North Sea oil & gas projects with $14.9 billion investment tag inch closer to green light

Norwegian oil and gas player Aker BP is one step closer to getting the final stamp of approval for the development of its oil and gas projects in the North Sea offshore Norway, as the Storting – the Norwegian Parliament – said yes to its plans for the development and operation (PDOs) of these projects, which are worth more than NOK 165 billion (nearly $14.9 billion) in investments.

Back in December 2022, Aker BP submitted a plan for installation and operation (PIO) and ten PDOs for oil and gas projects to the Norwegian Ministry of Petroleum and Energy with total investments of more than NOK 200 billion (around $20.4 billion). These projects, together with several measures to increase efficiency and recovery, would 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.

When March 2023 rolled in, the Norwegian player notified the country’s Ministry of Petroleum and Energy about acceding to all the PDOs submitted in December 2022, except for one. As a result, the Troldhaugen project in the Edvard Grieg area, which represents around four per cent of the net estimated resources in these projects, has been discontinued. 

At the end of March, the Norwegian government presented a proposition to the Storting, concerning the development of Yggdrasil and Valhall PWP-Fenris projects. According to Aker BP, a majority in the Energy and Environment Committee gave a positive recommendation on 25 May, which was considered in a plenary session in the Storting on 5 June 2023. Afterwards, the Storting also gave its seal of approval.

Karl Johnny Hersvik, CEO at Aker BP, commented: “With the decision, the Storting has agreed to thousands of jobs and important value creation in Norway. I am proud of what we will now deliver together with our license partners. Yggdrasil and Valhall PWP-Fenris alone amount to more than NOK 165 billion in investments. We are talking about estimated tax revenues of over NOK 120 billion for our country.”

Furthermore, Aker BP explains that the Norwegian share of deliveries from the Yggdrasil and Valhall PWP-Fenris projects is around 65 per cent, contributing 130,000 man-years in Norway throughout the lifetime of the fields, about half of which is in the development phase. This will entail activity at shipyards in Egersund, Stavanger, Haugesund, Stord, Verdal and Sandnessjøen, as well as at several hundred suppliers throughout the country. The projects will also bring activity and jobs to shipyards and suppliers elsewhere in the world.  

“The development projects contribute to Aker BP delivering on its ambition to create the oil and gas company of the future with low costs, low emissions, profitable growth, and attractive returns. We have a solid resource base, high production, and are the company with the lowest CO2 emission intensity of all the oil and gas operators in the world,” added Hersvik. 

The Yggdrasil area development -formerly NOAKA – entails Hugin, Munin, and Fulla located between the Alvheim and Oseberg fields in the North Sea. 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 Frøy – Hugin B – which will be tied back to Hugin A.

Lars Høier, Yggdrasil director, remarked: “Yggdrasil is the next major development on the Norwegian continental shelf, and together with partners Equinor and PGNIG Upstream Norway, we are now opening up a mature area in the North Sea. We see great potential in the area and have recently announced a significant oil discovery at Øst Frigg Beta/Epsilon. This means further improved profitability and increased value creation.”  

As the preliminary calculations of the East Frigg Beta/Epsilon find are 40-90 million recoverable oil equivalents, this has boosted the total resources in the Yggdrasil area by around ten per cent to over 700 million barrels.  The company highlights that the development concept for Yggdrasil is designed to accommodate future discoveries and fields with extensive new infrastructure planned. 

Moreover, the entire Yggdrasil area is expected to be controlled remotely from an onshore integrated interaction centre and control room in Stavanger. This development will be powered from shore, contributing to low emissions of less than 1 kg CO2 per barrel.   

“We are now well underway with detailed planning. All major contracts have been concluded and we are in the process of placing thousands of orders with suppliers both nationally and internationally. We are on track to start construction according to plan in the autumn. We will be present at all central locations to follow important equipment deliveries and construction work closely going forward,” underscored Høier.  

Aker BP further points out that the development of the Valhall PWP-Fenris project in the southern part of the North Sea will extend Valhall’s lifespan. This project is ready to start construction before the summer. 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. 

Rannveig Storebø, project director, stated: “We are making good progress in the detailed planning. Together with the alliance partners and suppliers, we have put in place a close-knit team that is ready to extend the life of the giant Valhall.”

While Pandion Energy is Aker BP’s partner in Valhall, PGNiG Upstream Norway is the firm’s partner in Fenris, which is 50 kilometres away. The new reserves, as a result of the development project, are estimated at 230 million barrels of oil equivalent. 

The project also ensures lifetime extension of Valhall beyond 2028 and continued production of existing Valhall reserves estimated at 137 million barrels. The development is expected to utilise existing power from an onshore system with minimal emissions, calculated at less than 1 kg CO2 per barrel.   

Ole Johan Molvig, Valhall director, said: “Together with our license partners, we ensure lifetime extension and further production from Valhall. This development gives access to new and very profitable volumes at Valhall and Fenris with significant upside potential.

“We are now also establishing Valhall as a hub for gas. The production from Fenris will significantly increase gas exports from Valhall to Europe, and will more than double the gas processing capacity. It makes an important contribution to Norway’s long-term capacity for stable energy supplies to Europe.”

While the Storting gave the go-ahead for the Yggdrasil area and Fenris, as well as further development of Valhall, the Ministry of Petroleum and Energy is in charge of granting final approval of the development plans.  

Aker BP has already awarded a number of contracts for these projects to alliance partners and other strategic suppliers with the total value amounting to tens of billions of kroner. Aker Solutions, Aibel, Subsea 7, and ABL Group are among the companies which received these contract awards.

In addition, Heerema Fabrication Group Vlissingen was recently hired by Aker BP for the procurement and construction of the Munin jacket in the Yggdrasil area.

The jacket procurement activities are expected to start in the autumn while the construction is set to start at the beginning of 2024. The installation of the jacket is planned for 2025.

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