Statoil to consider FPSO for Castberg (Skrugard-Havis)
Since the Skrugard and Havis project has been renamed as Johan Castberg, some significant changes have happened to justify Statoil from Norway and its partners, Eni from Italy and Petoro from Norway, to rethink the conceptual design of the project into a floating, production, storage and offloading (FPSO) vessel.
Located in the Norwegian territorial waters of the Barents Sea, the Skrugard and Havis fields are considered as the pilot case of the High North oil and gas exploration and production in Norway.
Therefore the selection of the conceptual design of the Johan Castberg project to develop these fields must be considered as a milestone toward a wider development program.
In the Castberg project, Statoil and its partners are sharing the working interests such as:
– Statoil 50% is the operator
– Eni 30%
– Petoro 20%
In this context, in February 2013, Statoil and its partners had selected a conceptual design pretty luxurious according to the size of the Skrugard and Havis fields based on:
– Semi-submersible offshore production platform
– Oil and Gas export pipelines to shore
– Onshore terminal to be located at Veidnes
Although Veidnes is approximately 280 kilometers far from the Skrugard and Havis fields, this site had been selected because of the opportunity to store the oil and gas in mountain cavernes in addition to the conventional tank farms.
Then the plan for Statoil and its partners was to move Castberg to the next step in starting the front end engineering and design (FEED) on the second half of 2013.
Statoil to reduce capital expenditure on Castberg
But in the meantime, Statoil Eni and Petoro had to consider some changes in the project that impact the original scenario and lead them to reduce significantly the capital expenditure of the Johan Castberg project, thus its conceptual design before moving into FEED.
Located at the frontier of the Arctic circle, the costs calculation of the Castberg project based on the semi-submersible offshore platform somewhere in between the Skrugard and Havis fields connected to shore by export pipeline would have a break-even cost of $74 per barrel instead of first estimates at $64 per barrel based on a production of:
– 200,000 barrel of oil equivalent (boe) per day
– 10 million cubic meter of gas per day
– 50,000 cubic meter of water per day
In addition the Norwegian parliament voted a revision of the tax break on oil and gas projects generating $7 per barrel extra costs.
Overall the total capital expenditure for the full development of the Castberg project would jump in such a scenario from the first estimates $10 billion to more than $15 billion.
These figures are calculated in considering the Johan Castberg project to rely on 500 million barrels of oil equivalent (boe) recoverable reserves, and in that respect the last exploratory wells drilled brought up more questions than confirmation regarding these reserves.
Therefore Statoil and its partners Eni and Petoro are considering the development of the Castberg project through a standalone FPSO in order to minimize the infrastructures around the Skrugard and Havis oil and gas fields and maintain the capital expenditure at the original level.
