* Gas field was key in reviving interest in Norwegian Arctic
* Resource view is half earlier view of 10-50 bln cubicmetres
* Sees potential for up to 100 mln boe at N.Sea prospect
By Gwladys Fouche
STAVANGER, Norway, Nov 20 (Reuters) - French energy firmTotal said on Wednesday development of the Norvarg gasfield in Arctic Norway was not commercially viable, anothersignal that oil firms are reining in their optimism about theArctic.
Norvarg was one of the two discoveries together withStatoil's Johan Castberg in 2011 to revive interest inthe Norwegian side of the Barents Sea. They helped rejuvenatethe prospects of Norway as an oil and gas producer.
The announcement on Wednesday underlines the challenges ofdeveloping oil and gas in the remote region. Statoil in Junesuspended the $15.5 billion Castberg project as it hopes to findmore resources to make the project economically viable.
"The problem we have on Norvarg is productivity," MartinTiffen, managing director of Total Norway in an interview.
A well drilled recently at the Norvarg field flowed at arate of just under 200,000 cubic metres a day, he said.
"It is very hard to see how we can have a commercialdevelopment with that kind of flow rate. That is our challengetoday. With flow rates like that, it does not matter how muchgas you have in place," he said, without giving indications ofcommercially viable flow rate expectations.
The resource estimates for the field were also lowerfollowing the drilling of a second well in July, he said.
Originally the field was expected to contain between 10 to50 billion cubic metres of gas.
"We are at 50 percent below that," he said.
Oil companies are keen to drill in the Arctic because itcould hold up to 90 billion barrels of oil, according to theU.S. Geological Survey.
But firms scaled back exploration plans after the groundingof a Royal Dutch Shell drilling rig off Alaska on NewYear's eve caused a public uproar.
Total's partners in Norvarg are Canada's Ithaca,Norway's Statoil, Det norske, Rocksource and North Energy.
Further south, Total will start drilling the sea bed in theNorth Sea at a prospect called Trell in a week or two.
At most Trell could contain up to 100 million barrels of oilequivalent, Tiffen said, although Total expected somewhat lessthan that. Results are due for the well early next year.
Production in Norway accounts for 12 percent of Total'soverall production, with a daily production of some 275,000barrels of oil equivalent per day.
Norway was the French group's biggest production contributorfor years until Nigeria replaced it last year.
