind project to boost power supply security at Norway's Nyhamna gas processing plant, they told Reuters.

The project, which would be the country's first offshore wind farm, is called Havsul 1 and was fully licensed by Norwegian energy regulators in 2009 before being abandoned in 2012 due to profitability concerns and insufficient subsidies.

Nyhamna is one of Norway's biggest gas processing plants, handling output from Shell's Ormen Lange field. Its capacity was raised to 84 million cubic meters (mcm) per day this year to accommodate gas from the Aasta Hansteen field.

However, the plant's power supply is fed by a single grid line, the fragility of which has caused outages in recent years, affecting exports to Britain.

Gassco spokeswoman Lisbet Kallevik said the company was undertaking a technical study for Enbridge, evaluating the possibility of a tie-in of Havsul 1 to the Nyhamna plant. The study was expected to be completed by spring 2019."The windmill project will - if decided - secure power supply for the Nyhamna processing plant and the region for years to come," she said.

The additional capacity at Nyhamna means the need for a reliable power supply is increasing but long-standing discussions to upgrade the power line between Gassco and state grid Statnett have failed to produced results.

Havsul 1, with a capacity to produce about 1 Terawatt hour (TWh) of electricity annually, would not only benefit the gas plant, but also feed the local grid, Enbridge told Reuters.

"Our intention is to enter into a commercial agreement with Nyhamna gas processing facility to supply a dedicated source of renewable electricity, also enhancing security of supply for the facility and local grid," spokeswoman Mandy Dinning said, adding the partners would only be able to reach a final investment decision after 2019.

Initially Havsul 1 was part of a larger plan to construct three offshore wind farms, with around 1,500 megawatts capacity, but Norway's regulator rejected the other farms.

The estimated cost for Havsul 1 was up to 7 billion crowns ($814.52 million) at the time of its 2009 licensing. Since then, the project's rights have changed ownership twice, with Enbridge securing its licenses earlier this year.

However, development costs for offshore wind have fallen since Havsul 1 was abandoned in 2012, while Norway said last year it would offer some concessions for such projects.

($1 = 8.5940 Norwegian crowns)

(Reporting by Lefteris Karagiannopoulos; Editing by Kirsten Donovan)