Plans unveiled for $20.4 billion investments in ten oil & gas projects

Plans unveiled for investments of $20.4 billion in ten oil & gas projects

Norway’s oil and gas company Aker BP has submitted a plan for installation and operation (PIO) and ten plans for development and operation (PDOs) for oil and gas projects to the Norwegian Ministry of Petroleum and Energy (MPE).

Skarv Satellite project; Source: Aker BP

While announcing these “major investments” on the Norwegian continental shelf (NCS) with total investments of more than NOK 200 billion (around $20.4 billion), Aker BP highlighted that these oil and gas projects represent one of the largest private industrial developments in Europe. 

Karl Johnny Hersvik, CEO of Aker BP, remarked: “The scope of the development plans we are submitting to the Minister of Petroleum and Energy is a manifestation of our ambition to create the oil and gas company of the future – with low costs, low emissions, profitable growth and attractive returns.

“We are uniquely positioned for profitable growth, not least through our role as operator for several of the major field developments on the Norwegian shelf in the years ahead. This gives us a great opportunity to lead the way in transforming the oil and gas industry, in close cooperation with our licence partners, our alliance partners and other strategic partners.”

Back in October 2022, Aker BP disclosed that it was preparing to make final investment decisions (FIDs) and submit PDOs for several oil and gas projects by year-end. The company followed up on this at the start of December to reveal that as the operator of these projects, it would vote in favour of submitting the PDOs for these developments by mid-December 2022.

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Therefore, Aker BP handed these PDOs over on 16 December 2022, adding that the total recoverable resources in these development projects amount to 730 million net barrels of oil equivalent for the company. These projects are expected to contribute to extending the life of existing production and enable future growth opportunities. 

The Norwegian player’s share of the investments is approximately 70 per cent, amounting to around $19 billion in nominal terms while the average break-even price is estimated to be $35-40 per barrel. These development projects, together with several measures to increase efficiency and recovery, will enable the firm’s oil and gas production to grow from around 400,000 barrels per day in 2022 to around 525,000 barrels in 2028.

Terje Aaslan, Norway’s Minister of Petroleum and Energy, stated: “It’s always a good day at work when I get to receive new development plans. What is happening today is overwhelming. The companies have taken the government at its word – they are further developing the Norwegian shelf.”

More oil & gas on the horizon

The Norwegian player has grouped the projects covered by these ten PDOs into four main groups: Yggdrasil (formerly NOAKA), Valhall PWP-Fenris (formerly King Lear), Skarv Satellite project, and Utsira High projects.

“We will have a completely new development with Yggdrasil, and a revitalisation around the Valhall, Skarv and Grieg/Aasen fields. The development projects will secure jobs and expertise in the Norwegian supplier industry for many years to come. In addition, enormous value will be created for society and resources will be developed to ensure oil and gas deliveries to Europe. Today there is every reason to celebrate,” emphasised Aaslan.

As a pertinent element in its strategy to achieve net-zero emissions by 2030, Aker BP outlines that these new projects will predominantly receive power from shore, which is expected to further reduce the firm’s emission intensity when they come on stream. 

“We take the global climate challenges seriously, and we have a three-pronged strategy to meet the world’s growing need for energy while simultaneously contributing to reduce emissions. We will deliver oil and gas with a minimum climate footprint. We will generate revenue that can be used to facilitate the energy transition. And we will contribute knowledge, data and experience to support new industries. This creates growth and improvement that reach far beyond our own business. These development projects provide an important foundation for this strategy,” highlighted Hersvik.

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Furthermore, Aker BP’s operated development projects are expected to contribute to more than 150,000 full-time equivalents in Norway in supplier companies across the country. In addition to ensuring activity and jobs, the projects contribute to developing technological expertise in the Norwegian industry before renewable projects are expected to increase in scale. 

“With an average oil price of $65 per barrel, these development projects will generate net tax payments to the Norwegian state totalling NOK 160 billion in real terms, and thus make an important contribution to financing welfare schemes and strengthen the state’s ability to support the energy transition,” concluded Hersvik.

