Press Release 17 June, 1999

Natural Gas Hydrate is a newly established company owned jointly by Oslo-based Aker Engineering and Professor Jon S. Gudmundsson of the NTNU in Trondheim, Norway. The business idea of this limited company is to continue the research and development work in the area of hydrate technology, in which the parties have co-operated for a number of years. The co-operation is based on technology patented in Norway by Professor Gudmundsson in the early 90's, and later also internationally. The main finding of Professor Gudmundsson is that gas hydrates may be stored and transported at atmospheric pressure if the temperature is kept at approximately 15 degrees below the freezing point of water.

Natural Gas Hydrate will own, manage and develop further the hydrate patents and other know-how jointly developed by Aker Engineering and Professor Gudmundsson up until now. The company foresees construction of a pilot facility for testing of hydrate production. As the hydrate technology becomes fully developed, the company will be responsible for Norwegian and world-wide commercialisation. The earliest possible starting date for engineering work on the first commercial plant is 2002.

Gas hydrates constitute a solid consisting of natural gas and water. Each cubic meter of hydrate contains 160-180 cubic meters of gas. Hydrates may be used for storage and transportation of natural gas in Norway and internationally. Two alternative methods for storing and transporting hydrates exist; as a solid (crystals) or as a mixture of solid hydrates and oil (slurry). The first application of hydrate technology is expected to take place in isolated fields located too far away from the gas market for a pipeline to be profitable. Several such fields are located in the Barents Sea, North America, West-Africa, the Gulf of Mexico, Western Australia and West-Shetland.

The hydrate technology is well suited for production and landing of associated gas from oil fields. Present alternatives include re-injection or flaring of gas or conversion to LNG, methanol or syncrude. NTNU and Aker Engineering are developing a process for producing an oil/hydrate slurry. Oil and gas produced on e.g. floating offshore installations is to be separated, and the gas used for hydrate production. Gas will be mixed with water at a pressure of 80-100 bar at normal temperatures in order for the gas hydrates to appear. An oil/hydrate slurry will be produced by mixing the hydrates with oil, and then cooling the mixture to a temperature somewhat below the freezing point of water.

The oil/hydrate mixture may consist of up to fifty per cent gas hydrate, the rest being crude oil. The mixture (slurry) is pumped into the storage tanks onboard a floating production unit for subsequent transportation by tanker, in the same way shuttle tankers are presently transporting crude oil from offshore production units. The tanker will transport the oil/hydrate mixture to a receiving terminal. At the terminal the mixture will be heated in order to melt the hydrates. The terminal will be producing natural gas, crude and water. The water will be returned to the production unit as ballast and is recycled.

Aker Engineering has been the main sponsor for development of the hydrate technology at NTNU. During the period 1997-1999 the NTNU research has been supported by several international oil companies as well, including Amerada Hess of London, ARCO of Texas, Fortum (previously Neste) of Oslo, Phillips of Oklahoma, Shell International of Rijswijk, and the Oslo-based Total Norge. The research and development work at NTNU has been supported by The Norwegian Research Council through doctorate scholarships. A separate hydrate laboratory has been established in Trondheim for the purpose of scientific testing and measurement. Articles covering the industrial project is available on the Internet at http://www.ipt.ntnu.no/~ngh.

The new company, Natural Gas Hydrate, will be based in Trondheim at Leiv Eiriksson Senter, P.O. Box 1248, 7462 Trondheim. The board of directors has the following members: Dr. Jon S. Gudmundsson (chairman), Mr. Hans O. Torsen, Mr. Oscar Fr. Graff and Mr. Per H. Kongelf.

For further information about the newly established company, please contact: Professor Jon S. Gudmundsson, Department of Petroleum Engineering and Applied Geophysics, Norwegian University of Science and Technology, 7491 Trondheim, phone (+ 47) 73 59 49 52, fax (+47) 73 94 44 72, e-mail: jsg@ipt.ntnu.no and/or Mr. Oscar Fr. Graff, Aker Engineering AS, Tjuvholmen, 0250 Oslo, phone (+47) 22 94 59 90, fax (+47) 22 94 53 57, e-mail: oscar.graff@akermar.com