Shell has suspended plans to deploy technology for subsea gas compression in a major Norwegian gas field that would allow extracting resources without a platform.
The technology, expected to be deployed at Ormen Lange, Norway’s second biggest gas field, was hailed for its potential to revolutionise offshore gas extraction.
If successful, the innovation would allow continuing gas extraction at the site which provides about a fifth of UK gas without having to build a platform, meaning lower additional cost.
The technology, consisting of subsea pumps capable to squeeze out the resources from below the seabed, was developed by Norwegian company Aker Solutions, who also built a pilot project at Ormen Lange hoping Shell and its partners would eventually expand it.
However, Shell decided not to go forward with the project, citing rising cost of oil and gas production in general and the fact the technology had not been extensively tested to be the main motives behind the decision.
"The oil and gas industry has a cost challenge," said Odin Estensen, the chairman of the Ormen Lange Management Committee in a statement.
"This, in combination with the maturity and complexity of the concepts and the production volume uncertainty, makes the project no longer economically feasible."
A Shell spokeswoman said: "We are not giving up on offshore compression at Ormen Lange, but we can't give any timeline (of how long the postponement could last)."
Statoil, however, is moving ahead with its own subsea compression project at the Aasgard field in the Norwegian Sea and expects to be the first in the world to have such a project running when it starts up in 2015.
Shell is the operator of the Ormen Lange field with a 17.8 per cent stake, while Norway's state-owned Petoro has 36.5 per cent, Statoil 25.4 per cent, Dong Energy 14 per cent and ExxonMobil 6.3 per cent.
Shell said Petoro was the only partner against postponing the offshore compression project.
The Norwegian Petroleum Directorate estimates that the per unit cost in Norway has risen tenfold in 10 years