With projects like Johan Castberg, Polarled, Aasta Hansteen, Snefrid Nord, Askeladd and the offshore exploration campaign in the Barents Sea, multi-billion investments are lined up for Northern Norway. All but one of these projects are led by the Norwegian state-owned giant Statoil.
Namely, Statoil, who acted as the development operator of the Polarled subsea pipeline, in May 2017 handed over the operatorship of the pipeline to the state-owned Gassco.
According to Statoil’s statement on Friday, the investments lined up for the North create spin-offs. For example, thanks to the contract for ten Johan Castberg subsea templates Aker Solutions Sandnessjøen will increase its workforce from 20 to 50 over the next two years.
Celebrations at Sandnessjøen when the news broke that Aker Solutions’ northernmost plant will deliver the ten subsea templates for the Johan Castberg field on March 5. They will connect a total of 30 wells on the oil field in the Barents Sea.
Six of the subsea templates will be delivered in 2019, and four in 2020. Site manager Annbjørg Skjerve at Aker Solutions in Sandnessjøen said: “The assignment allows us to develop our own skills and knowledge, while boosting the development of the local supply industry. The contract will thus have ripple effects both locally and regionally.”
Two years ago, the yard at Strendene was on the brink of closing down due to low activity. Thanks to assignments from Aker BP and the Skarv field it could keep going with just six employees.
Last year, however, the upturn started.
Aker Solutions Sandnessjøen then won the contract for building the subsea template and suction anchor for Snefrid Nord, a gas discovery twelve kilometers from the Aasta Hansteen field in the north of the Norwegian Sea, which is scheduled to come on stream in the fourth quarter of 2019.
The assignment, which generated employment for 20 employees, is due to be completed in April.
Apprentices and local manpower
Months later it became clear that the factory, a sub-supplier of Kværner, will deliver a 300-tonne flare boom and topside modules totaling 170 tonnes for the Johan Castberg floating production, storage and offloading unit (FPSO).
Thanks to the new contract for the ten Johan Castberg subsea templates Skjerve can now increase the staff from 20 to 50 permanent employees and contractors. Skjerve also hopes to take on apprentices.
“This is very positive. We will be looking for the right technical skills and expertise both locally and regionally, and are also considering the possibility of sub-contracting parts of the work to other companies in the region,” Skjerve says.
Kjell Giæver, managing director of the supplier network for petroleum activities in the North, Petro Arctic, describes the contract awarded to Aker Solutions Sandnessjøen as one of the biggest industrial contracts to Northern Norway from the oil industry ever. He thinks it represents a spin-off milestone.
“This will generate employment and add value at Helgeland for many years to come,” he says.
After an annual growth of between 10 and 20 percent in the period 2010 to 2015, also suppliers in the North were hit by the oil price decline and empty order books in 2016 and 2017. According to Giæver, sales dropped from slightly less than NOK 6 billion per year in the peak period, to around NOK 3.5 billion. At the same time 2,000 to 3,000 full-time jobs disappeared.
‘Faith in the future’
He, however, has great faith in the future. According to Petro Arctics’ forecasts the activity will now return to the pre-price drop level. The goal, however, is further growth and a turnover of NOK 10 billion per year from 2025.
“The last contract awards support this scenario,” says Giæver.
In order to put this goal into perspective: In the period 2010 to 2016 the supply industry in Northern Norway delivered NOK 29.8 billion worth of goods and services to the oil and gas industry, according to a report published by Kunnskapsparken Bodø (Body Science Park).
“Apart from the Snøhvit development, suppliers in Northern Norway have seen few industrial spin-offs from the development phase in the North until Aasta Hansteen. The contract strategy chosen by Statoil here, however, represents a break-through which is now progressed for Johan Castberg,” Giæver says.
He is also pleased that Statoil chooses to run the field in the North from Northern Norway. This creates lasting spin-offs, he maintains.
“Statoil has always been good at this. The decision to operate Johan Castberg from the North has great, noticeable effects,” Giæver says.
