Statoil to decide on Johan Castberg by summer 2015

The partners in the Johan Castberg licence, comprising Statoil, Eni and Petoro, have decided to spend more time on making the final concept selection for the Johan Castberg project, Statoil today confirmed in a press release.

“The companies will continue efforts to mature the technical development solution, updating the resource basis and reducing cost leading up to the summer of 2015. The partners will also further assess the financial basis for an oil terminal at Veidnes,” says Arne Sigve Nylund, Statoil executive vice president for Development and Production Norway.

The Johan Castberg project comprises the Statoil-operated discoveries Skrugard, made in 2011, and Havis, made in 2012. The discoveries were a breakthrough for the Barents Sea as a new oil province. The proven volumes in Johan Castberg are estimated to 400-600 million barrels of oil.

Related: Reuters: Statoil needs more time for Johan Castberg concept

The Johan Castberg discoveries are the result of Statoil’s long-term involvement in the Barents Sea for 34 years, Statoil says. The company has been involved in 99 of 109 exploration wells in the Barents Sea.

As the operator of the Johan Castberg licence, Statoil says it has carried out an extensive exploration campaign in order to prove additional resources that can make Johan Castberg sufficiently viable for an expanded infrastructure in the region. The exploration campaign has lasted in excess of 12 months, and comprised a total of five wells at multiple reservoir depths.

“Unfortunately, the exploration campaign has proven less new oil resources in the Castberg area than expected. In total, we have not proven enough resources in Castberg to make the field viable for supporting infrastructure, including a pipeline to shore and an onshore terminal on its own,” Nylund says.

Government support practices for this type of infrastructure also remain unclear.

The Johan Castberg partners have decided to spend the time leading up to the summer of 2015 to make the final concept selection for the Johan Castberg project.

The work leading up to a new concept selection will be focused on three main areas to provide the best possible quality of the decision-making basis:

• Technical development solutionThe companies will allocate further resources in order to mature a floating production, storage and offloading vessel (FPSO), while continuing their efforts for a production platform (semi) as a possible offshore development solution.
• Evaluate the economics of an oil terminal at VeidnesThe Johan Castberg licence will also spend more time investigating the possibility of realising a stand-alone oil terminal on Veidnes. An onshore terminal could also be an alternative in combination with offshore oil offloading. However, there are significant differences in costs between a concept based on bringing the oil to shore in a pipeline and a concept based on offshore oil offloading. Therefore, Statoil and its partners will continue to work to optimise opportunities in the area and the timing of project activities.
• Update the resource basis and cut costsOn behalf of the Johan Castberg license, Statoil will implement a number of measures in order to reduce costs. Statoil and the partners will also assess the potential of the area, implement the Drivis discovery and update the resource basis in the further efforts to plan and develop the Castberg field.