With the world class development almost 70% complete, estimated costs have been reduced and the resource estimate increased, bringing the break even costs down to below $15/bbl for Phase 1 of the Statoilt operated project, offshore Norway.
Capex for Phase 1 is now estimated at NOK 88bn ($11.24bn), a reduction of just under 30% since the plan for development and operation (PDO) was submitted in 2015. Meanwhile, resource estimates have increased from between 1.7 and 3bn boe to between 2.1 and 3.1bn boe.
A major factor in this improvement has been as a result of the successful drilling programme with more wells drilled than planned carried out over one year ahead of schedule. Data from the wells has improved the company’s knowledge of the reservoir, allowing the increase in the resource estimate. Further reductions have been achieved through working with suppliers to standardise equipment packages and focusing on copying good practices. In addition, an increased use of automated and digital systems is also expected to reduce operating costs by NOK 1 bn ($0.13bn) per year. Applying these improvements across other developments should also lead to similar cost reductions, with the break even on next generation projects (ie those onstream by 2022) has reduced from $27/bbl in 2016 to $21/bbl today.
Phase 1 of the project is due to come onstream in late 2019 and will have a production capacity of 440,000 bbl/d while phase 2 is planned to start up in 2022 with a production capacity of 660,000 bbl/d. Phase 2 will require the addition of another process platform, together with modifications to the riser platform and subsea production and injection systems. The PDO for phase 2 will be submitted by September 2018 and capex guidance for this is now at less than NOK 45bn ($5.85bn) at the lower end of the company’s previous guidance of NOK 40 -55 bn.
Johan Sverdrup partners are: Statoil (40.0267%), Lundin Norway (22.6%), Petoro (1736.%), AkerBP (11.5733%) and Maersk Oil (8.44%).