“Johan Sverdrup coming onstream 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 NOK1400 billion of which more than NOK900 billion to the Norwegian state and society,” said Eldar Sætre, president and CEO of Equinor.
Johan Sverdrup has expected recoverable reserves of 2.7 billion boe and the full field can produce up to 660 000 bpd 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 US$20/bbl. After reaching plateau for the first phase, anticipated during the summer of 2020, expected operating costs are below US$2/bbl. The operator also expects cash flow from operations of around US$50/bbl in 2020, based on a real oil price of US$70/bbl, partly as a result of the phasing of tax payments in the ramp-up phase.
“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 & 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 NOK40 billion to now NOK83 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 digitalisation 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, optimise production and improve field operations, and these new ways of working have already saved at least one month in the execution stage,” says Opedal.
Sanctioning 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% 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.
In the operations phase expected to last more than 50 years, Johan Sverdrup may also generate employment of more than 3400 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,” said 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 4Q22.
Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/07102019/production-begins-at-johan-sverdrup/
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