Statoil ASA(ADR) (NYSE:STO) has recommended the building of a platform to extract the best possible volumes from the Snorre field in the North Sea. Statoil wants to build a new drilling and processing platform in order to extend the life of this field, with the goal of extending the Snorre field oil production up to the year 2040.
Statoil's improved oil recovery program
"Snorre 2040 is an important improved oil recovery (IOR) project and supports our ambition of achieving an average oil recovery rate of 60% from our fields on the Norwegian shelf," stated Statoil ASA(ADR) (NYSE:STO) Executive VP Øystein Michelsen.
The Snorre field was discovered in 1979, but its production came online in August 1992. Statoil ASA(ADR) (NYSE:STO) is the operator of the Snorre field and has a 33.32 percent share in the field. Other license participants include Exxon Mobil Exploration & Production Norway AS (17.76 percent), Idemitsu Kosan ADR (OTCMKTS:IDKOY) (9.6 percent), Petoro AS (30 percent), RWE Dea Norge AS (8.28 percent) and Core Energy AS (1.04 percent).
Snorre field oil reserves
The Snorre field had original recoverable reserves of 1.57 billion barrels (bbls) of oil, 6.6 billion cubic meters (bcm) of gas and 4.7 million tons of NGL. At the close of 2012, the field still held 403 million bbls of oil, 0.3 bcm of gas and 0.1 million tons of NGL.
Snorre is primarily an oil field and is located in the Tampen area in the northern part of the North Sea. In 2013, the field contributed production of 85,000 bbls of oil per day. There are already two drilling dites in operation in Snorre.
Figure 1: Oil, gas and NGL production of Snorre Field
"Snorre A in the south is a floating steel facility (TLP) for accommodation, drilling and processing. Snorre A also has a separate process module for production from the Vigdis field. A subsea template with ten well slots, Snorre UPA, is located centrally on the field and connected to Snorre A. Snorre B is located in the northern part of the field, and is a semi-submersible integrated drilling, processing and accommodation facility. An amended PDO for Snorre, including a new processing module on Snorre A for processing oil from Vigdis, was approved in December 1994. The PDO for Snorre B was approved in June 1998. Snorre B came on stream in June 2001," reports the Norwegian Petroleum Directorate (NPD).
Statoil's new project
Statoil ASA(ADR) (NYSE:STO) is favoring the initiation of a Snorre C area which will help increase the output of this field. "A thorough evaluation of the Snorre 2040 project has been carried out with detailed examination of two development concepts—a subsea development with continued use of the Snorre A and B platforms, or a development with a new platform tied in to Snorre A and B," says Statoil.
Figure 2: Statoil plan for Snorre Field
"The (new) platform solution is the best alternative for maximising production and creating the greatest possible value," says Øystein Michelsen, Statoil executive vice president for the Norwegian shelf.
"Snorre 2040 is a huge project with significant investments, but it will also yield substantial value. Thorough preliminary work is important to arrive at the best possible solution. We are also seeing marked rising costs in our industry and we must ensure that value creation is optimal," says Michelsen.