Equinor ASA: Johan Sverdrup, the North Sea giant, is on stream
October 05 2019 - 11:51AM
Stavanger, Norway, 5 October 2019 -- On 5 October
Equinor and the Johan Sverdrup partnership consisting of Lundin
Norway, Petoro, Aker BP and Total, started production from the
giant field in the North Sea, more than two months ahead of and NOK
40 billion below the original estimates in the Plan for development
and operation.
“Johan Sverdrup coming on stream is a momentous occasion for
Equinor, our partners and suppliers. 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 1400 billion of which more than NOK 900 billion to the
Norwegian state and society,” says Eldar Sætre, president and CEO
of Equinor.
Johan Sverdrup has expected recoverable reserves of 2.7 billion
barrels of oil equivalent and the full field can produce up to
660,000 barrels of oil per day at peak. Powered with electricity
from shore, the field has record-low CO2 emissions of well-below 1
kg per barrel.
The break-even price for the full-field development is less than
USD 20 per barrel. After reaching plateau for the first phase,
anticipated during the summer of 2020, expected operating costs are
below USD 2 per barrel. The operator also expects cash flow from
operations of around USD 50 per barrel in 2020, based on a real oil
price of USD 70 per barrel, partly as a result of the phasing of
tax payments in the ramp-up phase.
High quality in execution, new technology and
digitalization“Starting production months ahead of
schedule helps realize additional value from the field and is
fitting for a project that over the development phase has redefined
excellence in project execution,” says Anders Opedal, executive
vice president for Technology, projects & drilling in
Equinor.
The Plan for development and operation (PDO) for Johan Sverdrup
phase 1 set an ambition for production start-up in late December
2019. Since the PDO was approved in August 2015, investment costs
for the first phase of the development have been reduced by NOK 40
billion to now NOK 83 billion (nominal NOK, fixed exchange
rate).
“Close cooperation with our partners and suppliers has
contributed to high quality in the execution phase, and has been a
key part of the improvement story. And we’ve also made courageous
decisions with new technology and digitalization that we’re
benefiting from today.”
“The qualification of new installations technology has reduced
safety risk, saved more than two 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,
optimize production and improve field operations, and these new
ways of working have already saved at least one month in the
execution stage,” says Opedal.
The largest development in Norway for three
decadesSanctioning of Johan Sverdrup in 2015 led the way
to the largest development on the NCS since the 1980s. The first
phase of the development has taken above 70 million manhours, and
more than 12.000 people worldwide worked every day during the main
construction period 2016-2018.
“Johan Sverdrup is a giant development, built across nearly 30
construction sites in Norway and globally, and the field centre
assembled in the North Sea counts as one of the largest on the NCS.
Sanctioned right at the beginning of the downturn in the oil and
gas industry, it helped ensure activity for tens of thousands of
people, especially in Norway, at a critical time for many,” says
Opedal.
More than 70 percent of the contracts were awarded to suppliers
in Norway, in strong international competition. The consultancy
Agenda Kaupang has estimated that the Johan Sverdrup development
can contribute more than 150,000 man-years in Norway during the
construction phase between 2015-2025.
Activity and ripple effects on the NCS for decades to
comeIn the operations phase expected to last more than 50
years, Johan Sverdrup may also generate employment of more than
3,400 man-years on average every year.
“The field will be operated from Equinor’s offices in Stavanger,
whereas base and helicopter services will be delivered from
Dusavika and Sola. The oil transported from the field will also
sustain activity at the Mongstad terminal outside of Bergen, and
the gas will be exported to Kårstø,” says Arne Sigve Nylund,
executive vice president for Development & production Norway.
“The importance of this field for both the national and regional
economies in Norway cannot be overstated.”
“In the same year that Norway celebrates 50 years since the
Ekofisk discovery in 1969, which started the oil and gas adventure
in Norway, the start-up of Johan Sverdrup lays the foundations for
another 50 years of industrial activity and value-creation on the
NCS”, says Nylund.
The Johan Sverdrup field is developed in two phases. Phase II of
the development was approved by Norwegian authorities in May 2019
with production start-up expected in Q4 2022.
Media contact:
- Lise Andreassen Hagir, Email: lhagi@equinor.com, Tel: +47
41657507
* * *
FACTS ABOUT JOHAN SVERDRUP
- Johan Sverdrup is the third largest oil field on the Norwegian
continental shelf, with expected resources of 2.7 billion barrels
of oil equivalent.
- At plateau the field will produce up to 660,000 barrels of oil
per day, which will make up about one-third of oil production on
the NCS.
- Break-even price for the full-field development is below USD 20
per barrel. After reaching plateau for the first phase, anticipated
during the summer of 2020, expected operating costs are below USD 2
per barrel.
- Estimates from 2018 showed that the combined income from
production from Johan Sverdrup amounts to 1430 billion NOK (2018)
over the life of the field. Income to the Norwegian state is
expected to amount to more than 900 billion NOK (2018), from taxes
and from the Norwegian state’s ownership of Petoro.
- The Johan Sverdrup field is powered with electricity from
shore. CO2 emissions from production of oil and gas from Johan
Sverdrup are estimated at 0.67 kg CO2 per barrel. CO2 emissions
reductions from the field due to power from shore are estimated at
more than 620,000 tonnes of CO2 per year, totaling more than 25
million tonnes of CO2 over the life of the field. After 2022, Johan
Sverdrup will also provide power from shore to other fields on the
Utsira High, including Edvard Grieg, Ivar Aasen and Gina Krog.
- The Johan Sverdrup field is developed in two phases. Phase 1
was approved by Norwegian authorities in 2015 and came on stream in
October 2019. Phase 2 of the development was approved in 2019 and
is expected to start production in Q4 2022.
- PARTNERS: Equinor: 42.6% (operator), Lundin Norway: 20%,
Petoro: 17.36%, Aker BP: 11.5733% and Total: 8.44%.
PHASE 1
- Included the development of four platforms (accommodation and
utility platform, processing platform, drilling platform, riser
platform), three subsea installations for water injection, power
from shore, export pipeline for oil (Mongstad) and gas
(Kårstø).
- Contracts awarded in phase 1 amounted to more than NOK 60
billion. Over 70% of the suppliers had a Norwegian billing
address.
- Production capacity: 440,000 barrels of oil per day.
- Capital expenditures: NOK 83 billion (nominal terms based on
fixed currency).
- Production start-up: October 2019.
PHASE 2
- Includes development of another processing platform (P2),
modifications of the riser platform and the field centre, five
subsea templates, in addition to the power-from-shore supply to the
Utsira High (including the Edvard Grieg, Ivar Aasen and Gina Krog
fields) by 2022.
- Contracts awarded so far in phase 2 amount to more than NOK 20
billion. 85% of the contracts have been awarded to suppliers in
Norway.
- Production capacity: 220,000 barrels of oil per day.
- Capital expenditures: estimated at NOK 41 billion (nominal
terms based on fixed currency).
- Production start: Q4 2022 (expected).
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