A flurry of development plans submitted at the end of the year meant Norway overtook the US to have the highest total offshore project capital expenditure committed anywhere in 2017.
The figures are evidence that the Norwegian industry is returning to a healthier state after the price crash caused a period of job cuts and falling output.
Oslo-based consultancy Rystad Energy has released figures showing that the total capital expenditure committed to offshore greenfield projects on the Norwegian Continental Shelf (NCS) in 2017 was slightly more than US$18 billion. This was more than US$4 billion more than the total committed in the US last year.
Norway’s year ended on a particular high, as no fewer than seven significant plans for development and operation (PDOs) were submitted to the Norwegian Petroleum Ministry for approval in December alone. The fields have a combined capex value in excess of 100 billion kroner (US$12.41 billion), double that for the rest of the year combined on the NCS.
By far the largest commitment came on December 5, when Statoil handed in its PDO for the giant Johan Castberg project in the Barents Sea, on behalf of partners Eni and Petoro. Investment in the project is valued at 49 billion kroner (US$6.08 billion), or more than a third of the annual total.
Johan Castberg is seen as a saviour of the Norwegian oil and gas sector. Its estimated recoverable resources of between 450-650 million boe make it the largest offshore oil and gas development anywhere to be given the go-ahead in 2017. Oil production at the field is scheduled to commence in 2022, and it has an anticipated production lifespan in excess of 30 years.
Despite its size, the original project was not thought to be commercially viable owing to its high capex in excess of 100 billion kroner (US$12.4 billion) and a calculated breakeven oil price above US$80 per barrel. But subsequent efficiency improvements enabled Statoil to halve its estimated capex, making it profitable at below US$35 per barrel.