Yggdrasil: the next giant on NCS

Aker BP explains that this is the next large field development on the Norwegian shelf, located between Alvheim and Oseberg in the North Sea. Yggdrasil contains several discoveries with total recoverable resources of around 650 mmboe.

The company outlines that new names will be used for licence groups and facilities while the development concept consists of an unmanned production platform to the north – Munin, formerly Krafla – a process platform with well bay area and living quarters – Hugin A, formerly NOA – to the south and a normally unmanned wellhead platform on FrøyHugin B – which will be tied back to Hugin A.

“Through the development of the Yggdrasil area (formerly NOAKA), which is the largest of the projects, we aim to set new standards for field development and operation using new technology, data-driven decisions and work processes, remote operations and unmanned platforms,” added Hersvik.

Yggdrasil; Source: Aker BP
Yggdrasil; Source: Aker BP

The company further elaborates that Yggdrasil represents a comprehensive subsea development with a total of nine subsea templates. The plan calls for 55 wells in the area, which will be developed using power from shore. Equinor has acted as the operator for Krafla so far. However, upon submission of the plan for development and operation, the field name is changed to Munin and Aker BP will take over as operator.

This will enable the firm to operate the entire area in both the development and operations phases. The total investments for the Yggdrasil project are estimated at NOK 115 billion or over $11.6 billion. The project’s production is planned to start in 2027. Aker BP’s partners for this project are Equinor and LOTOS.

Valhall PWP–Fenris enabling more gas for Europe

The Valhall PWP-Fenris unitised development includes a new process and wellhead platform (PWP) bridge connected to the Valhall field centre, and an unmanned wellhead platform on Fenris that will produce through a 50-kilometre pipeline to Valhall PWP. Aker BP expects Valhall PWP to have “an essential role” in the further development of the Valhall area.

Valhall PWP-Fenris; Source: Aker BP
Valhall PWP-Fenris; Source: Aker BP

The company further emphasises that the gas production from Fenris will make “a significant contribution” to long-term and predictable gas supplies to Europe. The total investments in this project are estimated at NOK 50 billion (over $5 billion) while reserves are estimated at 230 mmboe. The production is expected to start in 2027 and the partners in this license are Aker BP, PGNiG Upstream Norway and Pandion Energy.

Three developments in the Skarv area

The Skarv satellite project includes the Alve Nord, Idun Nord and Ørn gas and condensate discoveries in the northern part of the Norwegian Sea. These fields will be developed using subsea solutions connected to the Skarv FPSO on the Skarv field. Aker BP anticipates that these developments will contribute to continued high production and an extended lifetime for Skarv FPSO.

The total investments for this project are estimated at NOK 17 billion (over $1.7 billion) while its recoverable resources are estimated at 120 mmboe. The start of production for this project is scheduled for 2027. Aker BP’s partners in this license are Equinor, PGNiG Upstream Norway and Wintershall Dea.

Three satellite projects on Utsira High 

The Norwegian player underlines that three satellite projects will utilise the capacity of Edvard Grieg and Ivar Aasen on the Utsira High in the North Sea. According to Aker BP, new names will be used for licence groups and facilities, thus, Symra (formerly Lille Prinsen) will be a tie-in to Ivar Aasen while Solveig Phase 2 and Troldhaugen (formerly Rolvsnes) will be tied into the Edvard Grieg platform. The company points out that a report will be submitted to the MPE for Solveig Phase 2, rather than a separate PDO.

Utsira High project; Source: Aker BP
Utsira High project; Source: Aker BP

In addition, the Norwegian firm states that the total investments for the Utsira High project are estimated at NOK 21 billion (over $2.1 billion). The project’s recoverable resources are estimated at 124 mmboe and the production is planned to kick off in 2026/2027. Equinor, Sval Energi, OMV and Wintershall Dea are Aker BP’s partners in this license.

Aker BP hands out billion-kroner contracts

In connection with the PDO submissions, the Norwegian player awarded a number of contracts to alliance partners and other strategic suppliers and the total value of the contract awards amounts to tens of billions of kroner. Aker Solutions, Aibel, and Subsea 7 are among the companies which received these contract awards.

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