Partners submit Johan Sverdrup development plan
Additions were made to this article on Feb. 13.
Partners Statoil ASA, Lundin Petroleum AB, Petoro, Det Norske Oljeselskap ASA, and Maersk Oil have submitted a plan for development and operation (PDO) for Phase 1 of Johan Sverdrup field to the Norwegian Ministry of Petroleum and Energy.
The oil field—which lies on the Utsira High in the North Sea, 155 km west of Stavanger—will be developed in several phases. Phase 1 consists of four bridge-linked platforms and three subsea water injection templates, with a production capacity of 315,000-380,000 boe/d (OGJ Online, Feb. 13, 2014).
Production from Phase 1 is expected to launch in late 2019. The partners are targeting a recovery rate of 70% (OGJ Online, May 7, 2014). Expected recoverable resources are projected between 1.4–2.4 billion boe.
In addition to the PDO, the partners will also submit two plans for installation and operation (PIO) for pipeline transportation and development of power from shore. Oil from the field will be piped to the Mongstad terminal in Hordaland.
Capital expenditure for Phase 1 is estimated at 117 billion kroner, which includes offshore facilities, oil and gas export pipelines, development wells, and power supply from shore.
Twenty-two appraisal wells drilled on Johan Sverdrup have shown that the reservoir is of “exceptional quality” and multiple production tests also indicate well productivity will be “very high,” partner Lundin says (OGJ Online, Mar. 28, 2014).
As a result, Lundin expects “very short” periods from ramp-up to plateau production for Phase 1 and subsequent phases. Phase 2 is expected to start production in 2022.
Capex for full field-development is estimated at 170-220 billion kroner as of 2015, with recoverable resources between 1.7-3 billion boe—95% of which is oil—and an expected plateau production of 550,000-650,000 b/d.
The partnership previously recommended Statoil as the operator for all phases of the field development and operation (OGJ Online, Dec. 1, 2014).
The majority of the partnership has asked the Ministry of Petroleum and Energy to determine the final allocation of resources in Johan Sverdrup, proposing Statoil 40.0267%, Lundin Petroleum subsidiary Lundin Norway AS 22.12%, Petoro 17.84%, Det norske oljeselskap 11.8933%, and Maersk Oil 8.12%.
“We are delivering the PDO for the largest oil discovery on the Norwegian continental shelf since the 1980s,” said Eldar Saetre, operator Statoil’s chief executive officer. “Johan Sverdrup will generate value of great importance to Norway through several decades. The field’s economy is robust also at current oil prices.”
The field’s breakeven price is $40/bbl.
According to analysis from Wood Mackenzie, the field will provide more than 10% of Statoil’s global oil production by 2020. It will also boost returns and cash margin metrics, both key industry benchmarks.
WoodMac also says the field is a “company maker” for Lundin and Det Norske.
"Lundin in particular deserves credit for discovering the field in 2010,” it says. “It will quadruple Lundin's production and make up 98% of its upstream value by 2020. But project sanction means intense investment for one of the most highly leveraged companies in the sector. It’s also a vital strategic asset for Maersk Oil, as it will mitigate the company’s long-term production decline. It will add 48,700 boe/d of net peak production by 2024 to Maersk, equivalent to 18% of total volumes.”
Overall, the field will provide 25% of Norwegian production by 2025, out-producing the entire UK sector.
The 2010 discovery by Lundin Norway of Avaldsnes in PL501 followed by the 2011 discovery by Statoil of Aldous in PL265 eventually brought forth development of the massive Johan Sverdrup field (OGJ Online, Aug. 16, 2011).
