Statoil is understood to be eyeing a potential FPSO solution for the development of its Johan Castberg (formerly
Skrugard/Havis) field in the frontier Barents Sea offshore Norway, with DI hearing Sevan Marine’s circular floater
design could be a strong contender.

The Norwegian state-owned operator delayed its final investment decision on the project in early June after saying that recent tax changes had undermined the commercial viability of the previously selected solution, involving a semisubmersible production unit with export via pipeline to an onshore terminal.

The government proposals to cut tax uplift and increase the special petroleum tax have raised the breakeven oil price required for the project, with the changes essentially cutting the amount of project costs that could be claimed back against tax from 93% to 89%.

In addition the cost of the original solution is also reported to have risen by around NKR 30 billion (US $5.2 billion) compared to the original estimates of between NKNR 80-90 billion. The breakeven oil price required to make it commercially viable has risen to more than $80 per barrel, which although the price remains today above $100 per bbl, is causing Statoil concern over the economic margins.

Statoil is reconsidering all options originally evaluated for the project, further citing uncertainties related to the resource base at Castberg, which has recoverable reserves estimated at between 400-600 MMboe. It is planning to drill several exploration and appraisal wells around the field in a programme aimed at firming up additional reserves to boost the field’s economics and long-term production profile.

The alternative of an FPSO with offshore oil loading to shuttle tankers is now seen as a strong contender commercially by Statoil and its field partners Eni and Petoro, with its development costs likely to be at least $2 billion less than the present semisub-to-shore solution.

Offshore