Most of this outlay relates to investments in Johan Sverdrup Phase 2, power from shore at Edvard Grieg, development drilling at Solveig, and new projects in the Alvheim Area, all in the North Sea.
Around 55% of the budgeted development expenditure will go toward Johan Sverdrup facilities and drilling. Phase 2 is currently around 70% complete, with development drilling for the subsea wells getting under way last month; installation work for the subsea facilities and flowlines close to completion; installation of the Phase 2 processing platform topsides set to take place next month; and first oil anticipated during 4Q.
Lundin’s Solveig Phase 1 development (via the Edvard Grieg facilities) is ahead of schedule, with four wells drilled and the final well set to be drilled shortly.
Expansion of the Aker BP-operated Alvheim Area, which accounts for around 15% of Lundin’s budget in 2022, includes execution of development of the Frosk tieback (PDO submitted in 2021) and Kobra East/Gekko (PDO approved last month).
Lundin’s exploration and appraisal budget for 2022 is $230 million. The company plans to drill five more wells targeting around 140 MMboe of net unrisked resources, on various prospects.
As for appraisal, the company has five potential projects being prioritized for development within Norway’s temporary tax incentives, with PDOs to be submitted before the end of 2022. The total resource potential is around 240 MMboe net.
Much of the expenditure will go on the Wisting project in the Barents Sea. Lundin’s operated new developments are Solveig Phase 2, Lille Prinsen and Rolvsnes full field developments (all in the North Sea), again moving toward PDO submissions.
At the Alvheim Area, expenditure relates to the Trell and Trine project, with the PDO due to be submitted by mid-2022.
Installation work to supply power from shore at Edvard Grieg, a multi-field project in the Utsira High area of the North Sea, should conclude in late 2022.
The power cable has been installed on Edvard Grieg and laid on the seabed at Johan Sverdrup, awaiting arrival of the Phase 2 processing platform. Also on schedule is the retirement of the existing gas turbine power generation system on the Grieg platform and installation of electric boilers to provide process heat.
In addition, Lundin expects to benefit from a 10% rise in gas sales from Edvard Grieg following removal of the turbine power generation arrangement.
At the Alvheim Area, Lundin anticipates first oil from a third new infill well this month.
The 39-MMboe Kobra East/Gekko (KEG) development will be a subsea tieback to the Alvheim FPSO: phase one will include four tri-lateral production wells targeting the oil zones of the two discoveries, while phase two calls for one gas production well targeting the gas cap at Gekko.
This will be drilled at a later stage once gas processing capacity is available on the Alvheim FPSO. Drilling should start in early 2023, with first oil scheduled for 1Q 2024.
Finally, drilling on the 9-MMboe Frosk subsea tieback to the Alvheim FPSO, via the Bøyla manifold, should start later this year, followed by first oil during the first half of 2023.