- Company shelves platform option to cut investment by 30%-40%
- No guarantees yet project will be realized, Statoil VP says
Statoil ASA abandoned the idea of building a new platform to boost oil recovery at the North Sea Snorre field, focusing instead on a subsea solution that has cut the investment estimate by as much as 40 percent on a project closely watched by Norwegian authorities.
Investments are now seen 30 percent to 40 percent below a 2013 estimate of 40 billion kroner ($4.7 billion), Bjarne Bakken, Statoil’s vice president for the Snorre 2040 project, said in a phone interview. The subsea option, which would exploit the two existing platforms on the field, would achieve the same target of about 200 million barrels of oil in added recovery, he said.
“We’ve concluded with our partners and the authorities that a subsea solution will have a larger economic potential than a platform solution,” Bakken said. Statoil plans to make a decision on the development concept in the fourth quarter and a final investment decision in 2017, though there are “no guarantees” that the project will be realized, he said.
As Statoil and other producers cut spending to weather a collapse in oil prices since the middle of 2014, Norwegian authorities have put pressure on companies to go through with projects that aim to increase recovery from mature fields, warning that resources could be lost forever. The government has threatened not to renew one of the production licenses for the Snorre field if Statoil failed to progress on the 2040 project.
Statoil said last year that a new platform remained the base case for Snorre 2040 but that it had started working on a subsea option for the delayed project, which has been under review since 2014. The company also achieved cost savings on the platform solution, though not enough and by not as much as for the subsea option, Bakken said. Costs may be reduced even further, he said.
“Both based on the market and further design optimilization, we can improve this,” Bakken said. “We’re also working to raise the volume extracted -- that’s one of the positive things with a subsea solution.”