According to OGJ, Norway had 84.3 trillion cubic feet (Tcf) of proven natural gas reserves as of January 2006. The North Sea holds the majority of these reserves, but there are also significant quantities in the Norwegian and Barents Seas. Norway is the eighth-largest natural gas producer in the world, producing 2.95 Tcf in 2004. However, because of the country's low domestic consumption, which totaled only 290 billion cubic feet (Bcf) in 2004, Norway was the world's third-largest net exporter of natural gas in 2004, behind Russia and Canada.

As is the case with the oil sector, Statoil and Norsk Hydro dominate natural gas production in Norway. Several international majors, such as ExxonMobil and BP, also have a sizable presence in the NCS gas sector, though they often work in partnership with Statoil or Norsk Hydro.

Norway has begun to slowly reform the midstream and downstream gas sectors. In June 2001, the Norwegian government eliminated controls on natural gas prices. Also in 2001, the government created Gassco, a state-owned company responsible for administering the natural gas pipeline network. Previously, Statoil and Norsk Hydro had controlled the network; it is hoped that placing control of the system with an independent company will ensure fair, indiscriminate access for all companies. The company also manages Gassled, the network of pipelines and receiving terminals that exports Norway's natural gas production to the United Kingdom and continental Europe.

A small group of fields account for the bulk of Norway's total natural gas production. The single largest field is Troll, which produced 3.11 Bcf per day (Bcf/d) during the first half of 2006 and represents about one-third of Norway's total natural gas production. Other important fields include Sleipner Ost (1.45 Bcf/d), Asgard (1.00 Bcf/d), and Oseberg (0.72 Bcf/d). These four fields compose 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).

Over the long term, Norway is counting on non-North Sea projects to provide significant natural gas production. In the Norwegian Sea, Norsk Hydro is currently developing the Ormen Lange field. The project consists of an offshore production facility and a subsea pipeline linking the field to the gas processing terminal in Nyhamma. In addition, the Ormen Lange project includes a pipeline linking Nyhamma to Easington, England (see below). Ormen Lange holds an estimated 14 Tcf of recoverable reserve and will have a full production capacity of 710 Bcf per year. Shell will take over as operator of the project from Norsk Hydro in the production phase, which is scheduled to begin in late 2007. Also in the Norwegian Sea, Shell announced in 2005 that it had made a major discovery in the Onyx prospect, west of the company's existing Draugen field. According to the Norwegian Petroleum Directorate (NPD), the find could contain as much as 2.1 Tcf of recoverable gas reserves. In 2005, Norsk Hydro reported that it made a discovery at its Stetind project in the Norwegian Sea, containing estimated natural gas reserves of 0.5-1.3 Tcf.

In the Barents Sea, Statoil is developing the Snohvit project, which contains an estimated 5.7 Tcf of proven natural gas reserves. Snohvit will combine production from three gas fields (Snohvit, Albatross, and Askeladd), a pipeline connecting these fields to an onshore receiving terminal near Hammerfest, and a liquefied natural gas (LNG) export terminal (see below). According to Statoil, first production from the Snohvit field should occur in June 2007, with production from the other two fields beginning in over the following 5-10 years.

Norway has worked with Russia to jointly develop the giant Shtokman natural gas field and pursue other oil and gas projects in the area (please see the Russia Country Analysis Brief for more information). One issue that has stalled the development of natural gas reserves in the area has been the lack of a defined maritime boundary between the two countries. The area of dispute between the two countries contains oil and natural gas reserves estimated at 12 billion barrels of oil equivalent.

Gassco owns and operates most of the domestic and export pipelines in Norway, as well as onshore receiving facilities. The domestic pipeline network consists of numerous subsea systems that bring offshore production ashore for further processing. The Asgard Transport System (ATS) links the Asgard and numerous nearby fields in the Norwegian sea to the receiving terminal at Karsto; the 42-inch, 440-mile ATS has a capacity of 706 Bcf/y. The Karsto facility also receives natural gas via the Statpipe system, which brings 320-Bcf/y ashore from the Statfjord area; an outbound extension of the Statpipe carries gas from the Karsto terminal to an interface with the Norpipe near the Ekofisk platform. The 80-Bcf/y Haltenpipe connects the Heudrum field with a gas receiving terminal and methanol plant at Tjeldbergodden. The system connecting the Kollsnes processing facility with the Troll and Kvitebjorn fields has a maximum capacity of 4.2 Bcf/d.

Norway operates numerous natural gas pipeline connects with the rest of Europe. Some connection run from production facilities directly to receiving terminals in export markets, while others connect Norway's onshore processing facilities to these markets. Many pipelines run through riser platforms in the North Sea, hubs that allow different pipeline systems to interface and provide pressure regulation and quantity metering; the most important such platforms are the Draupner, Sleipner, and Heimdal platforms.

The 520-mile Franpipe carries 530 Bcf/y from the Troll and Sleipner fields to Dunkerque, France. The Zeepipe I carries 460 Bcf/y from the Sleipner system to Zeebruge, Belgium; an expansion of the system, Zeepipe II, connects the Kollsnes terminal to the Sleipner and Draupner riser platforms, where gas can then flow through the Zeepipe I to Belgium. Three pipelines connect Norwegian natural gas production with Germany: the 290-mile, 640 Bcf/y Europipe I connects the Draupner riser platform to Dornum, Germany, the 410-mile, 850-Bcf/y Europipe II connects the Karsto terminal to Dornum, and the 500-Bcf/y Norpipe connects the Karsto terminal (via the Statpipe) to Emden. Finally, Total operates the Frigg gas pipeline, connecting Norway's Frigg field to the gas receiving terminal at St. Fergus, Scotland.

In June 2005, Norsk Hydro began construction on the Langeled gas pipeline linking Norway's Ormen Lange natural gas field to Easington, England. The project includes two subsea pipes connecting Ormen Lange to a new receiving terminal at Nyhamna and a 750-mile pipeline linking Nyhamma to Easington via the Sleipner riser platform. Langeled will be the longest subsea pipeline in the world, with an initial capacity of 1.9 Bcf/d and planned maximum capacity of 2.9 Bcf/d. Shell will take over the Langeled pipeline in the operational phase. Construction of the system has begun, with completion of the $10 billion project planned by the end of 2007.

There has been discussion of building a natural gas pipeline from Norway to Sweden. Gassco formed a consortium of Norwegian and Swedish companies to consider the project, which would consist of a 780-MMcf/d system linking the Karsto processing terminal to western Sweden. In late 2006, Gassco planned to issue a tender for a feasibility study of the project. Poland has also expressed an interest in participating in the project, with the intend of building an extension fo the system to Poland. Such a development could help it reduce its dependency on Russian natural gas imports.

Norway exported 2.9 Tcf of natural gas in 2005, according to Statistics Norway. The country is the second-largest supplier of natural gas to the EU, behind Russia. The largest recipient of Norway’s natural gas exports in 2005 was Germany (900 Bcf), followed by France (560 Bcf) and the United Kingdom (550 Bcf). The non-EU destinations of Norway’s natural gas exports were Czech Republic (97 Bcf), Poland (17 Bcf), and Switzerland (2 Bcf).

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.