Equinor has signed a letter of intent with Odfjell Drilling for the Deepsea Atlantic rig to drill 12 wells during phase 2 of the Johan Sverdrup field development in Norway, following its work on phase 1.
The letter of intent is subject to finalization of the contract.
The value of the fixed part of the agreement is estimated at around $150 million, Equinor said on Tuesday.
The costs of integrated services, maintenance and options for drilling five extra wells are not included in the estimated value. The total contract value will depend on the efficiency of the well deliveries.
The Johan Sverdrup licence partners are Equinor (operator), Lundin, Petoro, Aker BP and Total.
Geir Tungesvik , Equinor’s senior vice president for project development, said: “Johan Sverdrup phase 2 is the next stage in the development of the giant Johan Sverdrup field and a project that strongly impacts activities and spinoffs in Norway. With this contract, Norwegian suppliers have been awarded more than 90 per cent of the project contracts”.
According to Equinor, the drilling period is scheduled to start at the beginning of 2022.
Operations will have a duration of twelve firm wells plus five optional wells.
Erik G. Kirkemo , Equinor’s senior vice president for drilling and well operations, said: “Deepsea Atlantic drilled the Johan Sverdrup phase 1 wells with excellent results, so we are pleased to secure the rig for phase 2 as well.
“The rig is already on a continuing contract with Equinor, and our ambition is to keep it busy until Johan Sverdrup phase 2 comes on stream at the end of 2022”.
Johan Sverdrup phase 2 includes the construction of a subsea production system, reconstruction of the existing riser platform and a new processing platform, which will also accommodate a converter unit receiving power from shore.
This unit will distribute power to other fields on the Utsira High: Edvard Grieg, Ivar Aasen, Gina Krog and Sleipner. The four existing platforms on the Johan Sverdrup field are already receiving power from shore and CO 2 emissions per barrel are 0.7 kg.
The phase 2 development will increase the field production capacity from 470,000 to 690,000 barrels per day on plateau.
The break-even price will be below $20 per barrel, making Johan Sverdrup a highly profitable field with a very low CO 2 footprint.
Simen Lieungh , CEO Odfjell Drilling, said: “This contract award has come at an important time for Odfjell Drilling with the current challenges faced by the industry.
“We acknowledge Equinor for proceeding with long term developments such as Johan Sverdrup in this climate and we shall deliver on the trust they and the partners have placed in Odfjell Drilling”.
In related news, Odfjell Drilling’s semi-submersible drilling rig Deepsea Stavanger has recently mobilized from Norway to South Africa for a drilling campaign with Total.