Statoil’s new Arctic field needs oil prices of just $30 a barrel to turn a profit

An illustration shows a floating production vessel such as Statoil might use to develop the Johan Castberg prospect. (Statoil ASA)
An illustration shows a floating production vessel such as Statoil might use to develop the Johan Castberg field. (Statoil ASA)

Norwegian oil company Statoil says its Johan Castberg field will come on stream in year 2022 and prepare the way for the development of more northern fields, in a new company report.

With full steam, the Norwegian oil company continues to prepare for developments in the Barents Sea. And the low oil prices won’t stop the project.

According to a new analysis commissioned by the company, an oil price of $30 per barrel will be sufficient for the field to be profitable.

The project is very robust to changing oil prices, dollar exchange rates and fluctuating  environmental costs, the company says. It is expected to come on stream in 2022, and have an operating lifetime of 30 years.

A final investment decision regarding is to be made towards the end of 2017.

Johan Castberg is one of the largest projects in Statoil’s portfolio yet to be developed. It includes three oil structures located about 249 kilometers north of Hammerfest on the Norwegian Arctic mainland. Water depths in the area are about 400 meters and the company intends to use a floating production vessel for extraction.

A photo illustration depicts the the development of the Johan Castberg prospect in northern Norway from a floating platform. (Photo: Kåre Spanne / Statoil; Illustration: Grafisk Geologi & Print)
A photo illustration depicts the the development of the Johan Castberg prospect in northern Norway from a floating platform. (Photo: Kåre Spanne / Statoil; Illustration: Grafisk Geologi & Print)

Benefits for northern Norway will be significant, the company underlines.

“We will invest around NOK 1.15 billion per year in operation of the field, amounting to around 1,700 man-years nationally, of which around 500 will be performed in North Norway,” a press release reads.

“To ensure a long-term development of petroleum-related specialist jobs in Finnmark, Statoil will, in collaboration with other operating companies, suppliers and local authorities before the plan for development and operation is submitted to the authorities, look at possible initiatives to upgrade the general petroleum competence level in Hammerfest and Finnmark,” says Siri Espedal Kindem, company senior vice president for the operations north cluster.

The national employment during the development phase has been estimated at almost 47,000 man-years, of which close to 1,800 will be in North Norway.

The project will have its operations organisation based in the town of Harstad and there will be a supply base in Hammerfest.