Aker BP gearing up to sanction multiple oil & gas projects in December

After recording higher production and strong financial results in the third quarter of 2022, Norway’s oil and gas company Aker BP is preparing to make final investment decisions (FIDs) and submit plans for development and operations (PDOs) for several oil and gas projects by year-end.

Aker BP disclosed on Wednesday that it recorded a total income of $4.8 billion in the third quarter of 2022 – the firm’s first full quarter after the Lundin acquisition – compared to $2 billion in the second quarter of 2022, and $1.5 billion in the third quarter of 2021.

Commenting on the results, Karl Johnny Hersvik, CEO of Aker BP, remarked: “Third quarter 2022 was the first quarter of the enlarged Aker BP, following the completion of the Lundin transaction at the end of June. During the quarter we have successfully integrated the two organisations. At the same time, we maintained momentum in our operations and project development activities.”

The firm delivered a net profit of $783 million in Q3 2022 compared to $188 million in Q2 2022 and $206 million in Q3 2021. The company’s free cash flow (FCF) of $1.9 billion in the third quarter of 2022 was driven by high prices and low operating costs. The quarterly dividend in Q3 2022 is $0.53 per share compared to $0.48 in Q2 2022 and $0.31 in Q3 2021.

During the third quarter of 2022, the Norwegian player achieved a new production record of 412 mboepd compared to 181.3 mboepd in the second quarter of 2022 and 210 mboepd in the third quarter of 2021. Aker BP also worked on lowering CO2 emissions and progressing the growth of its asset portfolio.

In line with this, the company made progress on projects in the Alvheim area, which would be tied back to the Alvheim FPSO. This includes the Frosk field, which is on track for its first oil in the first half of 2023; Kobra East Gekko project for which first oil is expected in 2024; and Trell & Trine with first oil slated for 2025.

Moreover, Aker BP is preparing for final investment decisions on multiple projects as all technical work has been completed and all FEEDs were finalised during Q3 2022. Therefore, the Norwegian firm is on track to submit PDOs for several oil and gas projects by year-end.

“Aker BP has a unique resource base, and over the last couple of years we have been working systematically to mature field development projects with combined resources of around 900 mmboe net to Aker BP. This work is now nearing completion, and we are currently aiming to submit PDOs for these projects by the end of 2022, and hence qualify for the temporary tax rules which were introduced in 2020,” added Hersvik.

According to the company, readiness reviews and economic evaluations are ongoing, and FIDs for some of these projects are anticipated in December. The PDOs and FIDs are related to the NOAKA, Valhall, Skarv, Edvard Grieg and Ivar Aasen projects.

The development project in the NOAKA area – covering Krafla, Fulla, and the North of Alvheim on the Norwegian Continental Shelf (NCS) – in the North Sea is a coordinated development of several fields where total investments are estimated at about NOK 80 billion ($10 billion). Aker BP says that the NOAKA area will be powered from shore to ensure a minimal carbon footprint. This project remains on schedule for submission of the PDO in the fourth quarter of 2022.

As elaborated by Aker BP, the NOA Fulla development concept includes a fixed platform – NOA PdQ – at the Frigg Gamma Delta field, which will function as an area hub with processing, drilling, and living quarters, while the Frøy field will be re-developed with a normally unmanned installation, as a copy of the Valhall Flank West and the Hod B platforms. On the other hand, Krafla will be developed with an unmanned production platform and five subsea templates tied back to the NOA PdQ for oil and produced water processing.

Aker BP pointed out that the environmental impact assessments for NOA Fulla and Krafla were published during the second quarter. The preparations for a final investment decision, which is expected in the fourth quarter of 2022, are ongoing. Thanks to a deal with Equinor from May 2022, the operatorship for Krafla will be transferred to Aker BP following the PDO submission, making Aker BP the operator of all discoveries in the NOAKA area.

Aker BP outlines that the development of several satellite fields in the vicinity of the Skarv FPSO in the Norwegian Sea is laying the foundations for the next wave of tie-backs with new discoveries and farm-ins. The Norwegian player underlines that the Skarv Satellites project is progressing according to plan and the project is on track for the final investment decision and PDO submission in late 2022. The company also has several subsea developments which will be tied back to the Alvheim, Edvard Grieg and Ivar Aasen fields, all in the North Sea.

When it comes to the construction of a new platform on the Valhall field in the southernmost part of the Norwegian North Sea, and the hook-up of the Fenris field – former King Lear – to the new platform, Aker BP already awarded a contract to Rosenberg Worley in Stavanger to build parts of the new central platform. The estimated investments for this project are NOK 40-50 billion (around $4.1 and $5.2 billion).

Furthermore, the selected development concept consists of a new process and wellhead platform (PWP) which will provide Valhall with significant gas processing capacity, and an unmanned platform on the Fenris gas field. The project will be connected to the existing power-from-shore solution at Valhall. The company highlighted that the PDO submission for this project is scheduled for the fourth quarter of 2022 while the start of production is slated for 2027.

When it comes to projects related to the Edvard Grieg and Ivar Aasen fields, the first oil from the Hanz discovery is expected in 2024 while the PDO for Utsira High projects – Lille Prinsen, Rolvsnes and Solveig – is expected this December. The Edvard Grieg and Ivar Aasen area will be powered from shore as part of Equinor-operated Johan Sverdrup Phase 2, which is on track for first oil in the fourth quarter of 2022. The Johan Sverdrup field is located on the Utsira Height in the North Sea, 160 kilometres west of Stavanger.

The Edvard Grieg IOR campaign for 2023 is on schedule for a final investment decision in the fourth quarter of 2022 while the first oil from the first well is expected in mid-2023. Meanwhile, the Ivar Aasen IOR campaign for 2022 is progressing well and the Maersk Invincible drilling rig arrived in September. The first oil from the first of three wells is expected before year-end.

“The world is characterised by geopolitical instability, inflation and increasing interest rates, supply chain constraints and high volatility in energy and commodity prices. In addition, the Norwegian government has proposed a tightening of the temporary tax rules. Aker BP will take all these factors into account before making final investment decisions,” concluded Hersvik.

Another project, slated for the PDO submission in December is the Equinor-operated Wisting development, where Aker BP holds a 35 per cent interest. The production is scheduled to start in 2028.