Norway’s Statoil has bucked the recent market trend by committing itself to go ahead with a US$610M development of a small gas and condensate field in the North Sea.
Statoil will develop the Gulfalks Rimfaksdalen despite recent oil price falls that are said to make many developments uneconomic. The field will produce some 80 million barrels of oil equivalent when production starts in the first quarter of 2017, with the field being tied into the adjacent and much larger Gulfalks field.
Costs are being kept down by using existing infrastructure where possible, including the Gulfalks A platform. Statoil says it expects to recover 31,000 barrels of oil equivalent a day from the new field at peak production that will be reached in 2019. The field is expected to have a 15 year life.
Gullfaks Rimfaksdalen is one of Statoil’s ‘fast track’ projects, which aim to realise resources quickly and cost-efficiently by using existing infrastructure when possible. Statoil has a 51% share of the development, state owned holding company Petero owns 30% and OMV of Austria has 19%.
The news that Statoil will proceed with the development despite oil prices falling below $60 a barrel this week comes as a welcome boost to hopes for the short and medium term future of the North Sea, where several proposed developments have been postponed recently. Earlier this month Statoil postponed a decision on a US$5.75Bn development in a mature field. Statoil will now decide in October 2015 whether to go ahead with the Snorre field in the Norwegian Sea.
Statoil’s proposed plan would involve building a new platform to extend the field’s life to 2040 but the company says it needs more time to reconsider the project with a view to cutting costs. Analysts have estimated that the development needs an oil price of $80 a barrel to break even.