Start-Up Green Light Given for Major North Sea Oil Field

Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Permission to start up one of the largest oil fields in the North Sea has been granted to developer Equinor (NYSE:EQNR) by Norway's regulator, the Norwegian Petroleum Directorate (NPD).

Johan Sverdrup, currently under construction, is the biggest field development on the Norwegian continental shelf since the 1980s. Production estimates for Johan Sverdrup stand at 2.2 billion to 3.2 billion barrels of oil equivalent (boe). It will contribute up to 25% of Norway's total production of oil and gas and will produce oil for the next 40 years, according to the NPD. Revenues from the field over the production lifetime will top $107 billion.

"The Johan Sverdrup field is a shining example of the possibilities and the values that can be achieved through exploration of mature petroleum provinces on the shelf," said Ingrid Sølvberg, director development and operations in the NPD. "Johan Sverdrup is the third largest oil field on the Norwegian shelf -- measured in reserves. Only Statfjord and Ekofisk, both also in the North Sea, are larger."

About 95% of the reserves is oil, 3% is dry gas and the rest is natural gas liquids (NGL). The field has a production capacity of 105 000 cubic metres (660,000 barrels) of oil per day.

According to Equinor, investment costs for development of the first stage of construction are expected to be around $9.1 billion. Phase 2 will have a reduced total cost of investment and higher-than-expected yields, with an improved break-even price of less than $25 per barrel. In May, Industrial Info reported that Norway's government had granted permission to Equinor for the $5 billion Johan Sverdrup Phase 2 oil and gas project. Phase 2 of the development, with planned start-up in fourth-quarter 2022, will increase field production from 440,000 barrels of oil per day to 660,000 barrels per day. For additional information, see May 29, 2019, article - Norway Permits Phase 2 of Largest Oil and Gas Project.

In July, Industrial Info reported that Equinor had secured a larger slice of the Johan Sverdrup oil field following a deal with Lundin Petroleum AB. Equinor sold a 16% shareholding in Lundin Petroleum in exchange for a 2.6% share in the Johan Sverdrup field and a cash payment of around $650 million. This increased Equinor's stake in the project to 42.6%. For additional information, see August 21, 2018, article--Equinor Takes Bigger Slice of Giant Johan Sverdrup Oil Find.

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