Statoil: Johan Castberg is a major boost for Northern Norway

Norwegian oil company Statoil has said that its Johan Castberg development in the Barents Sea will „be important to Norwegian industry and have strong ripple effects.“

The company has, as operator of the Johan Castberg project, distributed a proposed impact assessment program (PDF in Norwegian) for what is says is the largest field yet to be developed on the Norwegian continental shelf (NCS).

While development plan has yet to be submitted, the field located approximately 240 kilometers north-west of Hammerfest, and 150 kilometers from Goliat field, is expected to be developed using a floating, production, storage, and offloading (FPSO) unit.

“During our improvement work we have created new opportunities for the Johan Castberg field in the far north. We have changed the concept and found new solutions that allow us to realize the project. But we are still vulnerable to increasing costs and a continued low oil price,” says Margareth Øvrum, executive vice president for Technology, Projects and Drilling in Statoil.

Statoil says the proposed impact assessment program is an essential part of the preparations before a final development plan for Johan Castberg is submitted in 2017, according to schedule.

The plan will present the development, relevant development solutions and expected impacts on other businesses and communities. Statoil says that the proposed program is being sent to consultative bodies today to allow them to submit any issues for discussion during the consultation process related to the Johan Castberg impact assessment work.

“The Johan Castberg project may be a central project for further development of the NCS and in the far north. The field will provide significant tax income. The field development and operation will also create new opportunities for the industry throughout Norway and in North Norway in particular,” says Arne Sigve Nylund, executive vice president for Development and Production Norway.

Based on a spin-off report from Agenda Kaupang the Johan Castberg project, based on an investment estimate of between NOK 50 and 60 billion, will represent a significant part of NCS investments in the period 2018-2022. The first phase of the Johan Sverdrup development will be completed in this period. A continued low oil price may affect these plans.

According to Agenda Kaupang’s report the expected value creation in Norwegian supplies of goods and services to Johan Castberg amounts to NOK 29 billion, more than half of the project’s total investments. Value creation in North Norway during the development period is estimated to be NOK 1.7 billion.

“The Johan Castberg field will be producing for more than 30 years, and the major project spin-offs will be created in the long-lasting production phase. Castberg will trigger much activity for suppliers in North Norway and have ripple effects throughout, both in the development phase and the operating phase. In a normal year of operation the Johan Castberg field will generate 1200 man-years in Norway, of which 300 are expected to be in North Norway,” says Nylund.

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