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Contract award for subsea pipelines and marine operations for Johan Sverdrup phase II


WEBWIRE
The Johan Sverdrup field in the North Sea.
The Johan Sverdrup field in the North Sea.

On behalf of the Johan Sverdrup licence, Equinor is awarding the contract for subsea pipelines and associated marine operations in the second project phase to Subsea 7. This will increase the share of contracts awarded to Norwegian suppliers in phase 2 of the Johan Sverdrup project to 85%.

“Demonstrating competitiveness and a strong ability to improve during the past years, Norwegian suppliers have secured as much as 70% of the contracts in the first phase of the Johan Sverdrup development. Today’s contract award increases the Norwegian share in phase 2 to 85%,” says Peggy Krantz-Underland, Equinor’s chief procurement officer.

The first phase of the Johan Sverdrup development is nearly 90% completed, with expected production start in November. In phase 1, Subsea 7 was responsible for delivery and installation of several subsea components and tie-in of pipelines at the field.

In the second project phase Subsea 7 is awarded the contract for delivery and installation of around 100 kilometres of infield pipelines and 25 spools, installation of umbilicals and marine operations associated with the subsea scope.

“Subsea 7 is awarded the last major subsea contract for Johan Sverdrup phase 2. Based on good experiences and learning from phase one, the award will ensure continuity and a coherent development of the entire Johan Sverdrup field. This will give us a good foundation for enhancing our collaboration on safety, efficiency and further improvements in the execution phase and afterwards in the operating phase,” says Trond Bokn, project director for the Johan Sverdrup development.

Subsea 7 describes the value of the contract as “substantial”, defined to be in the range of USD 150-300 million.

Johan Sverdrup is regarded as Norway’s biggest industrial project in modern history. The Agenda Kaupang consulting company estimates that the Johan Sverdrup project may provide more than 150,000 man-years in Norway in the development period 2015-2025.

Phase 2 of the Johan Sverdrup development was approved by Norwegian authorities in May 2019. Start-up of phase 2 is scheduled for the fourth quarter of 2022.

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

FACTS ABOUT JOHAN SVERDRUP

Phase 1 

  • Includes the development of four platforms (accommodation and utility platform, processing platform, drilling platform, riser platform), three subsea installations for water injection, power from shore, export pipeline for oil (Mongstad) and gas (Kårstø)
  • Under development. Nearly 90% of the development is completed 
  • Contracts worth more than NOK 60 billion have been awarded. Over 70% of the suppliers have a Norwegian billing address 
  • Production capacity of 440,000 barrels of oil per day 
  • CAPEX estimate: NOK 86 billion (nominal terms based on fixed currency) 
  • Production start expected in November 2019

Phase 2 

  • Includes development of another processing platform for the field centre + the Avaldsnes, Kvitsøy and Geitungen satellite areas, in addition to the power-from-shore supply to the Utsira High (including the Edvard Grieg, Ivar Aasen and Gina Krog fields) by 2022 
  • The plan for development and operation was discussed and approved by the Storting on 29 April 2019, and formal approval from Norwegian authorities was received by the partnership on 15 May 2019 
  • Additional production capacity of 220,000 barrels of oil per day 
  • CAPEX estimate: NOK 41 billion 
  • Production start expected Q4 2022 

Full field (Phase 1 + Phase 2) 

  • Includes both phase 1 and phase 2 of the Johan Sverdrup development 
  • Resource estimate in the range of 2.2-3.2 billion barrels of oil equivalent (with expected resources of 2.7 billion boe) 
  • Total production capacity of 660,000 barrels of oil per day 
  • Break-even price: below USD 20 per barrel 
  • PARTNERS: Equinor: 40.0267% (operator), Lundin Norway: 22.6%, Petoro: 17.36%, Aker BP: 11.5733% and Total: 8.44%


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