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Statoil submits Johan Castberg PDO, $35/bbl breakeven

Written by  OE Staff Tuesday, 05 December 2017 05:38

Norway's Statoil, with partners Eni (30%) and Petoro (20%), has submiited a plan for US$5.9 billion (NOK49 billion) development and operation for the Johan Castberg field in the Norwegian Barents Sea.

The development cost is more than half of the original estimated cost for the project, at $12.08 billion, with a breakeven price of $35/bbl. 

The field development concept, to tap the field's estimated 450-650 MMboe recoverable resources, across three oil discoveries (Skrugard, Havis and Drivis, in PL 532), includes a floating production vessel with "extensive" subsea infrasrtucture, with 30 wells, 10 subsea templates and two satellite structures.

Statoil says the amount of subsea infrastructure makes the project "the biggest subsea field under development in the world today," as well as the project being the biggest offshore oil and gas development to be given the go-ahead in 2017. First oil is scheduled for 2022, and the field, some 100km north of the Snøhvit field, in 360-390m water depth, is expected to produce for more than 30 years. 

Aker Solutions has won the contracts for the Johan Castberg subsea system, and engineering and procurement management on the project, worth a total $480 million (NOK4 billion). Last month, Statoil is signed a letter of intent with Sembcorp Marine Rigs & Floaters in Singapore for the construction of the hull and integrated living quarters for the floating production, storage and offloading (FPSO) vessel for Johan Castberg.

“Johan Castberg has brought challenges," says Margareth Øvrum, Statoil’s executive vice president for Technology, Projects and Drilling." The project was originally not commercially viable due to high capital expenditures of more than NOK100 billion ($12.08 billion) and a break-even oil price of more than $80/bbl.

"We have been working hard together with our suppliers and partners, changing the concept and finding new solutions in order to realize the development. Today, we are delivering a solid PDO for a field with halved capital expenditures and which will be profitable at oil prices of less than $35/bbl,” Øvrum says.

She says the field will be a "backbone of the further development" of the oil and gas industry in the north. "We know from experience that this will create new development opportunities,” says Arne Sigve Nylund, Statoil’s executive vice president for Development and Production Norway.

The Johan Castberg field will have a supply and helicopter base in Hammerfest and an operations organization in Harstad. Operating costs are estimated at some $140 million (NOK1.15 billion) per year. 

As well as developing Johan Castberg, discovered in 2011-2014, Statoil says that, together with other operators of oil discoveries in the Barents Sea, it is investigating the possibility of finding a profitable oil terminal solution at Veidnes.

Meanwhile, Statoil, on behalf of the partners in the Snorre license, has also signed a letter of intent with FMC Kongsberg Subsea for the subsea system for Snorre Expansion Project.

The LoI is worth slightly less than $240 million (NOK2 billion) and includes six subsea templates and subsea production equipment for a total of 24 wells.

Read more

Electrifying the Barents - going all-electric in the Barents Sea

Keeping cool, cutting costs - cutting costs on Johan Castberg

De-engineering - a DCFO future on Johan Castberg

Image from Statoil. 
 
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