As summer progresses the vast Johan Sverdrup development in the Norwegian North Sea has passed several significant milestones. Tim Skelton takes a look at how the project is evolving.
Since its discovery in 2010 in the Utsira High region, 160 km west of Stavanger, the Johan Sverdrup field has generated great excitement throughout the oil and gas sector, and especially in Norway.
The oil field is one of the largest ever found on Norwegian Continental Shelf (NCS). The reservoir, located at a depth of 1,900 metres, is thought to contain recoverable reserves of between 1,900 and 3,000 million barrels of oil equivalent. With several recent finds in new areas of the Barents Sea being smaller than hoped, the successful development of Johan Sverdrup could be a potential saviour for a maturing Norwegian industry. Licence operators Statoil say the development has the potential to remain a major project for the next half century, securing both jobs and national income.
Some 70% of the project contracts have so far been awarded to Norwegian companies. The first-phase development work alone is expected to provide around 51,000 man-years of local work, with another 2,700 man-years available in the production phase. Statoil also believes the development could generate in excess of 1,350 billion kroner (US$170 billion) in production income over the expected 50-year lifespan. This will contribute 670 billion kroner (US$84.7 billion) to state coffers.
The first signs After several years of planning and onshore work, this summer saw the first visible signs of the project emerge offshore. At the end of July, the steel jacket for the riser platform was installed without incident by the Thialf crane vessel, owned by Dutch outfit Heerema Marine Contractors.
Weighing in at around 26,000 tons, the jacket - built by Norwegian engineering firm Kvaerner at its Verdal yard, near Trondheim - is the largest and most complex ever constructed in Europe and installed on the NCS. It sits in around 120 metres of water and stretches 140 metres from the seabed, with a footprint measuring 94 metres by 64. Some 24 poles weighing a combined 9,000 tons were used to anchor it to the seabed.
“This is a special milestone for us, because it is the first visible sign of the field,” Kjetel Digre, Statoil’s project director for Johan Sverdrup said at the time of installation. “We have already done a lot of work on and below the seabed, and in the time ahead we will gradually become more visible above the sea surface as well.”
Full metal jackets Besides the riser jacket, Kvaerner and its joint venture partner, American engineers KBR, were also awarded contracts to build two other jackets for Johan Sverdrup, as well as the utility and living quarters (ULQ) topside.
The companies say the Drilling Platform jacket will be completed at Verdal early in 2018, followed by the Process Platform jacket at the same yard in summer 2018. Work on the ULQ topside is also progressing on schedule at a second Kvaerner yard in Stord, between Bergen and Stavanger. It too is scheduled for completion and installation next year.
Drilling platform Meanwhile, Norwegian oil and gas service providers Aibel – contracted for the construction and assembly of the three Johan Sverdrup Phase 1 drilling platform modules – has also made significant progress. The Stavanger-based outfit said the main support frame was completed in early August. The 10,800-ton frame, the largest ever built at its Laem Chabang yard in Thailand, is now en route for Norway.
Later the same month, Aibel also announced the mechanical completion of the 8,000-ton drilling support module (DSM) at its Haugesund yard in Norway, and of the drilling equipment set (DES) at its Grimstad yard, also in Norway.
All three modules will be transported to the sheltered waters of Klosterfjorden, north of Haugesund, to be joined together during the first half of September. The transport barge carrying the completed platform will then be towed back to Haugesund for integration work, after which Statoil staff will test the onboard equipment. Once this is complete, the platform will leave Haugesund for on-site installation in June or July 2018.
Aibel has also been contracted for the hook-up of the drilling platform once it arrives at Johan Sverdrup. It will connect the platform’s systems to the jacket and two gangways, splice the high-voltage cables, and hook-up a temporary hotel platform.
State-of-the-art As one requirement of it receiving environmental approval, the platform will be powered by electricity generated onshore, removing the need for offshore gas turbine generators and so reducing offshore greenhouse gas emissions by 80 to 90% compared to a standard development, Statoil claim.
In other developments, permanent reservoir monitoring (PRM) of Johan Sverdrup is being installed, which will mean that 80% of the field can be seismically monitored. Moreover, Statoil has also created a digital twin of Johan Sverdrup, which will help with troubleshooting as well as potential process improvements.
Problem-free To date the project has also been able to boast an almost blemish-free safety record. As of April 2017, according to Statoil, only one incident had been recorded. This involved a cement hose and was not deemed serious.
Elsewhere, Statoil have also said that the temperature differences in the reservoir are larger than was originally thought, but this is nothing extraordinary and within levels.
Cost savings Good news from Statoil’s side is that it has managed to realise significant cost reductions as the project has developed. Its initial Phase 1 development plan foresaw an investment of 123 billion kroner (US$15.6 billion), but the company reduced this by over 20%, to just 97 billion (US$12.3 billion) in the final design.
One key example of cost reduction is that the Pioneering Spirit construction vessel has a 48,000-ton lifting capacity, offering the possibility of doing a single-lift installation of the massive topside. Other savings have been enabled by Statoil’s willingness to share data with the several Original Equipment Manufacturers (OEMs) working on the project. “OEMs and suppliers can’t improve without access to Statoil operational data,” Johan Sverdrup Technical Director, Trond Stokka Meling, told the Subsea Valley Conference in Norway earlier this year. “Better quality assurance also lowers cost,” he added, pointing out that having parts arrive on time meant that the project could stay on budget. Simplification of the technical requirements has also cut the budget.
Mr Meling said Statoil was working to an average break-even price of US$25 per barrel on Johan Sverdrup. In Phase 1 the aim is to break even at below US$20, and below US$30 on Phase 2. The company is also aiming for an ambitious 70% recovery rate.
What next? Assuming all continues going to plan, production is due to start in late 2019. Daily output during the first phase is expected to be around 440,000 barrels of oil equivalents per day (bpd), rising to 660,000 bpd at peak production. Some estimates suggest plateau production could account for as much as 40% of all oil production on the NCS.
Oil recovered from the field will be piped onshore, to the Mongstad terminal in Hordaland. Meanwhile, gas will be transported via the existing Statpipe pipeline system to the Kårstø processing plant in North Rogaland.
In the meantime, Phase 2 has yet to be sanctioned, but Statoil said it expects to submit its development plan to the government by September 2018. The second phase is then expected to come onstream by 2022.
Statoil’s licence partners in Johan Sverdrup were Maersk Oil, Lundin Petroleum, Petoro and Det Norske Oljeselskap. Total’s recent multi-billion-dollar takeover of Maersk, however, now gives the French oil giant access to the latter’s 8.44% interest in the potentially lucrative development.