What will two upcoming giant oil & gas developments in the North Sea bring?
Norwegian oil and gas player Aker BP has revealed some of the benefits that its two recently greenlighted major developments on the Norwegian Continental Shelf (NCS) are expected to bring, aside from strengthening energy security once they are put into operation. These benefits include more work for the supply chain, enabling innovation, with more than 200 Norwegian suppliers already involved in these projects.
After the Storting gave its stamp of approval for the Yggdrasil and Valhall PWP-Fenris development plans on 5 June 2023, the Norwegian Ministry of Petroleum and Energy approved the developments on 28 June 2023. According to Aker BP, the politicians have greenlighted thousands of jobs and important value creation in Norway with this resolution, as over 200 Norwegian supplier companies are directly contributing to these developments and the number is expected to grow in the years to come. Aker BP’s licence partners in Yggdrasil and Valhall PWP-Fenris are Equinor, PGNiG Upstream Norway, and Pandion Energy.
Karl Johnny Hersvik, CEO of Aker BP, commented: “The Yggdrasil and Valhall PWP-Fenris development projects are direct responses to the activity package approved by the Storting three years ago. It aimed to secure activity, protect jobs, develop expertise and further develop the industry at a time characterised by the pandemic, record-low oil prices and steep declines in investments. Together with our licence partners, Aker BP is now delivering in line with the politicians’ expectations.”
The Yggdrasil development covers a large area consisting of several extraction permits and discoveries located between the Alvheim and Oseberg fields. The development concept consists of an unmanned production platform to the north – Munin, formerly Krafla – a process platform with a well bay area and living quarters – Hugin A, formerly NOA – to the south and a normally unmanned wellhead platform on Frøy – Hugin B – which will be tied back to Hugin A. The recoverable resources are estimated at around 650 million barrels of oil equivalent (boe) and the start of production is slated for 2027.
On the other hand, the Valhall PWP-Fenris project involves further development of the Valhall area, where a new unmanned platform on the Fenris field will be connected to a new integrated process platform at Valhall. The project’s estimated recoverable resources are 367 million barrels of oil equivalent. The production start-up is slated for the third quarter of 2027.
Yggdrasil and Valhall PWP-Fenris represent approximately NOK 165 billion (currently over $15.32 billion) in investments and are expected to generate more than NOK 120 billion (around $11.14 billion) in estimated tax revenue for Norway. The projects will contribute 130,000 full-time equivalents in Norway throughout the lifetime of the fields with about half of this in the development phase.
“Although Aker BP is the largest privately owned taxpayer in Norway, we’re actually a small business. We will be drawing on the entire value chain to carry out these developments. Yggdrasil and Valhall PWP-Fenris are possible thanks to the world-class Norwegian industry that can deliver complex oil and gas projects. Many of these companies will also take Norway into new value chains,” added Hersvik.
Furthermore, the contracts for these two projects are awarded by Aker BP, as well as the company’s alliance partners and strategic partners, and directly involve more than 200 Norwegian suppliers, which will be making thousands of purchase orders, with a significant percentage, about 65 per cent, going to Norwegian companies. For many suppliers, this means a considerable boost in the competitive edge.
The Kvinesdal-based Tratec Halvorsen is delivering large process tanks to Yggdrasil, thanks to a contract valued at more than NOK 100 million (almost $9.28 million), which has ensured work for engineers, production personnel and apprentices for the next two to three years. The importance of this contract is confirmed by the firm’s CEO, Frode Olsen, who outlines that the deal will allow the firm to invest in “cutting-edge robotic welding machines,” making the company ”competitive in the international market.”
On the other hand, Framo in Bergen is delivering pumps to Valhall PWP-Fenris and Yggdrasil and the company will work together with Aker BP throughout the equipment’s lifetime, from design to operation. Sigve Gjerstad, director of offshore pumping systems, points out that Aker BP has challenged the firm’s mindset, as “through sharing data, we can jointly optimise the use of pumps when operating the equipment.”
Another player, Linjepartner, is hiring new employees and more apprentices as a result of “a contract worth more than NOK 100 million with Yggdrasil power from shore. This will ensure a robust foundation for our company for the next two years, as well as an educational and interesting workplace for all our employees in and outside Trøndelag,” underlined Stig Myhr, Linjepartner’s general manager.
Moreover, FireNor in Kristiansand will deliver advanced firefighting equipment to Yggdrasil. The NOK 100-million (nearly $9.28 million) contract will secure work for 34 employees and the company will recruit new employees and take on more apprentices. The company is placing NOK 50 million (about $4.63 million) in contracts with its sub-suppliers while Kjetil Kleven, its Managing director, says the deal also “strengthens” the firm’s position in the offshore wind market.
Helge Gjøsæter, Leirvik CEO, underscored: “Leirvik has invested in automated and robotic production lines for welding and plate cutting. It will increase efficiency, improve safety for employees and boost competitiveness.” The yard at Stord will deliver the living quarters and helicopter deck for Hugin A in Yggdrasil and this contract will generate work for up to 220 people over the next several years, including apprentices.
Additionally, Yggdrasil and Valhall PWP-Fenris projects are anticipated to yield considerable activity at yards in Grimstad, Eydehavn, Egersund, Stavanger, Haugesund, Stord, Verdal and Sandnessjøen. In line with this, Aker Solutions in Verdal will deliver two topsides and four jackets over the next three years, which secures jobs and vocational training for up to 100 apprentices. Through these projects, the Verdal yard will also invest in a robotic and automated production line.
Kjetel Digre, President and CEO of Aker Solutions, explained: “This will contribute to efficient project execution, improved productivity and an even safer workday for our employees. The upgrades will also strengthen Aker Solutions’ position in future renewables projects.”
Aside from this, Aker Solutions is also upgrading the yards in Egersund, Stord and Sandnessjøen and the company will provide vocational training for 500 apprentices as a result of the projects in the activity package.
“These developments are incredibly important to Norway. We will celebrate this along with politicians, trade unions, other national stakeholders, our employees, licence partners, and most importantly, strategic partners and suppliers,” said Hersvik.