Statoil Shutting CHP Plant at Norway's Mongstad Refinery

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Oil and gas company Statoil ASA (NYSE:STO) (Stavanger, Norway) is phasing out a combined heat and power (CHP) plant at its oil refinery in Mongstad, Norway, due to falling demand and rising costs.

The plant was commissioned in 2010 and generates 280 megawatts (MW) of electricity and around 350 MW of thermal heat (MWth). However, the company said it will now be phased out a "following several years of unprofitable operations." The other operations at the refinery complex will not be affected.

"The reason for this decision is that the CHP has had less utilization than planned due to lower steam demand at Mongstad," explained Grete Haaland, senior vice president for asset management in Marketing, Midstream and Processing at Statoil. "This has resulted in severe operating loss and actions to adjust the activity are unavoidable. The CHP will run as normal until the termination. In this two-year period, alternative sources for steam and solutions for safe and stable operations for the refinery will be worked out."

The plant was originally designed to improve the energy efficiency at Mongstad and to secure the energy supply to industrial and others customers in the region. Part of the gas being used by the CHP is supplied through a separate agreement with the operators of the Troll oil and gas field in the North Sea. Statoil Refining Norway AS (the Mongstad Refinery) and the partners in the Troll license have agreed to terminate the existing gas agreement with effect as of 31 December 2018.

Statoil said that the plant will operate at full power until the gas supply agreement ends in December next year. It claimed that one benefit from the closure will be a reduction of CO2 emissions in the range of 250,000 to 300,000 tons per year.

In 2012, Mongstad became the world's largest carbon capture and storage (CCS) facility. The Technology Centre Mongstad (TCM) was officially opened and started running two CCS projects using different post-combustion carbon-capture techniques, one based on amine and the other on chilled ammonia solvent. TCM is majority owned by state-owned energy company Gassnova SF (Porsgrunn, Norway) (75.1%) and Statoil. The projects were designed to capture and scrub 80,000 tonnes of the gas from the Mongstad oil refinery and another 20,000 tonnes of emissions from the CHP plant on the site. For additional information, see May 10, 2012, article--Norway Opens Leading Carbon Capture Facility.

However, just a year later, Norway's government announced "a change in direction" with regard to CCS development, cancelling the financing for the continued CCS expansion at the refinery. For additional information, see September 27, 2013, article--Norway Drops Leading Carbon Capture Project.

Despite the setback, TCM continues to attract and run CCS projects with leading industrial companies at the site.

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