Statoil announced further delay in developing the Johan Castberg project, postponing final concept selection on the Barents Sea project until 2015.
“Unfortunately, the exploration campaign has proven less new oil resources in the Castberg area than expected. In total, we have not proven enough resources in Castberg to make the field viable for supporting infrastructure, including a pipeline to shore and an onshore terminal on its own,” Arne Sigve Nylund, Statoil executive vice president for Development and Production Norway, said.
The Johan Castberg project has been plagued with economic difficulties since its inception in 2009. Located in the Barents Sea, the project license (PL) 532 is comprised of Statoil-operated discoveries Skrugard, Havis, and Drivis. The proven volumes in Johan Castberg are estimated to be 400-600MMboe.
“The companies will continue efforts to mature the technical development solution, updating the resource basis and reducing cost leading up to the summer of 2015. The partners will also further assess the financial basis for an oil terminal at Veidnes,” Nylund said.
The Skrugard prospect is located on Block 7220/8 in a water depth of 373m. On 3 February 2011, the Norwegian Petroleum Directorate granted Statoil a drilling permit for wellbore 7220/8-1 using the Polar Pioneer semisubmersible. The well was drilled to a depth of 1250m; it has proven a gas column of 33m and an oil column of 90m.
In December 2011 Statoil received permission to drill well 7220/7-1(Havis), in PL 532. Drilled by the Transocean Barents semisubmersible to a vertical depth of 2200m in a water depth of 365m, it is estimated that the discovery contains between 200-300MMboe.
The latest well, 7220/7-3 S, was on the Drivis prospect in production license (PL) 532, 230km northwest of Hammerfest, and was the final exploration well in a 2013/2014 program around the Johan Castberg field. The well, drilled by the semisubmersible drilling rig West Hercules is estimated to contain 44-63MMboe.
Despite the discoveries, the JV partners continue to face economic uncertainty regarding the project. In May, Statoil attributed the lack of progression due to uncertainties around the resource base, development plans, and a proposed increase in taxation by the Norwegian government. UK-based consultant group Woods Mackenzie were recruited in June to help in the decision making of development plans, however the development remains delayed.
Government support practices for this type of infrastructure also remain unclear.
The Johan Castberg partners have decided to spend the time leading up to the summer of 2015 to make the final concept selection for the Johan Castberg project.