Statoil Delays North Sea Mariner Oilfield

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland) - Work on the largest oil and gas project in the U.K. North Sea has been pushed back by a year by Norway's Statoil ASA (NYSE:STO) (Stavangar, Norway).

The production start-up date for the $7 billion Mariner oilfield has been delayed to the second half 2018, instead of 2017, as the company presented lower than expected profits for its Q3 2015 financial results. As a result, the company expects to reduce its upstream investment. Statoil said that development costs at the Mariner project had risen 10% since development started. The company has also delayed its Arctic Aasta Hansteen gas field in the Norwegian Sea

Statoil posted adjusted operating profits of 16.7 billion Norwegian crowns ($1.97 billion), down from 30.9 billion crowns ($3.64 billion) for the same quarter in 2014. Thanks to low crude oil prices the company wants to cut capital expenditure by another $1 billion from the $16.5 billion budget for 20. Its exploration budget will also be trimmed from $3.2 billion to $3 billion.

Mariner is located roughly 150-kilometres from the Shetland Islands, and is the largest development in the past decade on the U.K. continental shelf. It will have a production capacity of 250 million barrels of oil over its 30 years. Peak production is estimated at approximately 55,000 barrels per day.

"We are progressing our efficiency programs according to the plan we communicated in February, and continue to reduce the underlying operational cost," said Statoil CEO Eldar Sætre in a company statement. "I am pleased with the way we are taking costs down, but the continued low prices in the third quarter demonstrates that we must continue to chase further cost efficiencies."

Statoil's woes are mirrored by a number of its rivals. Earlier this week, BP plc (NYSE:BP) (London), turned in its Q3 2015 financials which showed a 40% plunge in profits to $1.8 billion, compared to $3 billion for the same period last year. The company the drop on the collapse in oil prices. North Sea Brent is averaging less than the $102-per barrel it cost in 2014. The company has slashed its planned capital expenditure to between $17 billion and $19 billion a year through 2017, a far cry from the $25 billion per year it had expected to spend a year ago.

Also this week, Royal Dutch Shell (NYSE:RDS.A) (The Hague, Netherlands) announced that will not continue construction of the 80,000 barrel per day Carmon Creek oil sands project in Alberta, Canada, blaming poor market conditions and the lack of infrastructure to move Canadian crude oil to global commodity markets.

"We are making changes to Shell's portfolio mix by reviewing our longer-term upstream options world-wide, and managing affordability and exposure in the current world of lower oil prices. This is forcing tough choices at Shell," said Chief Executive Officer, Ben van Beurden.

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