Backbone in the North
Statoil submitted the plan for the development and operation of the Johan Castberg field on behalf of the partners in December 2017. Located some 100 kilometers north of the Snøhvit field in the Barents Sea, the Johan Castberg field will be a backbone for the further development of the oil and gas industry in Northern Norway, Statoil noted.
Capital expenditures estimated at some NOK 1.15 billion per year, the operations will be run from Hammerfest supply and helicopter base and the Harstad operations organization. Nationally this represents 1,700 man-years, 500 of which will be located in Northern Norway. This includes both direct and indirect effects.
On Thursday, April 12 the Aasta Hansteen spar platform started the last leg of the journey towards the Norwegian Sea, where it will be moored on the field – 300 kilometers west of Bodø. Here the platform opens a new gas province. The gas will be delivered to Nyhamna and from there to Europe through the 480-kilometer Polarled pipeline.
A report issued by Kunnskapsparken Bodø, Nord Universitet and Petro Arctic estimates the total spin-offs of the Aasta Hansteen and Polarled construction in Nordland and Sør-Troms counties at almost NOK 1.3 billion in the period 2013 to 2018.
Almost NOK one billion of these spin-off effects benefit Helgeland.
Askeladd and extended productive life at Norne
On March 12 Statoil and the partners also decided to invest some NOK five billion in Askeladd, which is part two of the phased development of the Snøhvit field in the Barents Sea. Askeladd will deliver 21 billion cubic-meters of gas and two million cubic-meters of condensate to Hammerfest LNG. Three wells are planned to be drilled through two new subsea templates. The templates will have idle well slots for additional wells in the future.
According to Statoil’s senior vice president for project development, Torger Rød, Askeladd will extend the plateau production at the Hammerfest LNG plant until 2023 and is a profitable investment that generates jobs and spin-offs in the region.
In January, on behalf of the Snøhvit partners, Statoil awarded the EPC contract for the delivery of the Askeladd subsea production system to Aker Solutions.
Statoil has also applied for extended technical life for Norne FPSO, and the associated Norne, Urd and Skuld facilities, from December 31, 2021 to December 31, 2036. The field in the Norwegian Sea, which is operated from Harstad, was put on stream in 1997.
Originally scheduled to be shut down in 2014, the new plans for Norne more than double the initially assumed productive life.
Want to have Northern Norway suppliers on the team
“Based on the projects currently being worked on, we have ensured a high activity in the North until 2050, and beyond. In addition, there is a considerable upside potential in the development of more discoveries and any new discoveries,” says Ørjan Birkeland, project manager for the Northern Area project at Statoil.
Last year Statoil drilled five exploration wells in the Barents Sea. This year up to five more wells are planned. Both exploration and production drilling generates considerable activity at the supply bases.
One of Birkeland’s main tasks is driving supplier development, ensuring maximum spin-offs from the activity in Northern Norway, of course based on competitiveness and quality.
Statoil is therefore actively involved in efforts aimed at qualifying Northern Norway industry as suppliers, either directly towards Statoil, or as sub-suppliers of some of the big contractor companies.
Since the start-up in 2008 some 300 companies have completed all or parts of the Supplier Development in Northern Norway programme, organised by Statoil together with Innovasjon Norge.
Industrial coordinator also in Hammerfest
In its statement on Friday, Statoil added it has also actively worked to simplify the contract structure, enabling smaller companies to submit bids.
Statoil will also have industrial coordinators as contacts to the local industry. From March 1, 2018 the company had a coordinator in Harstad. Now an industrial coordinator has been appointed in Hammerfest as well.
“Statoil aims to involve good suppliers in the North, thus increasing the local ripple effects,” Birkeland says.
Want to see increased collaboration
In Sandnessjøen Skjerve stresses the importance of creating a stable activity and building competencies and experience for the future. She also hopes that suppliers in the North can develop the same type of mutual confidence and teamwork as oil communities like Rogaland and Hordaland.
She is now looking forward to June, the start-up of work on the ten Johan Castberg subsea templates.