Snow White

NORWAY: A Norwegian firm is the first energy company to exploit the huge reserves of natural gas in the Arctic Circle. It remains to be seen whether the project is a success.

In 1984, the company StatoilHydro discovered a natural gas field that it named Snoehvit, or Snow White, under the fishing village of Hammerfest. It built a 143-km pipeline to the island of Melkoya off the northern coast of Norway. There, the company planned to cool the natural gas into liquid natural gas (LNG).

The drilling wells and pipelines were designed carefully to reduce possible damage to the environment. In September 2007, a year behind schedule, the factory began production of LNG.  But because excess gas had to be burnt off, a black cloud hung over Hammerfest for weeks. Also, the factory had to be closed several times for repairs.

A black cloud hung over Hammerfest for weeks, and the factory was closed for repairs.

Company representatives admit there have been some problems, but they believe that the Snoehvit project is giving them valuable experience in using new technology. As the LNG factory is planned to run for more than 30 years, they believe it will one day be more than worth the effort.

Some analysts are less optimistic. Cost estimates for the Snoehvit project have risen by 50 per cent, while the price of LNG on world markets has fallen. "The project has been a disaster for the company," Gudmund Halle Isfeldt, an analyst at Norwegian bank DnB NOR, recently told The Wall Street Journal.