Increased Value Creation, More Resources and Greater Ripple Effects from Johan Sverdrup

Today, Equinor and the Johan Sverdrup partnership of Lundin Norway, Petoro, Aker BP and Total, are submitting the development plan for the second phase of the project to the Norwegian Ministry of Petroleum and Energy.

With an increased resource estimate and lower investment costs, the full field development of Johan Sverdrup will contribute to even greater value creation. At the same time, the ripple effects from the project will be larger than previously estimated. Low CO2 emissions make Johan Sverdrup one of the world’s most carbon-efficient fields.

“The Johan Sverdrup field is the largest field development on the Norwegian shelf since the 1980s. At plateau, the field will produce up to 660,000 barrels per day, with a break-even price of less than USD 20 per barrel and very low CO2 emissions of 0,67 kg per barrel. Johan Sverdrup is on track to deliver vast volumes of energy with high profitability and low emissions for many decades to come,” says Eldar Sætre, Equinor CEO.

“Today we are announcing an increased resource estimate and we are reducing the total estimated investment for both Phase 1 and Phase 2 of the development by an additional NOK 6 billion since February of this year. Since the PDO for the first phase in 2015, we have reduced the total estimated investment for Johan Sverdrup full field development by more than NOK 80 billion. The project will yield even greater value creation and larger spin-off effects than previously estimated,” says Sætre.

Full field development of Johan Sverdrup is projected to contribute more than NOK 900 billion in income to the Norwegian State over the lifetime of the field. An updated analysis from Agenda Kaupang estimates that the development of Johan Sverdrup Phase 1 and Phase 2 can contribute more than 150,000 man-years in Norway in the period from 2015-2025. In the operations phase, Johan Sverdrup may generate employment of more than 3400 man-years every year.

The Plan for development and operation (PDO) for Johan Sverdrup Phase 2 also includes measures to facilitate power from shore to the Utsira High by 2022, in accordance with the terms for PDO Phase 1. Emission savings from the Johan Sverdrup field are estimated at 460,000 tonnes of CO2 per year, which is equivalent to annual emissions from 230,000 private cars.

Further improvement in the project
“We have completed nearly 80 per cent of the first phase of the development, and it is gratifying to see that the good momentum and quality of the construction phase seems to be continuing in the installation phase offshore. This means that we are on track to start production from the field in November next year,” says Margareth Øvrum, Executive vice president for Technology, projects & drilling in Equinor.

“The continued high quality of project execution is a result of close cooperation with our suppliers and partners. Together, we have managed to reduce the estimated investments for Phase 1 by an additional NOK two billion,” says Øvrum.

The updated investment estimate for Phase 1 is now NOK 86 billion (nominal NOK, project exchange rate), a reduction of 30 per cent, amounting to NOK 37 billion since submission of the Phase 1 PDO.

“We have worked systematically to make the second phase of the Johan Sverdrup development even more profitable and robust. We have taken the good solutions and experience gained from Phase 1 and have optimised the development concept for Phase 2 in cooperation with our partners and suppliers. In the Phase 2 PDO, we have reduced the investment estimate to NOK 41 billion (nominal NOK, project exchange rate), and the break-even price for Phase 2 is now less than USD 25 per barrel. Throughout the entire history of this industry, I don’t think we have ever seen a project that has been improved as much as Johan Sverdrup has over the last 3 years,” says Øvrum.