ONS 2016: Statoil tells ONS crowd that it continues to plan for exploitation of Barents Sea

By Kurt Abraham, Editor on 8/30/2016

Some professionals in the global oil and gas industry might think that with oil prices continuing to perform at sub-par levels, all thought of exploiting Arctic plays like the Barents Sea has ceased. But that’s just not true, according to Statoil Executive V.P. Tim Dodson.

Noting that oil and gas will still be 50% of the global demand mix by year 2040, Dodson told an ONS audience on Tuesday morning that “if we [the worldwide industry] stand still and do nothing, there will be an energy gap equal to 20 times the production of Norway. So, yes, we need to continue to find oil, and activity in the Barents Sea is needed and necessary.”

Aker Solutions Project Director Nils Olav Solheim explains, to ONS attendees, his firm's concept/design for an FPSO to produce oil at a potential Arctic development of Statoil's Johan Castberg field in the Barents Sea.

Dodson said that new, profitable developments will have to come from exploration. “What the industry needs to do is produce high-quality oil from the highest-quality reservoirs,” elaborated Dodson. “And to do that, we need to explore.”

The Statoil executive pointed out that drilling efficiency is up considerably at his company. In fact, in the firm’s most recent Arctic exploration campaign, seven discoveries were struck out of 12 wells drilled. And with efficiency gains made, the money saved in drilling those wells was enough to fund another seven wells of similar caliber.

Meanwhile, Statoil was awarded five tracts in the Barents Sea last May, as part of Norway’s 23rd Licensing Round. One tract is in the firm’s established position in that area, and the other four are in the southeastern Barents Sea, in the frontier section. Accordingly, Statoil intends to spud its first well in the new area during 2017, and is prepared to drill up to five wells, depending on results. “Yes, over the next few years, Statoil will drill a few wells in the Barents Sea,” acknowledged Dodson. “And our three goals for that are as follows: 1) Test the frontier areas; 2) Prove up additional reserves; and 3) Strengthen our presence in our core area of the Barents Sea.”

Noting that his firm has lowered the average cost to drill Arctic wells, and also has reduced the break-even cost for developing Johan Castberg field from $80/bbl to $45/bbl, Dodson said that Statoil sees the potential for up to three more stand-alone development projects in the Barents Sea—eventually.

All of this has to be music to the ears of senior staff at Aker Solutions. On behalf of Statoil, the firm has been laboring long and hard to come up with the right concept for production facilities at Johan Castberg. So, on Tuesday morning, the trade media were invited to a briefing at Aker’s ONS stand, to hear and see the firm’s production scheme for that field.

What Aker proposes is that a fit-for-purpose FPSO be built to handle production at Johan Castberg. The vessel is a customized design, tailored specifically to the Arctic conditions. “The chief element here is to take down the costs for this project,” said Nils Olav Solheim, project manager for Aker’s Johan Castberg effort. “The wells are going to be more efficient, hence the project will need less wells and will have fewer flowlines.”

The Johan Castberg FPSO will be 968-ft long and 177-ft wide. It will work in a 1,214-ft water depth and have living quarters for 140 workers. Processing capacities will be 30,000 m3/day of oil (about 188,700 bopd), 40,000 m3/day of liquids, and 8.2 MMcmd of gas (290 MMcfd). Given that the vessel will have an oil storage capacity of 1.1 MMbbl, “the oil, at full production, would have to be offloaded every fourth or fifth day,” said Solheim.

Among other features of the vessel is the fact that it has been designed for additional use beyond Johan Castberg field. There also has been a focus on winterization of facilities and equipment, added Solheim. When the vessel will be built remains a question up in the air. “Per the license, Statoil has an investment decision to make by the autumn of 2017,” said Solheim. “Perhaps then, we will know how soon the FPSO can be constructed.”

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