Development costs have been significantly reduced for the first phase of the Johan Sverdrup oil field offshore Norway, Statoil announced.
The giant field is expected to cost NOK 99 billion (£9.1 billion or US$12 billion), with the break-even price now at only $25 a barrel.
“We are now seeing the results of good cooperation between Statoil, its partners and suppliers. We are strongly reducing investment costs, and we are increasing the process capacity, resource estimate and value of the field. Johan Sverdrup is a world-class project and we want to create high value for the owners and society for generations,” Statoil CEO, Eldar Sætre, said.
Development Costs Fall on Statoil Giant Field
Production capacity rose to 440,000 barrels of oil per day, from the initial estimate of 315,000 to 380,000 barrels, throughout phase 1.
Meanwhile, partners in Johan Sverdrup agreed to expand production capacity with an extra processing platform on the field centre, which should raise full production capacity to 660,000 barrels of oil per day, from the initial 550,000 to 650,000 barrels.
Drilling at Statoil’s Johan Sverdrup Giant Oil Field
“The capacity increase, together with improved reserve estimate and investment costs, has helped reduce the break-even for the full-field development of Johan Sverdrup to below US$30 per barrel”, the company explained.
Oil Production Cost Cuts across the Norwegian Shelf
According to an analysis by the Norwegian Petroleum Directorate (NPD), development costs on the Norwegian shelf have declined by an average of more than 40% as a result of simpler development concepts, more efficient drilling and lower prices for work and equipment.
Estimates for the Utgard, Oda, Zidane, Trestakk, Snilehorn, Johan Castberg, Snorre Expansion and Johan Sverdrup Phase 2 projects have fallen from about NOK 270 billion (£24.85 billion) to NOK 150 billion (£13.8 billion), NPD explained.
However, NPD’s Director of development and operations, Ingrid Sølvberg sent out a word of caution to operators.
“We must not put ourselves in a situation where cost cuts reduce the future flexibility on the fields, or have a detrimental impact on our ability and willingness to use technology that can provide better and more efficient resource management,” she said.