Norwegian oil producer Statoil said it has brought down the breakeven price for Johan Sverdrup by cutting cost and increased resource estimate to boost the value of the offshore project.
The breakeven price of the project’s first phase was reduced to $15 per barrel and to $20 per barrel for the full project, Statoil said in a statement.
Phase 1 of the project, Statoil said, is currently estimated at NOK 88 billion ($11.23 billion), which amounts to a reduction of NOK 35 billion ($4.47 billion) or close to 30 percent since the plan for development and operation (PDO) was approved in August 2015.
The offshore project is 70 per cent complete, on plan and investment costs are continuing on a positive trend, Statoil said.
“There is high quality in project execution, the costs are decreasing, and the resource estimate goes up,” said Margareth Øvrum, executive vice president for Technology, Projects & Drilling in Statoil.
“Johan Sverdrup is now even more robust and valuable for both the partners and society.”
Øvrum said the project is also benefiting from the drilling and well improvement programme in Statoil.
“We’ve drilled more wells than planned, more than one year ahead of plan, which has contributed greatly to cost reductions in the project. The wells also make our production plans even more robust and have improved our knowledge of the reservoir. Based on this, we are now able to increase the resource estimate for Johan Sverdrup further,” she said.
Since the PDO for the first phase was submitted the range of the full-field resource estimate has improved from 1.7-3.0 to now 2.1-3.1 billion barrels of oil equivalents.
The Johan Sverdrup project will be developed in several phases, and the PDO for phase 2 will be submitted to Norwegian authorities in the second half of 2018. Further maturation has reduced the estimated investment costs for phase 2 to below NOK 45 billion.
With this, the break-even for the full-field development of Johan Sverdrup has been improved to below $20 per barrel.
“The standardisation of equipment packages, copying of good solutions, and doing things right the first time – in collaboration with our suppliers – has been critical to the positive developments that we see in the first phase of Johan Sverdrup,” said Kjetel Digre, project director for Johan Sverdrup in Statoil. “In phase 2 we are taking this one step further, and we are starting to see the results of this.”
A more streamlined operation and maintenance model, combined with increased use of digital and automated solutions, has also helped reduce estimated yearly operating costs by nearly NOK 1 billion or approximately 30 percent since the PDO was approved in August 2015, Statoil said.