Statoil 'Passes' Castberg Milestone
Thursday 15 December 2016
Statoil and its partners have reportedly made a preliminary decision to implement the Johan Castberg field development project in the Barents Sea off Norway, paving the way for a final investment decision in 2017.
The so-called DG2 decision is set to trigger a front-end engineering and design contract award shortly with local contractor Aker Solutions, which has already carried out pre-FEED work, a strong contender for the deal.
Project director Knut Gjertsen was quoted as saying by Norwegian news site SyslaOffshore.no that Statoil wants “broad participation” from the industry in the contract tendering process as it seeks to stimulate price competition, which could involve the award of parallel FEED deals to gain the optimal bid.
Statoil has selected a floating production, storage and offloading vessel concept, developed in collaboration with Aker Solutions, to exploit estimated resources of between 450 million and 650 million barrels of oil equivalent at the Arctic frontier field that encompasses the Skrugard, Havis and Drivis discoveries.
Costs on the project have been almost halved to between Nkr50 billion and Nkr60 billion ($6 billion and $7 billion) after Statoil abandoned an earlier blueprint involving a semi-submersible production unit with pipeline to onshore terminal in favour of the slimmed-down FPSO concept.
In addition, Statoil has cut the number of production wells from 40 to 31, reduced the size of the proposed FPSO and simplified subsea infrastructure to make savings.
Gjertsen said the operator is now looking to shave costs further to Nkr50 billion as the break-even price of the scheme has sunk to around $40 a barrel from a previous level of $80.
A raft of contracts are now up for grabs on the project – one of the few greenfield schemes moving forward due to a low oil price regime – with contractors targeting prospective deals for fabrication of the FPSO’s hull, turret and topsides, including both accommodation and processing facilities.
The project will also require fabrication and installation of subsea infrastructure, production drilling work, and hook-up and commissioning of offshore facilities.
The first phase of the development is set to take place between 2018 and 2022, following a scheduled investment decision by the end of next year.
Statoil has a 50% stake in Johan Castberg with Eni on 30% and Petoro on 20%.