Statoil recommends building a new drilling and processing platform on the Snorre field in the North Sea to maximize extraction of remaining reserves.
Together with Petoro AS and the other license partners, Statoil says it has worked hard to find a good solution for extending the life of the field to 2040.
Statoil carried out a thorough evaluation of the "Snorre 2040" project, with detailed examination of two development concepts: a subsea development with continued use of the Snorre A and B platforms, or a development with a new platform tied-in to Snorre A and B.
"The platform solution is the best alternative for maximizing production and creating the greatest possible value," says Øystein Michelsen, Statoil executive vice president for the Norwegian shelf.
"Snorre 2040 is an important improved oil recovery (IOR) project and supports our ambition of achieving an average oil recovery rate of 60% from our fields on the Norwegian shelf," he said.
Statoil is a world leader within IOR, with an average oil recovery rate of 50% from the Norwegian shelf.
Snorre field reserves are currently estimated at 1.55 billion bbl of oil. The original estimate when the plan for development and operation (PDO) was submitted in 1989 was about 760 MMbo. Thanks to a number of IOR measures and use of new technology, recoverable reserves have more than doubled.
An important contribution to the increase in recoverable reserves came with the decision to install a second platform, Snorre B, on the northern part of the field, and to start reinjection of produced gas beginning in the mid-1990s.
When the PDO was submitted, the estimated recovery rate was 25%. Today the estimated recovery rate is 47%, but Snorre has an ambition of implementing additional IOR measures that will enable the field to increase the recovery rate to 55%.
Øystein Michelsen emphasises that more time will be needed to mature the development solution and make the decision basis more robust.
"Snorre 2040 is a huge project with significant investments, but it will also yield substantial value. Thorough preliminary work is important to arrive at the best possible solution. We are also seeing marked rising costs in our industry and we must ensure that value creation is optimal," says Michelsen.
"The change in the petroleum tax rules that was adopted in May also undermines the financial conditions of Snorre 2040, which means that we have to spend more time on maturing the project."
The final development concept decision is scheduled for the first quarter of 2015.
Statoil notes that a new drilling and processing platform will also facilitate tie-in of new discoveries in the area. These are resources that might otherwise have ended up being not profitable to recover.
The partners in the Snorre license are Statoil (33.27556%), Norway's Petoro AS (30.0%); ExxonMobil E&P Norway (17.44596%); Idemitsu Petroleum Norge AS, a subsidiary of Japan's Idemitsu group (9.6%); Oslo-based RWE Dea Norge AS, a subsidary of Germany's RWE Dea (8.57108%); and Oslo-based Core Energy AS (1.1074%).