Equinor to book $1.8 bln impairment as UK field reserves shrink

Norwegian oil and gas company Equinor has reduced its total recoverable reserves estimate for the Mariner field in the UK North Sea, which will result in a $1.8 billion impairment in Equinor’s result for the last quarter of 2021.

As revealed on Wednesday, Equinor revised its estimate of the total recoverable reserves in the Mariner field from an earlier assessment of approximately 275 mmbbl to about 180 mmbbl.

The revision will result in an impairment in the region of $1.8 billion which will be reflected in IFRS net operating income for Equinor’s Exploration and Production International segment in 4Q 2021 results, to be reported on 9 February 2022.

The Mariner field began producing in 2019 and consists of two reservoirs: Heimdal and Maureen. Mariner’s reserves have a wide range of uncertainty given the high subsurface complexity and the early production phase of the field.

Equinor explained that the reserve revision is linked to an updated seismic interpretation and experience from the production of the Maureen reservoir, which led to a revised reservoir model. This revised reservoir model is further supported by results from the first well into the Heimdal reservoir, drilled in 4Q 2021.

Equinor is the operator of the field with 65.11 per cent equity and its partners are JX Nippon (20 per cent), Siccar Point (8.89 per cent), and ONE-Dyas (6 per cent). Mariner is located on the East Shetland Platform of the UK North Sea, approximately 150 kilometres east of Shetland and 320 kilometres northeast of Aberdeen.

Al Cook, executive vice president for Exploration and Production International, stated: “We are committed to working with our Mariner joint venture partners to identify opportunities to improve recovery and production. We plan to continue drilling on the field to prolong cash flow into the future.”

The Mariner field development includes a production, drilling and quarters (PDQ) platform based on a steel jacket, with oil being exported to a floating storage unit (FSU) and then transported to shore via tankers. The field is expected to produce oil for the next 30 years.