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.
Accelerated decarbonisation strategy
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.