Johan Sverdrup partners looking to reach production ramp-up earlier than expected

Source: press releases, 30 March 2020

The Johan Sverdrup field in the North Sea
The Johan Sverdrup field in the North Sea (photo: Equinor/Arne Reidar Mortensen)

The North Sea Johan Sverdrup field expects to reach plateau production for the first phase in early May, earlier than anticipated. Due to higher plant capacity, plateau production will increase from around 440,000 barrels of oil per day to around 470,000 barrels per day.

Plateau production was previously expected to be reached during the summer. At the end of March, daily production had already exceeded 430,000 barrels of oil.

“Johan Sverdrup is an important project to the companies, the industry and society at large. The project was sanctioned during the oil price fall in 2015 and resulted in important activity to the supplier industry in a demanding period. With low operating costs Johan Sverdrup provides revenue and cashflow to the companies and Norwegian society at large in a period affected by the coronavirus and a major drop in the oil price. In today’s situation, cooperation between operators, suppliers and authorities is more important than ever to maintain activity and value creation,” says Arne Sigve Nylund, Equinor’s executive vice president for Development and Production Norway.

“Field production has been very good and stable from day one, and the wells have produced even better than expected,” says Rune Nedregaard, vice president for Johan Sverdrup operations. “We are currently completing the tenth well. This work is progressing smoothly, helping reach higher production earlier than expected. We also expect to increase plant capacity, allowing plateau production to increase from the previously expected 440,000 barrels to around 470,000 barrels of oil per day.”

The Johan Sverdrup field came on stream on 5 October last year, more than 2 months ahead of the original schedule and NOK 40 billion below the original estimate for development and operation (PDO August 2015).

The break-even price for the full-field development is below USD 20 per barrel, and expected operating costs are below USD 2 per barrel.

“Johan Sverdrup has very low production costs, contributing with a strong cashflow also in periods with low prices, as we experience” says Nedregaard.

“We are working systematically with our partners to increase value creation from the field and ensure an optimal recovery factor,” says Nedregaard.

Alex Schneiter, President and CEO of Lundin Petroleum comments, “This is a fantastic indictment of the combined quality of the subsurface, topsides and the teams who have delivered the development and start-up of the field. With this increase in production from Johan Sverdrup, we will be upgrading our 2020 production guidance with our Q1 results on 30 April 2020.”

“In this current time of oil market uncertainty, a field like Johan Sverdrup with operating costs below USD 2 per barrel, provides us with one of the lowest cost and highest quality fields in the world and delivers strong cashflow resilience and certainty to our business,” adds Schneiter.

At plateau in phase 2 the field will produce 690,000 barrels of oil per day. Expected recoverable reserves in the field are 2.7 billion barrels of oil equivalent. Equinor’s ambition for the field is to achieve a recovery factor of more than 70%.

Johan Sverdrup partners comprise Equinor, 42.6% (operator); Lundin Norway, 20%; Petoro, 17.36%; Aker BP, 11.5733%; and Total, 8.44%.