Multiple oil & gas projects still on track for development plans by year-end

Multiple oil & gas projects still on track for development plans by year-end

Norway’s oil and gas company Aker BP will vote in favour of submitting plans for development and operation (PDOs) for multiple oil and gas projects, anticipated to take place by mid-December 2022.

Skarv FPSO; Source: Aker BP

This decision was made by the firm’s board of directors on Thursday. Therefore, Aker BP confirmed on Friday that, as the operator of these development projects, it would vote for the approval of the NOAKA field, Valhall PWP-Fenris, Skarv Satellite, and Utsira High projects, planned to be executed together with the company’s alliance partners.

The Norwegian player outlines that the final approvals to submit these PDOs are expected to take place in the respective licences during the first half of December, after which the PDOs will be submitted to Norwegian authorities. This is in line with the timeline Offshore Energy reported in late October regarding Aker BP’s preparations to make final investment decisions (FIDs) and submit PDOs for several oil and gas projects by year-end.

Furthermore, the oil and gas resources in the projects are estimated to be approximately 730 million barrels of oil equivalent, while net to Aker BP is in line with the company’s July strategy update when adjusting for the previously announced postponement of the Wisting project.

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The Norwegian firm highlights that its share of the investments in these projects is estimated to be approximately $19 billion (nominal) in the period 2023-2028, and the corresponding average break-even oil price is estimated to be $35-40 per barrel. This is calculated with a 10 per cent discount rate and accounting for the announced changes to the Norwegian Petroleum Tax adding on average $5-6/bbl to the break-even of the projects.

In a separate statement, Aker Solutions also corroborated the decision of Aker BP’s board. The plan is to submit the PDOs to the authorities before year-end if they are approved by the respective license partnerships.

Moreover, the company, through the Aker BP alliance models, executed the front-end engineering and design (FEED) work for these projects over the last year, under a single source supplier setting. These projects are anticipated to lead to contract awards worth around NOK 45 billion (over $4.6 billion) of order intake in December 2022, subject to the PDO submission in mid-December 2022.

What do these development projects entail?

Aker BP’s 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, which will be powered from shore to ensure a minimal carbon footprint.

As previously reported, 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.

In contrast, 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.

The Valhall field project in the southernmost part of the Norwegian North Sea entails the construction of a new platform and the hook-up of the Fenris field – former King Lear – to the new platform. To this end, Aker BP 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).

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The new processing and wellhead platform (PWP), expected to provide Valhall with significant gas processing capacity, and an unmanned platform on the Fenris gas field, will be connected to the existing power-from-shore solution at Valhall. The start of production is slated for 2027.

Meanwhile, the development of several satellite fields in the vicinity of the Skarv FPSO in the Norwegian Sea is anticipated to lay the foundations for the next wave of subsea tie-backs with new discoveries and farm-ins.

The Norwegian player’s Utsira High projects cover Lille Prinsen, Rolvsnes and Solveig. In addition, Aker BP is working on several subsea developments which will be tied back to the Alvheim, Edvard Grieg and Ivar Aasen fields, all in the North Sea.

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.