Statoil has reduced the cost of its massive Johan Sverdrup develop even further, to reach a full field break even cost of US$30/bbl, the Norwegian oil major revealed this morning.
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Drilling operations at Johan Sverdrup. Image from Statoil. |
Development costs for Johan Sverdrup’s first phase have been reduced by 20% to nearly US$12 billion (NOK 99 billion) since the project’s plan for development and operation (PDO) was submitted to Norwegian authorities. The cost cutting has helped reduce the project's phase 1 break-even price to below $25/bbl.
Speaking at a press conference during the ONS conference and exhibition in Stavanger, which opened today, Margareth Øvrum, EVP Technology, Projects & Drilling, Statoil, said the drop was thanks to reductions in costs and efficiencies in drilling and quality in project execution.
Facilities had also been debottlenecked, helping increase production capacity on the 1st phase to 440,000 b/d, from 350-380,000 b/d, as at the PDO.
Full field production capacity has also been increased to 660,000 b/d (from 550,000-650,000 b/d at PDO), costs had been reduced to $16.9-20.5 billion (NOK140-170 billion), compared to $20.5-$26.5 billion (NOK 170–220 billion) in 2015, with a break even price was below $30/bbl, she said. Better understanding of the reservoir had also increased the reserves estimate from 1.7-1.9 to 3 billion boe to 1.9 to 3 billion boe, she said. “We still see room for further improvement,” she added.
“Johan Sverdrup is a very huge and complex puzzle. Phase one cost is very positive. Since the last update we have started the drilling campaign with the Deepsea Atlantic and it is about to become one of our best drilling campaigns ever. This is a significant contribution to capex reduction.
“Standardized wells, simplified wells solutions, operational efficiency,” were at the forefront as well as a perfect wells aim, she said. This was setting targets which meant the teams were setting new standards for a so-called perfect well. However, it was in quality in project execution that was helping save more cash, she said.
Johan Sverdrup is in the Utsira High, in the North Sea, 155km west of Stavanger. Construction is 21% complete, across 19 major construction sites, according to another presentation at the conference. Next Spring will see some 4 million man hours a month dedicated to the project as it ramps up, ONS was told.
As part of the full field development, a fifth processing platform is due to be added to the field centre, to achieve the 660,000 boe/d capacity.
A decision on future phases is due to be made in 1H 2017, and a final investment decision will be reached and a PDO submitted in 2H 2018. Full-field production is expected to start in 2022, as originally planned.
“We will continue our improvement effort, and Statoil and its partners have decided to spend more time on this work until project pre-sanction and a final investment decision has been reached for future phases. At the same time, we want to stay on schedule for full-field production start and for establishing an area solution for land-based power by 2022, as per conditions stated in the approved PDO for phase 1,” says Øvrum.
Statoil is the operator of the Johan Sverdrup project with 40.0267% stake. Partners include Lundin Norway (22.6%), Maersk Oil (8.44%), Petoro (17.36%) and Det norske oljeselskap (11.5733%).
According to a report from the Norwegian Petroleum Directorate (NPD) released earlier today (29 August), the cost for developing a field on the Norwegian shelf has declined by an average of more than 40% since the autumn of 2014, when analyzing eight planned developments that are approaching start-up. Johan Sverdrup is one of those developments.
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