Johan Sverdrup Phase 1 breaks even below $20/bl: Update
Adds detail throughout
London, 7 February (Argus) — Norway's state-controlled Statoil and its partners in the giant Johan Sverdrup development offshore Norway have further reduced costs for the project. Its first phase, which is scheduled to come on stream in late-2019 and is currently 40pc complete, now projected to break even at oil prices below $20/bl.
"Since the plan for development and operation (PDO) for the first phase was submitted [two years ago], the range of the operator's full-field resource estimate has improved from 1.7bn-3.0bn to 2.0bn-3.0bn bl of oil equivalent (boe)," Norwegian independent Aker BP said today. Statoil operates Johan Sverdrup with a 40pc stake. Swedish independent Lundin has a 22.6pc interest, Norway's state-controlled Petoro 17.4pc, Aker BP 11.6pc and Maersk Oil 8.4pc.
"The project is moving forward, so that reduces uncertainties," said Statoil chief executive Eldar Saetre. "We are also seeing very efficient drilling operations... and we account for more of that efficiency to be taken forward into the project. We are also seeing that we can copy and paste: we can use more of the same equipment from Phase 1 in Phase 2... [meaning] standardisation approach. And generally, very efficient project execution, so far so good."
Investment in the first stage of the project is now estimated at 97bn Norwegian kroner ($12bn), compared with Nkr123bn in the PDO.
The project's second phase is expected to break even below $30/bl, with the whole project breaking even below $25/bl.
Full-field investment is estimated at NKr137-152bn, compared with a PDO estimate of NKr208bn.
Lundin has said Johan Sverdrup will produce oil with 28°API.
Saetre said today that the 450mn-600mn boe Johan Castberg project in the Barents Sea is also improving. "We talked about a breakeven price of $45/bl [last year], now we see it below $35/bl," he said.
Statoil plans to make a final investment decision on Johan Castberg by the end of this year. The project's capex is now estimated at NKR45bn-50bn, compared with NKr100 in 2013.
Saetre said Statoil is planning to drill 5-7 exploration wells in the Barents Sea this year, with two of them being high potential wells.