The Norwegian oil company Statoil has decided to move forward with a major oil project in the North Sea, one of the few to get the greenlight in today's bear market.
What is more notable than the $940 million Statoil plans on investing at a time of crashing oil prices is the fact that Statoil will use an unmanned platform for the project, known as Oseberg Vestflanken 2. The use of an unmanned platform is intended to cut costs, which Statoil says will help the project reduce its breakeven price down to $32 per barrel. Unmanned platforms have not been used in Norway, but have been demonstrated off the coast of Denmark.
"We've come up with an incredibly economically robust project," Ivar Aasheim, senior vice president for field development in Norway, said in Oslo. "This is the proof that Statoil works every day to further develop the large, old fields on the Norwegian shelf." Related: These 2 Breaking Stories Took A New Turn Over The Weekend
The field is expected to begin producing in 2018, and will play a critical role in helping Statoil keep production from falling from its Norwegian assets.
Unmanned platforms can be cheaper than the more common practice of having regular crews operate a facility. At the same time, an unmanned platform can also be cheaper alternative to subsea production systems, which are also becoming more commonly used, particularly in Norway. Subsea production systems involve equipment installed at the wellhead, allowing for processing at the seafloor rather than onboard a rig at the sea surface. As a result, seawater, sand, and debris can be removed at the wellhead rather than having to pump it to the surface, saving costs. Related: 7 Reasons Why Oil Could Fall Even Lower Before Christmas
Yet unmanned facilities can be cheaper still. "Manned platforms are very expensive," Aasheim said, according to Bloomberg. "If you have a manned platform and a field in a radius of 50 to 60 kilometers, you'll always look to use what you already have. It's always cheaper to tie in fields than to build new platforms."
The decision to move forward on the North Sea project comes just as Statoil made a separate decision to cancel a contract with Transocean for a drillship in the Gulf of Mexico. Statoil will pay Transocean a penalty for terminating the contract before the May 2016 expiration date, but as the Norwegian company is scaling back drilling plans around the world, it elected to pay a fee to Transocean rather than pay the $590,000 per day for the use of the drillship.
By Charles Kennedy of Oilprice.com
More Top Reads From Oilprice.com:
Charles is a writer for Oilprice.com More