The Barents Sea Johan Castberg development has been delayed yet again and the Snorre 2040 project pushed back as Statoil and its partners look to make further cost reductions on the projects.
Statoil is also working with operators to develop a Barents Sea region infrastructure proposal, in order to jointly unlock the so far underdeveloped basin.
Johan Castberg has already been set back three times, most recently in Autumn 2014, when Statoil said it aimed to shed a further 15% on the capital cost for the development before moving forward.
The up to 600 MMboe project was previously delayed due to disappointing exploration results in the area, as well as the high CAPEX costs.
Today, Statoil said it would look to make a decision to continue on the project in 2016, with the expectation a final investment decision would be made in 2017.
“We see that our efforts have yielded results, and we are focused on reaping the full benefits of this in a way that ensures a sustainable and profitable utilization of the resources in the Snorre and Johan Castberg fields. The recent decline in oil prices emphasizes this,” says Ivar Aasheim, Statoil’s senior vice president for field development on the NCS.
“We have made significant progress in reducing costs for Johan Castberg. However, current challenges in relation to costs and oil prices require us to spend more time to ensure that we extract the full benefit of the implemented measures,” Aasheim says.
At the same time, studies are continuing on the alternatives for an oil infrastructure in the Barents Sea, by a group of operators in the area including Statoil, Lundin Norway, Eni and OMV.
The aim is to assess the foundation for an onshore terminal that could support multiple fields in the Barents Sea
Statoil and its partners are also extending a plan to further develop the Snorre 2040 plan, with a preliminary decision to continue due to be made in Q4 2016.
Statoil says Snorre is one of the fields with the largest remaining oil resources on the Norwegian continental shelf. The subsurface is complex, and major investments will be required to produce the resources.
High investments in combination with challenging profitability characterize the Snorre field’s further development leading up to 2040.
"Systematic work has taken place over several years to find the right solution for this project. The conclusion is that more time is needed for the owners to reduce investment costs and improve the understanding of the reservoir," Statoil says.
The licensees have an ambition to increase the recovery rate on the Snorre field. The existing infrastructure has a given technical lifespan, and this will be decisive in the planning of increased oil recovery (IOR) measures.
The Snorre 2040 project works systematically to extend the lifespan for existing facilities, and to limit any loss of production due to the revised progress plan.
The selected concept to construct a new platform, Snorre C, forms the basis for the work leading up to a new time for the decision point, which is 4Q 2016, says Statoil. A final investment decision is scheduled for 4Q 2017, with production start in 4Q 2022.
Reserves in the Snorre field are currently estimated at 1.63 billion bbl. The original estimate, when the plan for development and operation (PDO) was submitted in 1989, was around 760 MMbbl.
By means of a number of IOR measures and use of new technology, the recoverable reserves have more than doubled.
When the PDO was submitted, the estimated recovery rate was 25%. Today the expected recovery rate is 47%, but through the Snorre 2040 project, the owners have an ambition to increase this even more.
“Castberg and Snorre 2040 are two major and important projects in our portfolio, and it is important that we find sound and robust development solutions for them,” says Ivar Aasheim, Statoil’s senior vice president for field development on the NCS.
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