Norway's Statoil (NYSE:STO) said on Monday that it had reduced its estimated development costs of the first phase of its giant Johan Sverdrup oil field in the North Sea by US$2.89 billion (24 billion Norwegian kroner) since the authorities approved its plan for development and operation (PDO) in August last year.
Statoil, which is operator of the Johan Sverdrup with a 40-percent interest, has also reduced the break-even to below US$25 per barrel for phase 1.
Johan Sverdrup will be developed in several stages and the estimate for the full-field investment has been reduced to US$16.86 billion-US$20.47 billion (140-170 billion Norwegian kroner) from a previous range of US$20.47 billion-US$26.49 billion (170-220 billion Norwegian kroner). Statoil attributed the reduced development costs mostly to optimization and simplification of the development concept for the next phases.
Optimization also encouraged the Norwegian company to raise current estimates for the phase 1 production capacity to 440,000 barrels of oil per day, from originally expected 315,000-380,000 bopd.
The partners in the project - Statoil, Lundin Norway, Petoro, Det norske oljeselskap, and Maersk Oil - agree on expanding production capacity with an extra processing platform, which will increase the capacity on the Johan Sverdrup full-field to 660,000 bopd, from previously expected 550,000-650,000 bopd.
Statoil has also lifted the lower end of the resource estimate range to 1.9-3.0 billion barrels of oil equivalents from 1.7-3.0 billion barrels of oil equivalents.
The higher reserves estimate and increased capacity expectation, along with lowered investment costs, has enabled Statoil to reduce the break-even for Johan Sverdrup's full-field development to below US$30 per barrel. Full-field production is expected to begin in 2022.
Regarding investments not only the North Sea, Statoil agreed last month to buy a 66-percent stake in an offshore Petrobras field in the pre-salt layer in a deal worth US$2.5 billion. Most recently, the Norwegian group is said to be willing to expand its operations in Brazil by entering a second phase of exploration at the Peregrino offshore oilfield.
By Tsvetana Paraskova for Oilprice.com
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