While one gets dropped, nine oil & gas projects still going ahead

Norway’s oil and gas company Aker BP has decided to move ahead with nine out of ten oil and gas projects for which plans for development and operation (PDOs) were previously handed over to the Norwegian Ministry of Petroleum and Energy (MPE).

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).

As reported at the time, 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.

In an update on Tuesday, 21 March 2023, Aker BP disclosed that it had notified the Norwegian 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.  

The company explains that when an offshore field development decision is made in Norway, the licensees are required to submit a PDO to the Ministry of Petroleum and Energy for approval. Afterwards, each licensee is obligated to notify the MPE within three months whether they accede to the field development plan or not.

In line with this, the nine projects that the Norwegian player intends to develop are put into four main groups: Yggdrasil (formerly NOAKA, entails Hugin, Munin and Fulla), Valhall PWP-Fenris (formerly King Lear), Skarv Satellite project (Alve Nord, Idun Nord and Ørn), and Utsira High projects (Symra in addition to a development report for Solveig Phase 2).

According to Aker BP, the total recoverable resources from these development projects were estimated to be 730 million barrels of oil equivalent (mmboe) net for the company, with net investments of approximately $19 billion in nominal terms and an average break-even price of $35-40 per barrel. Within these resource and investment figures, Troldhaugen was included with approximately 30 mmboe and $0.5 billion, respectively.

Based on the Norwegian player’s statement, the execution of the Troldhaugen project was subject to the performance of an extended well test (EWT), which has been in production since August 2021. The experience from the EWT has resulted in a reduction in the expected recoverable volume, thus, the project is no longer considered to have sufficient financial robustness, underscored Aker BP.

Following 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.