Equinor and its partners have signed a letter of intent with Odfjell Drilling for the Deepsea Atlantic rig to drill 12 wells during phase 2 of the Johan Sverdrup field development, following its work on phase 1.

The Deepsea Atlantic drilling rig. (Photo: Marit Hommedal / Equinor ASA)

The value of the fixed part of the agreement is estimated at around USD 150 million at the current USD exchange rate. The costs of integrated services, maintenance and options for drilling five extra wells are not included in the estimated value. The total contract value will depend on the efficiency of the well deliveries.

The Johan Sverdrup licence partners are Equinor (operator), Lundin, Petoro, Aker BP and Total.

“Johan Sverdrup phase 2 is the next stage in the development of the giant Johan Sverdrup field and a project that strongly impacts activities and spinoffs in Norway. With this contract, Norwegian suppliers have been awarded more than 90 per cent of the project contracts,” says Geir Tungesvik, Equinor’s senior vice president for project development.

The drilling period is scheduled to start at the beginning of 2022.

“Deepsea Atlantic drilled the Johan Sverdrup phase 1 wells with excellent results, so we are pleased to secure the rig for phase 2 as well. The rig is already on a continuing contract with Equinor, and our ambition is to keep it busy until Johan Sverdrup phase 2 comes on stream at the end of 2022. Odfjell has a high safety standard and the rig is one of the most efficient rigs we have,” says Erik G. Kirkemo, Equinor’s senior vice president for drilling and well operations.

Johan Sverdrup phase 2 includes the construction of a subsea production system, reconstruction of the existing riser platform and a new processing platform, which will also accommodate a converter unit receiving power from shore. This unit will distribute power to other fields on the Utsira High: Edvard Grieg, Ivar Aasen, Gina Krog and Sleipner. The four existing platforms on the Johan Sverdrup field are already receiving power from shore and CO2 emissions per barrel are 0.7 kg.

The phase 2 development will increase the field production capacity from 470,000 to 690,000 barrels per day on plateau. The break-even price will be below USD 20 per barrel, making Johan Sverdrup a highly profitable field with a very low CO2 footprint.

Johan Sverdrup field

Johan Sverdrup is the third largest oil field in the North Sea, and lies 140 kilometres west of Stavanger.

With expected resources of 2.7 billion barrels of oil, the field is one of the most important industrial projects in Norway for the next 50 years. Phase 1 of the field was opened in October 2019, and phase 2 is scheduled to begin production in the fourth quarter of 2022.

In 2014, the Norwegian parliament decided that by 2022, the licensees in the Johan Sverdrup field must establish an area solution for power from land that will supply power to the fields Johan Sverdrup, Edvard Grieg, Ivar Aasen and Gina Krog.

Key Facts

• Production start for phase 1: October 2019.
• Johan Sverdrup is located at Utsira High in the North Sea, 160 kilometers west of Stavanger
• The water depth is 110-120 meters
• The reservoir contains sandstone from the Jurassic period, and lies at about 1900 meters depth
• The oil from the field will be piped to the Mongstad terminal in Hordaland. The gas will be transported to Statpipe and on to Kårstø processing plant in North Rogaland
• We expect to produce 660,000 barrels a day when production reaches plateau in phase 2. Total resources are estimated at 2.7 billion barrels of oil equivalents, and the ambition is to extract more than 70 percent of the reserves.
• The field will be powered from shore
• Power from shore (mainly from hydroelectric power) contributes to emissions savings from Johan Sverdrup of more than 620,000 tonnes of CO2 each year, corresponding to emissions to more than 310,000 passenger cars
• During the development phase (2015-2025), Johan Sverdrup may contribute to the employment of more than 150,000 man-years in Norway (Agenda Kaupang, 2017)
• When production is at plateau, it will make up 30 per cent of all Norwegian oil production
• Total production income over 50 years of NOK 1,430 billion
• Revenue for the Norwegian state is estimated at more than NOK 900 billion
• Daily production phase 1 is estimated at 440,000 barrels. At plateau, production is estimated at 660,000 barrels every day
• Due to the size and extent of Johan Sverdrup - the size of the field is around 200 square kilometers - the field is being developed in two phases and with a total of five fixed platform installations
• Production start for the second phase of the development is planned in the fourth quarter of 2022
• First phase investments estimated at NOK 83 billion (investment estimate in nominal NOK based on fixed exchange rate)
• Investments for the second phase estimated at NOK 41 billion (investment estimate in nominal NOK based on fixed exchange rate)

KeyFacts Energy: Equinor Norway country profile