According to OGJ, the five countries in the North Sea region had combined, proven natural gas reserves of 176.9 trillion cubic feet (Tcf). Two countries, Norway and the Netherlands, account for over three-fourths of these reserves, while the United Kingdom is currently the largest producer. The North Sea region is an important source of natural gas for Europe, second only to Russia in total supply sent to the European Union (EU).

Natural gas production in the region has increased dramatically since the early 1980s, with a 2004 production level of 10.4 Tcf. However, regional natural gas production has begun to flatten, with only Norway adding any significant new capacity in recent years. As mentioned above, the UK is the largest producer of natural gas in the North Sea. In its sector, the most important production center is the Shearwater-Elgin area, which contains five large fields (Elgin, Franklin, Halley, Scoter, and Shearwater) producing a combined 1.2 Tcf in 2005, according to IHS Energy.

The second largest producer in the North Sea region is the Netherlands. However, most of that country’s natural gas production comes from the giant onshore Groningen field, which represents about one-half of total national production. The largest center of natural gas production in the Dutch sector of the North Sea is L7, operated by Total.

The bulk of Norway’s natural gas reserves are located in the North Sea, but there are also significant reserves in the Norwegian and Barents Sea areas. In 2004, Norway produced 2.95 Tcf of natural gas, making it the eighth-largest producer in the world; however, due to the country’s low domestic consumption, Norway is the third-largest natural gas exporter in the world, behind Canada and Russia). A small group of fields account for the bulk of Norway’s natural gas production: four fields (Troll, Sleipner Ost, Asgard, and Oseberg) comprise over 70 percent of Norway’s total natural gas production. Despite the maturation of its major natural gas fields in the North Sea, Norway has been able to sustain annual increases in total natural gas production by incorporating new fields. In October 2004, the Kvitebjorn field came onstream with an expected production level of 710 million cubic feet per day (Mmcf/d). In November 2005, Statoil brought the Halten Bank West project onstream, which includes the Kristin field and four additional satellite fields (Lavrans, Erlend, Morvin, and Ragnfrid).

In the German sector of the North Sea, Wintershall operates the A6 field. According to IHS Energy, A6 produced 90 Mmcf/d of natural gas in 2005. Most of Germany’s natural gas production is onshore. Denmark’s natural gas production reached 333 Bcf in 2004. According to the Danish Energy Authority, more than one-quarter of production is re-injected to boost oil production.

The natural gas production platforms in the North Sea are well integrated by a network of domestic and international pipelines. This network facilitates the movement of natural gas both within the North Sea basin and exports to continental Europe. The Germany , Norway , and UK Country Analysis Briefs contain additional information about the most important segments of this network.

Currently, the UK has a single LNG import terminal, the NGT’s Grain LNG on the Isle of Grain. The facility has a sendout capacity of 420 Bcf/d, which NGT plans to expand to 1.3 Bcf/d by the end of 2007. Algeria’s Sonatrach and BP are the principle importers using the terminal. ExxonMobil and Qatar Petroleum have received regulatory approval for the South Hook LNG receiving terminal in Milton Haven, Wales. The terminal will receive its LNG from the Qatargas II liquefaction project in Ras Laffin, Qatar, which is also a joint project between the two companies. The South Hook LNG project should come online by the end of 2007, with an initial capacity of 1.0 Bcf/d and a maximum capacity of 2.1 Bcf/d by 2009. Finally, BG has collaborated with Netherlands-based Petroplus and Malaysia-based Petronas to also build an LNG receiving terminal in Milton Haven, on the site of an existing natural gas storage facility owned by Petroplus. Dragon received regulatory approval from Ofgem in early 2005, and the project should start receiving cargos by the end of 2008 at an initial send-out capacity of 580 Mmcf/d.

There has been discussion concerning the construction of two LNG receiving terminals in the Netherlands, at Eemshaven and Rotterdam, though neither project has progressed beyond the initial planning stages. These LNG terminals would likely facilitate re-exports to the rest of Europe, as the Netherlands is able to meet it own consumption through domestic production. E.ON has also proposed an LNG terminal for Wilhelmshaven, Germany.

Norway has a collection of micro-LNG facilities, mostly used by domestic distributors with occasional exports to Sweden. One such plant in Tjeldergodden has a capacity of 11,800 tons per year (t/y), while another in Snurrevardenin has a capacity of 21,600 t/y. In late 2005, UK engineering firm Hamworthyhas received a tender to build a micro-LNG plant at Kollsnes, with a capacity of 82,3000 t/y.

On a much larger scale, Statoil plans to construct an LNG export terminal at Melkoya, near Hammerfest. The Melkoya facility, which will be the first, large-scale LNG export terminal in Europe, will consist of an anchored barge with pipeline connections to the Snohvit project. Statoil plans to have the the project online by the end of 2006, with an initial capacity of 4.1 million t/y and a potential expansion to 8.2 million t/y. Most of the output from the Melkoya facility has already been contracted to El Paso for delivery to the United States, with smaller amounts going to Iberdrola in Spain.