Statoil cuts Johan Sverdrup spending, boosts output expectations

Statoil ASA said it has cut its planned spending on Johan Sverdrup field in the North Sea to ensure profitability even if oil prices were to fall drastically. Statoil also forecast as much as a 40% increase in initial daily production capacity.

The field’s Phase 1 production capacity was estimated at 440,000 b/d compared with a previous estimate of 315,000-380,000 b/d, Statoil said. First-phase planned spending was cut to 99 billion kroner from the previous 123 billion kroner.

Total spending, including Phase 2 investment and production expansion, was listed at 140-170 billion kroner, down from 170-220 billion kroner, Statoil said.

Executives calculated the project will be profitable at below $25/bbl, down from Statoil’s February forecast of below $30/bbl. Brent crude oil for October delivery closed on the London market Aug. 26 at $49.92/bbl. Oil is traded in US dollars.

The North Sea field, discovered in 2010, is estimated at 1.9-3 billion boe. Production drilling has started on the first of a total of 35 wells to be drilled during Phase 1 (OGJ Online, Mar. 1, 2016).

Partners in the project include operator Statoil 40.0267%, Lundin Norway 22.6%, Petoro 17.36%, Det norske oljeselskap 11.5733%, and Maersk Oil 8.44%.