Aker BP hands in development plans for three offshore fields
Oil company Aker BP has submitted the plans for development and operations (PDOs) for the Valhall Flank West, Ærfugl (formerly Snadd) and Skogul (formerly Storklakken) fields to the Norwegian authorities.
The plans were submitted on December 15 by Aker BP CEO Karl Johnny Hersvik to the Minister of Petroleum and Energy, Terje Søviknes, Aker BP said on Friday.
“The Valhall Flank West, Ærfugl and Skogul developments will substantially strengthen Aker BP’s reserves and production from our operated field centres at Valhall, Skarv and Alvheim,” Hersvik said.
Reduced investments estimates
“Our ambition is to be recognized as the cost and capital leading offshore E&P company, and I am very proud to announce that the projects have improved significantly in this respect,” Hersvik stated.
Total investments for the Ærfugl development are estimated to NOK 8.5 billion – a reduction of approximately NOK 2 billion compared to previously communicated estimates – while recoverable reserves have increased substantially.
For the Valhall Flank West development, total investments are now estimated to NOK 5.5 billion, which also represents a reduction of more than NOK 1.5 billion compared to previous estimates. The smaller Skogul project is estimated to cost NOK 1.5 billion.
Aker BP said that, over the lifetime of the fields, the three projects are estimated to generate total oil and gas revenues of NOK 100 billion (in real terms), based on an oil price of $60 per barrel.
Net of investments and operating costs, this will result in a total value creation of NOK 70 billion, of which taxes to the Norwegian state amount to NOK 52 billion.
The impact on employment is estimated to approximately 14 000 full-time equivalents, according to benchmark data from DNV GL.
Valhall Flank West
Valhall is a giant oil field in the southern part of the Norwegian sector in the North Sea. The Valhall Flank West project aims to continue the development of the Tor formation in Valhall on the western flank of the field, with startup of operation in fourth quarter 2019. Valhall Flank West will be developed from a new Normally Unmanned Installation (NUI), tied back to the Valhall field center for processing and export.
The wellhead platform at Valhall Flank West will be fully electrified, and will be designed to minimize the need for maintenance activities. The platform will be remotely operated from the Valhall field center.
Recoverable reserves for Valhall Flank West are estimated to be around 60 million barrels of oil equivalent.
Joint venture owners in Valhall are Aker BP (35.95%) and Hess Norge (64.05%). Aker BP has entered into an agreement to acquire Hess Norge, and approval for submittal of the PDO to the MPE is conditional upon closing.
Furthermore, Aker BP has entered into an agreement with Pandion Energy to divest 10 percent interest in the Valhall and Hod fields.
Both transactions are subject to customary conditions for completion, including approval by the Ministry of Oil and Energy, Ministry of Finance and relevant competition clearance. The effective date of the transactions will be January 1, 2017, and closing is expected by the end of 2017.
The Ærfugl field, including Snadd Outer, is a unique gas condensate field, nearly 60 km long and just 2-3 km wide, situated close to the Aker BP-operated Skarv FPSO, approximately 210 km west of Sandnessjøen.
The PDO covers the full-field development and includes the resources in both the Ærfugl and Snadd Outer fields which are planned to be developed in two phases. The first phase includes three new production wells in the southern part of the field tied into the Skarv FPSO via a trace heated pipe-in-pipe flowline, in addition to the existing A-1 Hwell. Production is planned to begin in late 2020.
The second phase is subject to further maturation, but the reference case includes two additional wells in the northern part of the field and one in Snadd Outer also tied into the Skarv FPSO with an estimated production start late 2023. Other alternatives will be looked at to select the optimized concept.
The total remaining reserves for the full-field development are estimated at approximately 275 million barrels of oil equivalents.
The contracts’ cover Phase 1 of the project with an option for the Phase 2 scope. The Ærfugl project will be organized and executed as a part of Aker BP’s alliance model.
Joint Venture partners in Ærfugl (Skarv Unit) are Aker BP ASA (operator, 23.835%), Statoil (36.165%), DEA Norge (28.0825%) and PGNiG Upstream Norway AS (11.9175%). Partners in Snadd Outer (PL 212 E) are Aker BP (operator, 30%), Statoil (30%), DEA Norge (25%) and PGNiG Upstream Norway (15%).
The Skogul field is located 30 kilometers north of Alvheim FPSO, and will be developed as a subsea tieback to Alvheim via Vilje.
Recoverable reserves are estimated to around 10 million barrels of oil equivalents. Production start is planned for first quarter 2020.
The production well at Skogul will be subsea production well number 35 in the Alvheim area.
Joint venture partners in Skogul are Aker BP (operator 65%) and PGNiG Upstream Norway (35%).
In November 2017, the Ministry of Petroleum and Energy approved new name for Skogul.