Norwegian oil company Equinor will on Monday file the development plan for the second phase of the giant Johan Sverdrup offshore oil field development to the Norwegian Ministry of Petroleum and Energy.
The first phase of the project which includes the development of four platforms, three subsea installations for water injection, power from shore, export pipeline for oil (Mongstad) and gas (Kårstø) is 80 percent complete and is expected to start production in November 2019.
The second phase covers the development of another processing platform (P2), modifications of the riser platform and the field center, five subsea templates, in addition to power from shore to the Utsira High in 2022. Production start expected in the fourth quarter of 2022.
Announcing the planned development plan submission on Monday, Equinor has said it has managed to slash costs significantly for the full field development and has boosted the resource estimate for the field.
In the Phase 2 PDO, the resource estimate for the entire Johan Sverdrup field is raised from 2.1-3.1 billion barrels of oil equivalent to 2.2-3.2 billion barrels, with an expected estimate of 2.7 billion barrels.
Equinor CEO Eldar Sætre said: “Today we are announcing an increased resource estimate and we are reducing the total estimated investment for both Phase 1 and Phase 2 of the development by an additional NOK 6 billion since February of this year. Since the PDO for the first phase in 2015, we have reduced the total estimated investment for Johan Sverdrup full field development by more than NOK 80 billion. The project will yield even greater value creation and larger spin-off effects than previously estimated.”
The updated investment estimate for Phase 1 is now NOK 86 billion (nominal NOK, project exchange rate), a reduction of 30 percent, amounting to NOK 37 billion since submission of the Phase 1 PDO back in 2015.
Phase 2 cost cuts even greater
Margareth Øvrum, Executive vice president for Technology, projects & drilling in Equinor says: “The continued high quality of project execution is a result of close cooperation with our suppliers and partners. Together, we have managed to reduce the estimated investments for Phase 1 by an additional NOK two billion.”
She says the Phase 2 of the development will be even cheaper: “We have worked systematically to make the second phase of the Johan Sverdrup development even more profitable and robust. We have taken the good solutions and experience gained from Phase 1 and have optimized the development concept for Phase 2 in cooperation with our partners and suppliers.
According to Øvrum, in the Phase 2 PDO, Equinor has reduced the investment estimate to NOK 41 billion (nominal NOK, project exchange rate), and the break-even price for Phase 2 is now less than USD 25 per barrel.
“Throughout the entire history of this industry, I don’t think we have ever seen a project that has been improved as much as Johan Sverdrup has over the last 3 years,” Øvrum says.
Equinor is the operator of the Johan Sverdrup field with 40.0267 percent. The partners are Lundin Norway with a 22.6 percent working interest, Petoro with 17.36 percent, Aker BP with 11.5733 percent, and Total with 8.44 percent.