STAVANGER, Norway – Equinor has issued cost updates for three of its major new projects offshore Norway.
The Snorre Expansion project in the North Sea came onstream late last year, ahead of schedule.
Cost reduction actions have continued, with the present total estimated to be NOK18.3 billion ($2.15 billion), NOK2.65 billion ($311 million) below the figure issued in the original plan for development and operation (PDO).
Most of the reductions are associated with drilling operations, the subsea facilities, and topsides modifications. The project will remain profitable even at significantly lower oil prices, Equinor added.
For the Njord Future project in the Norwegian Sea, the Njord platform and the storage vessel were towed to western Norway for upgrading and preparations for another 20 years of service on the field.
The program also enables development of the Bauge and Fenja fields, both of which are being connected to the Njord A platform.
Equinor now estimates start-up in 4Q 2022, with lifetime extension and upgrading requirements more extensive than previously assumed.
In addition, COVID-19 restrictions have impacted productivity, prolonging project implementation and increasing costs by NOK13.1 billion ($1.54 billion), up 80% since the PDO was issued.
However, the project remains profitable at oil prices much lower than current levels, Equinor stressed.
In the Barents Sea, start-up of the Johan Castberg project has been pushed back to 4Q 2024. COVID-19 has heavily impacted construction of the production vessel in Singapore and at yards in Norway.
In Singapore the yard has had to be shut down for long periods, and still has reduced access to manpower due to entry restrictions associated with COVID-19.
Early next year the hull should be transported to Stord, Norway, for subsequent installation and commissioning of the process module.
There have also been issues related to welding quality in Singapore.
Marine operations and drilling have been less impacted by COVID-19.
Since the PDO, the cost estimate for the project has risen by NOK1.9 billion ($223 million), with the partners facing a further hike of close to NOK6 billion ($704 million) due to a weaker Norwegian krone, compared to currency expectations at the time of sanction.
But the project remains profitable, with a break-even price below $35/bbl.