Lundin to increase output, accelerate decarbonisation strategy

Swedish oil company Lundin Energy has announced it will be increasing its output in 2021 as well as accelerating its decarbonisation strategy.

Lundin said on
Thursday that its production guidance for 2021 was between 170 and 190 mboepd.
The range reflects that the current Johan Sverdrup Phase 1 facilities capacity
of 500 thousand barrels of oil per day gross is expected to increase up to 535 from
mid-2021.

In comparison, the average production in 2020 was 165 mboepd, which was at the top end of the original guidance range of between 145 and 165 mboepd. Production for the fourth quarter of 2020 was 185 mboepd, which was above guidance due to increased facilities capacity and high uptime performance at Edvard Grieg and Johan Sverdrup.

Lundin added that
there would be additional facilities capacity available for the Edvard Grieg
Area, as a result of the start of natural production decline at Ivar Aasen.

The Edvard Grieg
tie-back developments, Solveig Phase 1 and the Rolvsnes Extended Well Test
(EWT), are expected to start production in the third quarter 2021 and will
contribute to maintaining plateau production through the facilities.

The production
contribution is split approximately 60 per cent from the Johan Sverdrup field,
35 per cent from the Greater Edvard Grieg Area and the remainder from the other
assets.

Lundin further
stated that its production was expected to rise to over 200 mboepd by 2023,
reflecting the increased Johan Sverdrup full-field plateau level of 720 mbopd,
once Phase 2 comes on stream in the fourth quarter of 2022, and the extended
Greater Edvard Grieg Area production plateau period.

Lundin also
stated that it would accelerate its decarbonisation strategy to target carbon
neutrality for operational emissions to 2025, from the original target of 2030.

This change is
underpinned by good progress on the electrification of the company’s main
assets, investments in renewable energy to replace electricity usage and a
commitment to invest in proprietary natural carbon capture projects.

Electrification
of the company’s main assets will result in over 95 per cent of oil and gas
production being powered by electricity from shore by 2023 and committed
renewables projects will generate electricity accounting for 60 per cent of
forecast peak electricity usage, with a plan for further investments to achieve
100 per cent in 2023.

It is also worth
noting that the 2021 development expenditure is budgeted at $850 million and
reflects the actions taken to defer activity from 2020 to 2021, due to the low
oil prices in 2020.

The exploration
and appraisal budget for 2021 is $260 million and involves the drilling of
eight wells, seven of which remain to be drilled, with the programme targeting
over 300 mmboe of net unrisked resources.

Lundin also has
nine potential new projects which are being prioritised for development within
the temporary tax incentives that require a PDO to be submitted before the end
of 2022. These potential projects are Solveig Phase 2 and Segment D, Lille
Prinsen, Rolvsnes, Iving, Alta, Wisting, and the Alvheim Area projects of Kobra
East/Gekko, and Frosk, which have net resources totalling approximately 200 mmboe.

Some 50 per cent
of the exploration and appraisal budget is for drilling activities and
engineering studies to de-risk these potential projects to mature them to PDO
within the time-line of the tax incentives.