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Released October 21, 2019 | GALWAY, IRELAND
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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Production at the third-largest oil field in Norway's history, Johan Sverdrup, has begun two months early and $4.4 billion under the original budget.
Johan Sverdrup is the biggest field development on the Norwegian continental shelf since the 1980s, with Industrial Info tracking all of the key projects in Phase 1 and 2. It has cost $9.1 billion to develop and has expected recoverable reserves of 2.7 billion barrels of oil equivalent (boe) and the full field can produce up to 660,000 barrels of oil equivalent per day (boe/d) at peak. The commissioning of Phase 1 will produce 440,000 boe/d during the summer of 2020 and will reach its full potential of 660,000 boe/d when Phase 2 comes on stream at the end of 2022. 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 Norwegian Petroleum Directorate (NPD). Revenues from the field over the production lifetime will top $107 billion. The partners include Equinor (NYSE:EQNR): 42.6% (operator), Lundin Norway: 20%, Petoro: 17.3%, Aker BP: 11.5% and Total: 8.4%.
"Johan Sverdrup coming on stream is a momentous occasion for Equinor, our partners and suppliers," said Eldar Sætre, president and chief executive officer of Equinor. "At peak, this field will account for around one-third of all oil production in Norway and deliver very valuable barrels with record low emissions. Johan Sverdrup is expected to generate income from production of more than NOK 1,400 billion, of which more than NOK 900 billion to the Norwegian state and society."
Break-even price for the full-field development is below $20 per barrel, and Equinor expects cash flow from operations of around $50 per barrel in 2020, based on a real oil price of $70 per barrel, partly as a result of the phasing of tax payments in the ramp-up phase. Expected operating costs are below $2 per barrel.
"Starting production months ahead of schedule helps realise additional value from the field and is fitting for a project that over the development phase has redefined excellence in project execution," said Anders Opedal, executive vice president for technology, projects and drilling at Equinor. "The qualification of new installations technology has reduced safety risk, saved more than 2 million offshore hours and shaved months of the development schedule. We have also invested in digital solutions and ways of working to boost oil recovery, optimise production and improve field operations, and these new ways of working have already saved at least one month in the execution stage."
Alex Schneiter, president and chief executive officer of Lundin Petroleum, commented: "Since we made the discovery in 2010, this field has exceeded all expectations in terms of project execution, resources growth and cost reduction, and it is a testament to the hard work from all stakeholders and regulatory authorities, to get the field up and running ahead of schedule and below budget. This is one of the largest industrial projects in Europe, and I would like to thank the operator Equinor, who have done a fantastic job in managing the development of this world-class field."
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. For additional information, see May 29, 2019, article - Norway Permits Phase 2 of Largest Oil and Gas Project. In April, the project achieved a record-breaking lift when four massive units weighing almost 47,000 tonnes were lifted into place offshore over a four-hour period. For additional information, see April 1, 2019, article - Equinor Completes Record-Breaking Lift on Johan Sverdrup.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Our European headquarters are located in Galway, Ireland. Follow IIR Europe on: Facebook - Twitter - LinkedIn For more information on our European coverage send inquiries to info@industrialinfo.eu or visit us online at Industrial Info Europe.
Johan Sverdrup is the biggest field development on the Norwegian continental shelf since the 1980s, with Industrial Info tracking all of the key projects in Phase 1 and 2. It has cost $9.1 billion to develop and has expected recoverable reserves of 2.7 billion barrels of oil equivalent (boe) and the full field can produce up to 660,000 barrels of oil equivalent per day (boe/d) at peak. The commissioning of Phase 1 will produce 440,000 boe/d during the summer of 2020 and will reach its full potential of 660,000 boe/d when Phase 2 comes on stream at the end of 2022. 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 Norwegian Petroleum Directorate (NPD). Revenues from the field over the production lifetime will top $107 billion. The partners include Equinor (NYSE:EQNR): 42.6% (operator), Lundin Norway: 20%, Petoro: 17.3%, Aker BP: 11.5% and Total: 8.4%.
"Johan Sverdrup coming on stream is a momentous occasion for Equinor, our partners and suppliers," said Eldar Sætre, president and chief executive officer of Equinor. "At peak, this field will account for around one-third of all oil production in Norway and deliver very valuable barrels with record low emissions. Johan Sverdrup is expected to generate income from production of more than NOK 1,400 billion, of which more than NOK 900 billion to the Norwegian state and society."
Break-even price for the full-field development is below $20 per barrel, and Equinor expects cash flow from operations of around $50 per barrel in 2020, based on a real oil price of $70 per barrel, partly as a result of the phasing of tax payments in the ramp-up phase. Expected operating costs are below $2 per barrel.
"Starting production months ahead of schedule helps realise additional value from the field and is fitting for a project that over the development phase has redefined excellence in project execution," said Anders Opedal, executive vice president for technology, projects and drilling at Equinor. "The qualification of new installations technology has reduced safety risk, saved more than 2 million offshore hours and shaved months of the development schedule. We have also invested in digital solutions and ways of working to boost oil recovery, optimise production and improve field operations, and these new ways of working have already saved at least one month in the execution stage."
Alex Schneiter, president and chief executive officer of Lundin Petroleum, commented: "Since we made the discovery in 2010, this field has exceeded all expectations in terms of project execution, resources growth and cost reduction, and it is a testament to the hard work from all stakeholders and regulatory authorities, to get the field up and running ahead of schedule and below budget. This is one of the largest industrial projects in Europe, and I would like to thank the operator Equinor, who have done a fantastic job in managing the development of this world-class field."
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. For additional information, see May 29, 2019, article - Norway Permits Phase 2 of Largest Oil and Gas Project. In April, the project achieved a record-breaking lift when four massive units weighing almost 47,000 tonnes were lifted into place offshore over a four-hour period. For additional information, see April 1, 2019, article - Equinor Completes Record-Breaking Lift on Johan Sverdrup.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Our European headquarters are located in Galway, Ireland. Follow IIR Europe on: Facebook - Twitter - LinkedIn For more information on our European coverage send inquiries to info@industrialinfo.eu or visit us online at Industrial Info Europe.
