Plan for phase 2 of Johan Sverdrup construction approved

Photo: Equinor
On Wednesday, 15 May, the Norwegian authorities approved the plan for development and operation (PDO) for phase 2 of construction for the Johan Sverdrup field. On that same date, construction started on the field’s second processing platform at Aibel in Haugesund.
“Johan Sverdrup will deliver value to the Norwegian state for the next 50 years, so this is an important milestone,” says Petoro’s chief executive, Grethe Moen. Petoro owns 17.36% of Johan Sverdrup and over the course of the development will invest NOK 22 billion in this, the largest ongoing industrial project in Norway. 

A broad majority of the Norwegian Parliament (the Storting) endorsed the project on Monday, 29 April, and today the joint venture received formal approval from the Ministry of Petroleum and Energy (MPE).  

The Johan Sverdrup field is powered from shore, which makes it among the oil and gas fields with the lowest CO2 emissions - worldwide. In the second phase, the field will also supply other fields on the Utsira High with power from shore, including Edvard Grieg, Gina Krog and Ivar Aasen. The emission savings from Johan Sverdrup alone are estimated at more than 620,000 tonnes of CO2 on average every year, which is equivalent to the annual emissions from 310,000 cars.

Johan Sverdrup is the largest field development on the Norwegian shelf since the 1980s. Construction on the second stage of the project will start in the fourth quarter of 2022, and will increase production from the field from 440,000 bbls to 660,000 bbls of oil per day. In addition to construction of a new process platform (P2), the development will also include modifications of the riser platform, five subsea systems, as well as facilitation for power from shore to the Utsira High in 2022. Total investments for construction stage 2 are NOK 41 billion.

The first phase of the Johan Sverdrup development is now approaching 90 per cent completion, and the plan calls for production to start in November this year. In the first phase, suppliers in Norway won more than 70% of the contracts. Despite continued strong international competition, the Norwegian share may well be even higher in the second phase. Analysts Agenda Kaupang estimates that development of the Johan Sverdrup field can contribute to more than 150,000 full-time equivalents in Norway in the period from 2015-2025.

Facts about the Johan Sverdrup field:
Phase 1
  • Includes development of four platforms (living quarters and equipment platform, process platform, drilling platform, riser platform), three subsea installations for water injection, power from shore, export pipelines for oil (Mongstad) and gas (Kårstø)
  • Under development. The development is nearing 90 per cent completion
  • More than NOK 60 billion awarded in contracts. More than 70% suppliers with a Norwegian billing address
  • Production capacity of 440,000 bbls of oil per day
  • Investment estimate: NOK 86 billion
  • Production start - November 2019

Phase 2
  • Includes development of an additional process platform to the field centre (P2) + satellite areas Avaldsnes, Kvitsøy and Geitungen, as well as power from shore to the Utsira High (including the Gina Krog, Edvard Grieg and Ivar Aasen fields) during the course of 2022
  • Plan for development and operation was processed and approved by the Storting on 29 April 2019, and the joint venture received formal approval from the Norwegian authorities on 15 May 2019
  • Additional production capacity of 220,000 bbls of oil per day
  • Investment estimate: NOK 41 billion
  • Production start – fourth quarter 2022

Full field (Phase 1 + Phase 2)
  • Includes both Phase 1 and Phase 2 development of Johan Sverdrup
  • Recoverable resources of between 2.2-3.2 billion bbls of oil equivalent (with estimated resources of 2.7 billion boe) 
  • Total production capacity of 660,000 bbls of oil per day
  • Break-even: under USD 20 per bbl
  • PARTNERS: Equinor: 40.0267% (operator), Lundin Norway: 22.6%, Petoro: 17.36%, Aker BP: 11.5733% and Total: 8.44%

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