STAVANGER, Norway — Costs of the Johan Castberg development in the Barents Sea are still rising, according to operator Equinor’s latest update. The project, however, remains on track for startup in late 2024.
When the company submitted its plan for development and operation (PDO) to the Norwegian authorities in 2017, the overall estimate was NOK57 billion ($5.29 billion) in 2023 terms. But ongoing construction issues over the past three years have pushed that figure to NOK80 billion ($7.43 billion).
Geir Tungesvik, Equinor’s executive vice president for projects, drilling and procurement, said the escalation was due to a larger than expected scope of work and general cost increases the industry is having to deal with.
However, it remains a solid investment with a forecast breakeven of about $35/bbl, he added.
In 2022 the Johan Castberg FPSO hull, including living quarters, was transported from Singapore to Stord, western Norway, for installation and commissioning. The workload transferred to Stord has turned out to be more comprehensive and complex than forecast, and the project has not progressed as planned.
Marine operations, drilling and completion costs also have increased.
Other factors included the need for infection control measures and reduced access to labor brought on by COVID-19, both in Singapore, where the hull and living quarters for the production vessel were constructed and at Norwegian yards fabricating the topsides modules.
Johan Castberg is 100 km north of the Snøhvit Field in the Barents Sea, in a water depth of 360-390 m. The development calls for drilling of 30 wells distributed on 10 subsea templates and two satellites tied back to the 190,000-bbl/d capacity FPSO.
Proven oil volumes are in the range 450 MMbbl to 650 MMbbl.