High costs and the technical challenges posed by powering a long-distance subsea development from land have led Statoil and its partners to offshore gas turbines to power the Johan Castberg development.

Statoil recently shared news of the recommended power solution after extensive analysis on possible alternatives were carried out by Aker Solutions, Aibel, ABB, Unitech, Pöyry and Thema Consulting. Investment costs for full or partial electrification could range from more than NOK 4 billion (US$481 million) to just above NOK 12 billion (US$1.4 billion), Statoil said, noting the high cost makes the option a risk to the project’s timeline and feasibility.

The company and its partners plan to submit a final development plan for the field, deemed to be the largest awaiting development on the Norwegian Continental Shelf (NCS), in 2017. The proposed impact assessment program, which only covers the offshore development part of the project, was set to be delivered Sept. 13 to Norwegian authorities.

“We have developed a highly energy-efficient solution involving use of gas turbines for power generation on Johan Castberg. By use of heat recovery we achieve a turbine power efficiency of 64%, which is an outstanding result from use of gas turbines on offshore platforms,” Margareth Øvrum, executive vice president for technology, projects and drilling for Statoil, said in a statement. “The license partners consider gas-fired power to be the most suitable and socio-economic solution for the development.”

With use of gas turbines, emissions from the development would be 0.27 million tonnes of CO2 per year, which equates to about 2% of current annual emissions from the NCS, Statoil said.

“Johan Castberg will be prepared for future electrification by use of alternating current technology in case this becomes an efficient and feasible solution in the future,” Statoil said in the release.

The Johan Castberg development, previously called Skrugard, is located about 100 km (62 miles) north of the Snøhvit Field in the Barents Sea. Johan Castberg, which will develop the Skrugard, Havis and Drivis oil discoveries, is believed to hold proven resources of between 450 MMbbl and 650 MMbbl of oil.

The work of project partners—which include operator Statoil, 50%; Eni Norge, 30%; and Petoro, 20%—to development the fields comes as the oil and gas industry continues to rebound from one of the worst downturns in history. Lower commodity prices, the result of a supply and demand imbalance, have prompted many companies to seek out cost savings.

Statoil’s efforts have included work toward lowering development breakeven costs. The company said such costs for Johan Castberg have fallen from about $80 per barrel to below $25/bbl.

Statoil said “considerable Johan Castberg spin-offs” also exists.

“During our improvement work we have created new opportunities for the Johan Castberg Field in the far north. We have changed the concept and found new solutions that allow us to realize the project,” Øvrum said. “But we are still vulnerable to increasing costs and a continued low oil price.”

Statoil said investment for the project is estimated at between NOK 50 billion and 60 billion (US$6 billion and 7.2 billion) which makes up a large chunk of NCS investments expected between 2018 and 2022. However, the company warned that low oil prices may impact plans.

“The Johan Castberg Field will be producing for more than 30 years, and the major project spin-offs will be created in the long-lasting production phase,” Arne Sigve Nylund, Statoil’s executive vice president for development and production Norway, said in the release. “Castberg will trigger much activity for suppliers in North Norway and have ripple effects throughout Norway, both in the development phase and the operating phase.”

—Velda Addison

Offshore