AkerBP and its joint venture partners plan to spend nearly $1.9 billion to develop a trio of fields on the Norwegian Continental Shelf, showing the industry’s commitment to offshore oil and gas development remains as market conditions improve.

The company submitted plans for the Valhall Flank West, Ærfugl and Skogul developments to Norwegian authorities on Dec. 15. The move came after the company reduced costs. Combined, the projects are expected to bring in about $12 billion in oil and gas revenue based on a $60 per barrel oil price.

Brent crude futures were trading at more than $63 per barrel the morning of Dec. 15, about $10 per barrel more than it was around this time last year.

“Our ambition is to be recognized as the cost and capital leading offshore E&P company, and I am very proud to announce that the projects have improved significantly in this respect,” Aker BP CEO Karl Johnny Hersvik said in a company statement.

Investment for the Ærfugl gas condensate field—formerly called Snadd—fell by about $239 million to an estimated $1 billion, while total investment for the Valhall Flank West development dropped by more than $179 million to an estimated $657 million.

More efficient drilling operations are mainly behind the cost reductions for Ærfugl, according to DEA Norge, which holds a 28.0825% interest in the development. Hans-Hermann Andreae, managing director of DEA Norge, called the submission of the plan for development and operation for the field a milestone.

“The development project also proves that the industry is willing to invest in projects that will extend production from the Skarv area and the Norwegian Sea,” Andreae said in a company statement.

Ærfugl: The Ærfugl Field will be developed in two phases as a subsea tieback to the Skarv FPSO unit. With production startup set for fourth-quarter 2020, Phase 1 focuses on the southern part of the field and includes three production wells tied into the FPSO unit via a trace heated pipe-in-pipe flowline, AkerBP said.

Plans for Phase 2, which concentrates on the northern part of the field and in Snadd Outer, could include three more production wells with startup anticipated in 2023. AkerBP noted that other options will be considered for this phase. The company estimates remaining reserves at about 275 million barrels of oil equivalent (MMboe).

Subsea umbilical riser flowline and subsea production system contracts have already been awarded, respectively, to Subsea 7 and Aker Solutions for Phase 1 with an option for Phase 2.

“The Ærfugl development represents a significant opportunity with highly attractive and robust economics,” AkerBP said. “In addition, the Ærfugl development will extend the economic field life of the Skarv FPSO [unit] and allow for increased recovery from the Skarv Field itself.”

Partners in Ærfugl (Skarv Unit) are operator Aker BP (23.835%), Statoil Petroleum (36.165%), DEA Norge (28.0825%) and PGNiG Upstream Norway (11.9175%). Partners in Snadd Outer (PL 212 E) are Aker BP ASA (operator, 30%), Statoil Petroleum (30%), DEA Norge (25%) and PGNiG Upstream Norway (15%).

Valhall Flank West: The operator is eyeing first oil in fourth-quarter 2019 for the Valhall Flank West oil field development. Located in the Norwegian part of the North Sea, the field has estimated recoverable resources of about 60 MMboe. Development plans, which target the Tor Formation, call for a normally unmanned installation tied back to the Valhall field center, where it will be remotely operated, for processing and export, AkerBP said in the release.

The development will have six producers with a fully-electrified wellhead platform. Drainage will be by natural depletion, AkerBP said, but there is an option for future water injection. There is an option to convert two producers into water injectors.

Currently, AkerBP is a 35.95% interest holder in the development. Hess Norge holds the rest. AkerBP is in the process of acquiring Hess Norge, and it is also in the process of divesting a 10% stake in the Valhall and Hod fields to Pandion Energy, the release said.

Skogul: Formerly called Storklakken, Skogul is the smallest of the three developments and comes with a price tag of about $175 million. The field will be developed as a subsea tieback to the Alvheim FPSO vessel. AkerBP estimates recoverable reserves of the field to be about 10 MMboe.

“The production well at Skogul will be subsea production well No. 35 in the Alvheim area and represents Aker BP’s continuous effort to maximize value and extend economical field life to the benefit of the company and its partners,” the company said.

Holding a 65% interest, AkerBP is the field’s operator. Its sole partner in this development is PGNiG Upstream Norway (35%).

Velda Addison can be reached at vaddison@hartenergy.com.

Offshore