Johan Castberg project delayed to 2015 to evaluate costs, final concept

Posted on 04 July 2014

The partners in the Johan Castberg license – Statoil, Eni and Petoro – have delayed the final concept selection for the Johan Castberg project. “The companies will continue efforts to mature the technical development solution, updating the resource basis and reducing cost leading up to the summer of 2015. The partners will also further assess the financial basis for an oil terminal at Veidnes,” Arne Sigve Nylund, Statoil Executive VP for Development and Production Norway, said.

The Johan Castberg project includes the Statoil-operated discoveries Skrugard, made in 2011, and Havis, made in 2012. The discoveries were a breakthrough for the Barents Sea as a new oil province. Proven volumes in Johan Castberg are estimated at 400-600 million bbl of oil. Statoil has been involved in 99 of 109 exploration wells in the Barents Sea.

As the operator of the Johan Castberg license, Statoil has carried out an extensive exploration campaign to prove additional resources that can make Johan Castberg viable for an expanded infrastructure in the region. The exploration campaign of five wells at multiple reservoir depths has lasted more than 12 months.

“Unfortunately, the exploration campaign has proven less new oil resources in the Castberg area than expected. In total, we have not proven enough resources in Castberg to make the field viable for supporting infrastructure, including a pipeline to shore and an onshore terminal on its own,” Mr Nylund said.

The partners in the license have decided to spend the time leading up to summer 2015 to make the final concept selection for the Johan Castberg project. Work leading up to a new concept selection will be focused on three main areas to provide the best possible quality of the decision-making basis:

  • Technical development solution
    The companies will allocate further resources to mature a floating production, storage and offloading vessel (FPSO), while continuing their efforts for a production platform (semi) as a possible offshore development solution.
  • Evaluate the economics of an oil terminal at Veidnes
    The Johan Castberg license partners will also spend more time investigating the possibility of realizing a standalone oil terminal on Veidnes. An onshore terminal could also be an alternative in combination with offshore oil offloading. However, there are significant differences in costs between a concept based on bringing the oil to shore in a pipeline and a concept based on offshore oil offloading. Therefore, Statoil and its partners will continue to work to optimize opportunities in the area and the timing of project activities.
  • Update the resource basis and cut costs
    On behalf of the Johan Castberg license partners, Statoil will implement several measures to reduce costs. Statoil and its partners will also assess the potential of the area, implement the Drivis discovery and update the resource basis in further efforts to plan and develop the Castberg field.

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