Directors’ report 2012
Follow-up of the SDFI portfolio
Petoro’s efforts were directed in 2012 at long-term development of the Gullfaks, Snorre and Heidrun oil fields with the aim of ensuring maximum recovery of their resource potential during their commercial producing lives. A commitment was also made to continued development of the Johan Sverdrup, Troll, Ormen Lange, Linnorm and Snøhvit fields. Petoro considers the pace of drilling in mature areas to be too low and worked in 2012 to increase this tempo, particularly on fixed installations.
On Gullfaks, Petoro has worked to achieve a coordinated development of the main field and the surrounding discoveries and prospects. This contributed to the decision by the licence in June 2012 on an overall plan for continued development of the Gullfaks area. The process clarified that the income basis does not exist for a new platform on the field or for a new extended-reach drilling facility on Gullfaks A. Decisions were taken on a further development of the Statfjord formation in Gullfaks South with two subsea templates, a subsea compression facility for gas from Gullfaks South, and an upgrade of the drilling rig on
The commitment to Snorre has related to continued development of the decision base for a new wellhead platform on the field, so that the licensees assess this option in addition to a subsea facility until the choice of concept is made in the summer of 2013. Work has focused on establishing the probability of future production from a possible platform in addition to reducing the investment cost through an optimisation of the jacket and the process facilities. Petoro also secured agreement on a negotiated solution rather than a redetermination of interests between the Snorre participants, which improves collaboration and progress in the licence.
An alternative field development plan for Heidrun has been developed by Petoro to highlight that a further potential exists for reserves over and above that identified in the licence, and to clarify the decisions and investment needed to realise these assets. Petoro’s alternative plan, which includes a new platform on the field, is now under consideration in the licence.
Where Johan Sverdrup is concerned, Petoro has worked to establish unitisation principles which will safeguard the government’s interests in a field extending across several production licences with differing partner compositions. The company is seeking to achieve good commercial solutions by obtaining an understanding of and influence over the reservoir base, appraisal wells, drainage strategy and field development. A collaboration agreement has been established with Det Norske Oljeselskap ASA on this work. A concept selection is planned in 2013.
The commitment to Ormen Lange has related to the development of a future compression solution. In association with work on new infrastructure for gas in the Norwegian Sea through a Polarled pipeline, land-based compression has been incorporated as part of the Nyhamna expansion project. Polarled would cover about 70 per cent of the costs and provide the opportunity to launch the project in 2015. Petoro has also worked on the Linnorm development, which was halted as the result of a substantial rise in costs. A new well is planned for the spring of 2013.
A priority on Sn��hvit has been to develop the resource base and ensure expanded capacity at the Melkøya facility, either through a new process train for gas liquefaction or a new gas pipeline. Reserves in Snøhvit have been upgraded, and the licence implemented a project in 2012 to assess increased capacity in order to accelerate production from the field. A substantial increase in costs as a result of a stressed supplier market meant that the capacity expansion project became much less robust against changes in prices, reserves and investment. The project was accordingly halted for the time being in the second half of 2012.
The performance of the existing Snøhvit facility remained unsatisfactory in 2012, and Petoro worked in the licence to establish an improvement project. This has been launched in 2013.
No signs of any improvement in the pace of drilling from fixed installations on the mature fields were seen during 2012. In addition to assessing opportunities for new platforms to secure a substantial increase in the drilling pace, Petoro has been a driving force for extra wells on Heidrun and has assessed the use of lightweight rigs in addition to existing drilling facilities on Gullfaks.
Plans for development and operation (PDOs) of Martin Linge and Svalin were approved in 2012. Decisions were also taken to install permanent subsea seismic arrays on Grane and Snorre. This will contribute to improving recovery through a better decision base for new wells.
Visund South, the first “fast track” project for operator Statoil, came on stream in 2012 – 35 months after the reserves were proven. A number of such developments are due to be completed in coming years and will help to maintain production.
Certain aspects of the most recent redetermination for the Heidrun Unit were handled in a way which did not accord with Petoro’s view. These disagreements were settled in part through appeals to the Ministry of Petroleum and Energy and in part by arbitration. Petoro won acceptance for its complaints, resulting in an increase of 0.39051 per cent or about 5.7 million boe in the SDFI’s share.
Petoro is the largest partner in Gassled, with an interest of 45.793 per cent. This joint venture embraces gas infrastructure and terminals on or associated with the NCS. Day-to-day operation is handled by Gassco, which is not a partner. The SDFI received an income of NOK 10.7 billion from Gassled during 2012. Investment and operating costs came to NOK 966 million and NOK 2.1 billion respectively, on a par with 2011. Regularity at Gassled’s export points to the markets was 99.65 per cent, compared with 99.17 per cent in 2011. Gassled decided in 2012 to build a new Norpipe terminal in Emden.