Oil Major Makes A Rare Decision…Especially In This Price Environment #offshore #norway #commoditytrends

By 18th December 2015 Industry News No Comments

Norway’s Statoil is proceeding with a $940 million (8.2 billion-krone) North Sea project aimed at extracting more O&G from the Oseberg area. As many of its peers significantly scale back on investment amid the price downturn, Statoil’s decision represents an exception rather than the rule in this environment.

Let’s look at the details of Statoil’s decision:

The Specifics

The plan for development and operation (PDO) was submitted by Statoil and its partners for the North Sea Oseberg Vestflanken 2. This project is designed to extract 110 million barrels of oil equivalent. It will consist of an unmanned wellhead platform (Norway’s first) with 10 well slots. The wells will be remote-controlled from the Oseberg field center. Two existing subsea wells will also be reused.

Wellhead platforms with no facilities, helicopter deck or lifeboats represent a new solution in Norway, but it has been thoroughly tested in other areas, such as the Danish and Dutch continental shelves.

The well stream will be routed to Oseberg field centre via a new pipeline. Production is scheduled to commence in 2Q18.

The Oseberg field center; Credit: Statoil

Oseberg Vestflanken 2 is the first of three planned phases for developing the remaining reserves in the Oseberg area.

“Oseberg Vestflanken 2 meets the current cost challenges and higher efficiency requirements with an innovative concept based on simplification. This is a pioneering project on the Norwegian continental shelf (NCS) that the industry can learn from,” Ivar Aasheim, senior vice president for field development on the NCS, said in a statement.

Profitable Even At $37/bbl

Since the concept decision in February, Statoil said total investment costs have been reduced by around NOK 1 billion. Aasheim told Bloomberg in an interview that the stripped down facility- that will be tied in to the Oseberg field center- has helped to lower the project’s breakeven price to $32/bbl. Aasheim says this makes the project profitable even at the current $37/bbl price level.

“The costs of subsea templates have tripled during the last 10 years. Platform wells on a steel jacket lead to considerable cost reductions and secure a robust project economy,” says senior vice president for the projects cluster in Statoil Torger Rød.

An “Economically Robust” Project

“We’ve come up with an incredibly economically robust project,” Aasheim was reported as saying before presenting a development plan wrapped in Christmas gift paper to Petroleum and Energy Minister Tord Lien in Oslo. “This is the proof that Statoil works every day to further develop the large, old fields on the Norwegian shelf.”

Statoil says Oseberg Vestflanken 2 is an important element in further developing the Oseberg infrastructure for the future, and is a result of long-term licence decisions and uniform area development.