Statoil and its partners have today submitted the Plan for Development and Operation (PDO) for Johan Sverdrup, Phase one, to the Ministry of Petroleum and Energy, Norway.
According to Statoil, the hand-over from Statoil’s chief executive officer Eldar Sætre to Minister for Petroleum and Energy Tord Lien took place today.
“This is a great day. We deliver PDO for the largest oil discovery on the Norwegian continental shelf since the 1980s. Johan Sverdrup will generate value of great importance to Norway through several decades. The field’s economy is robust also at current oil prices,” says Statoil’s chief executive officer Eldar Sætre.
The capital expenditures for Phase one is estimated at NOK 117 billion ($15.3 billion) (2015 value) and the expected recoverable resources are projected at between 1.4 and 2.4 billion barrels of oil equivalent.
For the full field development, capital expenditures are estimated at some NOK 170-220 billion (2015 value) with recoverable resources of between 1.7 and 3.0 billion barrels of oil equivalent.
The Johan Sverdrup oil field is planned to be developed in several phases, Phase one consists of four bridge-linked platforms, in addition to three subsea water injection templates.
The ambition is a recovery rate of 70 percent and advanced technology for increased oil recovery (IOR) in future phases is taken into account. The development in phase one has a production capacity in the range of 315,000 to 380,000 barrels per day. First oil is planned for late 2019.
“The field will need the contribution of many suppliers, like a complex jigsaw puzzle where all pieces must be in place before we cross the finish line,” said Øivind Reinertsen.
The partnership, consisting of Statoil, Lundin Norway, Petoro, Det norske oljeselskap and Maersk Oil, has recommended Statoil as the Operator for all phases of the field development and operation.
The majority of the partnership has asked the Ministry of Petroleum and Energy to determine the final allocation of resources in Johan Sverdrup, based on the following proposal: Statoil 40.0267%, Lundin Norway 22.12%, Petoro 17.84%, Det norske oljeselskap 11.8933% and Maersk Oil 8.12%. The majority’s proposal for the allocation of resources is valid until the Ministry of Petroleum and Energy decides the final allocation.
“The partnership has submitted a very good basis for further proceedings to the Ministry,” says Øivind Reinertsen, senior vice president for the Johan Sverdrup project.
“The Johan Sverdrup development will create ripple effects for the whole society. We look forward to a continued good cooperation with our partners, the authorities and with a competent and competitive supply industry. The field will need the contribution of many suppliers, like a complex jigsaw puzzle where all pieces must be in place before we cross the finish line. We are excited about getting started,” he concludes.
In addition to the PDO the project will also submit two Plans for Installation and Operation (PIO) for pipeline transportation and the development of power from shore solution.
“Johan Sverdrup is an exceptional project that denotes optimism for the Norwegian shelf. With a breakeven price of under USD 40 per barrel, it will generate great value and ensure solid cash flows for Det norske for many decades to come. This is a very important day for Det norske,” says Det norske chief executive Karl Johnny Hersvik.
The plan was also submitted to the Norwegian Petroleum Directorate (NPD), which will review it before sending it to the Storting (Parliament) for processing.
“It is important to the NPD that the licensees choose a development solution that yields maximum value creation for society. The most important factor for us in the work on Johan Sverdrup has revolved around understanding the subsurface, and viewing production and increased recovery in a long-term perspective,” said Kjetil Aasoldsen, assistant director of the NPD responsible for fields and developments in the southern part of the North Sea.
“We have worked closely with the licensees in all of our discussions, and we have also made it very clear what we expect of them. An important point for us has been that they must learn from previous major developments on the Norwegian shelf,” says Aasoldsen, adding that the NPD takes part in meetings in the various committees in the project, and in meetings with the licensees.
“In those cases where we were not satisfied with the work done, we have requested reasoning, studies and analyses,” he says.