Go-ahead for another chapter of North Sea oil project’s story: More coming up by year-end

While one segment of an oil project in the North Sea is slated to go into production mode this year, Vår Energi, a Norwegian oil and gas player, and its partner, Kistos Energy, have put their stamp of approval on a final investment decision (FID) to bring online another addition to the same asset next year off the coast of Norway. This is one of around eight project sanctions expected in 2025.

Given its commitment to enabling new hydrocarbon production through infill drilling, exploration, and tie-back developments with a short time to market, Vår Energi sanctioned the Balder Phase V project in the Balder area of the North Sea in the fourth quarter of 2024, targeting start-up in late 2025.

The Norwegian player and its partner have now taken another step to sustain long-term, high-value production through the newly installed floating production, storage, and offloading (FPSO) Jotun, with the FID for the Balder Phase VI project to fast-track its development as a key contributor to maintaining production levels in the Balder area.

This project, which will develop around 15 million barrels of oil equivalent (mmboe) of gross proved plus probable (2P) reserves for a capital spend of NOK 2.6 billion ($260 million) gross, is said to have strong economics, with a break-even well below $35 per barrel, IRR above 35% and will pay back in less than a year from start of production at current prices.

Consisting of one additional multilateral production well, installation of a new subsea template, and a flowline that will be tied into the FPSO Jotun, the Balder Phase VI project is perceived to align with Vår Energi’s strategy of maximizing value in core hub areas by utilizing existing capacity and infrastructure, demonstrating how the upgraded FPSO will contribute to continued value creation in the area. This project is expected to come online by the end of 2026.

Torger Rød, COO of Vår Energi, commented: “The Balder area in the North Sea is one of Vår Energi’s core hubs and constitutes significant future resource potential. With the Jotun FPSO now installed as the new area host, we will continue to unlock additional high value barrels from the Balder area through several phases of new developments and field optimisations.

“This includes Balder phase V, which will come on stream later this year. And with the FID for Balder Phase VI we are taking yet another important step to sustain production from the area through short time to market developments.”

Furthermore, the Norwegian player is on track to reach production levels of over 400,000 barrels of oil equivalent per day (kboepd) in the fourth quarter of 2025; thus, it aims to organically sustain production long term by developing a highly attractive portfolio of around 30 early-phase projects. Vår Energi is the operator and holds a 90% interest in the Balder field, while Kistos Energy has the remaining 10% stake.

According to the North Sea operator, several additional early-phase projects in the Balder area are also being progressed, including Balder Next, which is targeting additional gross contingent resources of around 55 mmboe. Thanks to this project, the Balder floating production unit (FPU) will be brought to shore for decommissioning, which is planned for 2028.

Vår Energi plans to transfer selected wells producing through the FPU Balder to the FPSO Jotun, with production expected to be accelerated as part of the FPSO debottlenecking project to increase the unit’s production capacity and develop new production wells.

The decommissioning of Balder FPU is expected to reduce operating costs by approximately $130 million gross per annum and curb CO2 emissions by around 80,000 tonnes gross per year. With the FPSO Jotun serving as the new area host at the Balder field, the production is anticipated to remain at 70-80 kboepd gross towards 2030.

“While moving projects forward at pace, a major portion of our portfolio and capital remains uncommitted, allowing for a high degree of flexibility. This provides resilience and robustness to navigate through the cycles, whilst we continue to move high value projects forward at the right time,” highlighted Rød.

The company’s Balder X project, targeting a start-up in Q2 2025, is set to recover around 200 million barrels of additional reserves from the Balder-Ringhorne area, where the production lifetime is being prolonged to 2045, as part of the Balder Future redevelopment project in the North Sea.