A preliminary image of one main option for an offshore development of the Johan Castberg area, showing a semi-submersible platform. This offers greater flexibility for responding to future opportunities than a production ship. Work is now under way to optimise both concepts. Artist’s impression: Statoil
Postponement strengthens the Johan Castberg development solution
Petoro has been present in the Barents Sea since its creation in 2001, with development of Snøhvit as the first big decision it participated in. It is also involved in many exploration wells. Postponing a decision on Johan Castberg will strengthen prospects for including this discovery in a forward-looking oil infrastructure for these waters, says Kjell Morisbak Lund, the company’s vice president for licences.
“Activity in the Barents Sea shows that the petroleum industry has managed to transfer the lessons learnt further south on the Norwegian continental shelf [NCS] to the far north,” says Lund. He adds that no incidents or problems have occurred so far which can be attributed to Arctic conditions – by which he means 24-hour winter darkness, icing and challenging logistics.
Exploration drilling being pursued with Petoro involvement in the Hoop/Wisting area in the extreme north of the opened area of the Barents Sea has also encountered no problems.
“This backs the industry’s view that it has the expertise and experience to drill safely and in an environmentally acceptable manner in the far north,” says Lund. “Any issues encountered have been addressed in a good manner.”
Snøhvit represents the bulk of petroleum activity on the far northern NCS today. Proven in 1984, this gas field in the Hammerfest Basin came fully on stream in 2007.
It is produced with subsea installations, and the unprocessed wellstream is piped to Melkøya before the gas is shipped out in liquefied form.
Oil discovered during 2000 in the Goliat field on the Tromsø Patch is due to start flowing soon. But Johan Castberg, proven in 2011, ranks as the biggest Barents Sea oil find so far.
With proven reserves in this discovery initially put at 400-600 million barrels, the hope was that substantially larger quantities could be established.
The licensees accordingly unveiled a development solution in 2013 based on a semi-submersible platform and an oil pipeline to a terminal at Veidnes outside Honningsvåg.
However, a drilling campaign in the area around the discovery failed to support the original optimistic estimates, observes Lund.
“We’re accordingly satisfied that our partners will do more work on the potential around Johan Castberg, include the Drivis find in development plans, and update the total resource base.”
“Continuing to pursue two offshore development solutions – an optimised production floater and a production ship – also accords with our wishes. The licence is also making further assessments of the financial basis for a Veidnes oil terminal.”
“Our approach to Johan Castberg is that the project must be developed on the basis of sound commercial principles and measured against the same criteria as other decisions we take,” says Lund.
“That means it must be profitable. At the same time, it’s important to take account of the total value contribution when taking any decision.
“Our perspective on this and other developments is that the investment is long term, and that flexible solutions are adopted which can adapt to future needs. We must document and argue for this in the licence in order to gain acceptance for it.”
Since Johan Castberg will be among the first developments in the relevant area, the choice of solution will have great significance for future developments.
A production ship and offshore loading would not involve a pipeline to land, Lund acknowledges, but this concept could also benefit from a future shore-based oil terminal. “Nothing’s decided at the moment. We’ll use the time well and look at more data before we choose a final development concept – and we must bear in mind that an infrastructure could help to make our future discoveries profitable to develop.”