Statoil is proceeding with plans to extend production at the Snorre Field in the North Sea, handing its $2.27 billion development and operational plan to Norwegian authorities.

The move, which comes more than 38 years after the field was discovered and 25 years following first production, is expected to extend the field’s production life beyond 2040. Snorre’s original lifespan was anticipated to run through 2014 at the latest, producing 750 million barrels (MMbbl) of oil. But the field has already outperformed original expectations, having produced 1.4 MMbbl of oil.

The expansion project will boost recovery by nearly 200 MMbbl, Statoil said. If all goes as planned, the recovery rate of Snorre, which lies in a water depth of between 300 m and 380 m on the Norwegian Continental Shelf (NCS), will jump to 51% from 46% after the project is completed. Production startup is scheduled for first-quarter 2021.

“Long-term activity and value creation on the NCS is central in our strategy. Snorre Expansion is the largest improved oil recovery project (IOR) on the NCS, and provides valuable production and activity benefitting the company, partners and society,” Arne Sigve Nylund, Statoil’s executive vice president for development and production in Norway, said in a statement.

The plan includes 24 wells—12 each for production and injection—plus six subsea templates for production and alternating water and gas injection tied to the Snorre A tension-leg platform, Statoil said. Snorre A is also set for an upgrade.

Statoil and partners had postponed the project as they sought ways to lower costs and improve profitability, according to a Reuters report. Delivery of the plan comes as the oil and gas industry continues to rebound from a downturn and further settle into a lower-for-longer oil price environment, getting accustomed to finding ways to keep costs low and drive efficiency.

“Snorre Expansion has been a marginal project, and Statoil has worked closely with partners and suppliers to realize it,” Margareth Øvrum, executive vice president for technology, projects and drilling, said in the statement. “We have finally arrived at a good concept utilizing existing infrastructure and reducing costs.”

The Norwegian Petroleum Directorate (NPD) said the project will not only extend operations but also “yield significant additional revenues” for Norway.

“The development plan is the result of dedicated work on the part of the companies and the authorities, an effort that has been ongoing for the past 12-15 years,” said Arvid Østhus, assistant director for development and operations for the NPD. “This means that this is quite the banner day.”

Statoil’s partners are Petoro (30%), ExxonMobil Exploration and Production Norway (17.44%), Idemitsu Petroleum Norge (9.6%), DEA Norge (8.57%) and Point Resources (1.1%). Statoil holds 33.27% interest in Snorre.

Having submitted its plans, which are still subject to NPD approval, Statoil has already began doling out contracts. The company said it was signing contracts, also subject to the plan’s final approval by Norwegian authorities, with:

  • TechnipFMC, which said Dec. 21 it was awarded an engineering, procurement and construction contract from Statoil for the project;
  • Transocean for a rig. The drilling services company said it has lined up the semisubmersible Transocean Spitsbergen for the project. The contract for 22 wells is for an estimated 33 months and has two one-well options. Associated backlog is about $286 million, Transocean said;
  • Subsea 7 for fabrication and installation of the pipeline bundle system. The engineering, procurement, construction and installation contract includes Subsea 7’s pipeline bundle technology, which contains all flowlines and control umbilicals necessary for operation, the company said. The contract has a value between $150 million and $300 million; and
  • Aibel for Snorre A modification. Aibel said the EPCIC contract is valued at about $191 million. Work will include removing excess weight and equipment from Snorre A and installing a new 650-ton support module for risers among other tasks. Engineering work was set to begin immediately and run through fall 2021, involving about 160 engineers at its peak and between 70 and 100 for fabrication work, Aibel said.

“During the past years, Norwegian suppliers have demonstrated both a will and ability to change. Due to enhanced competitiveness, Norwegian industry plays a key role also in the Snorre Expansion project,” Øvrum said. “We estimate that 80% of the investments will include companies in Norway. Competitiveness has a short shelf-life however, and it is vital that the improvement work continues with unabated strength.”

Velda Addison can be reached at vaddison@hartenergy.com.

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