ENi’s Goliat or Gazprom Neft’s Prirazlomnaya?
The prices are low and layoffs and shrinking revenues continue to haunt the industry. But oil production is still proceeding full steam both in Norwegian and Russian Arctic waters.
Norway and Russia each have one offshore Arctic oil field in production. The Goliat is located about 80 km northeast off the coast of Norwegian Arctic town of Hammerfest and the Prirazlomnaya in the Pechora Sea, about 60 km off the Nenets coast.
ENI Norway started production at Goliat in March this year, and the first tanker with Goliat-oil left the field late that same month. The field, which holds about 180 million barrels of oil, is run by a Sevan 1000 FPSO, a floating, cylindrical production facility.
Ramping up production
Company representatives now say to NRK that tankers loaded with 850,000 barrels of oil depart from the installation every 8th day and that daily production has reached 100,000 barrels.
That is significantly more than at the Prirazlomnaya. According to Gazprom Neft, the field now produces 6,000 tons (44,000 barrels) per day. That volume is gradually increasing. In 2020, the company intends to reach peak production of more than 13,500 tons (100,000 barrels) per day.
That means that the two installations ultimately will produce about the same volumes of oil. However, Prirazlomnoye has far bigger reserves, 70 million ton (513 million barrels).
The Prirazlomnaya is operated by Gazprom Neft Shelf, a subsidiary of Gazprom. It started production in December 2013. Two specially designed ice-breaking tankers, the “Kirill Lavrov” and the “Mikhail Ulyanov” bring the oil from the platform to the floating terminal tanker «Umba» in the Kola Bay.
Climatic conditions at Goliat differ significantly from the ones in the Pechora Sea. While the waters in the Norwegian Barents Sea are open all through the year, the Pechora Sea is covered by thick ice in winter. Consequently, while the Goliat is based on the use of a floating production facility, the Prirazlomnaya uses a stationary, Arctic-class ice-resistant platform, the world’s first of its kind.
The Goliat platform is manned by about 40 people, while the Prirazlomnaya has a personnel of about 200.
Both projects were significantly delayed. After a long period of construction at the Sevmash yard, the Prirazlomnaya was towed to the Pechora Sea in August 2011. However, it took almost another 2.5 years before the installation could start production. The whole project is believed to have cost Gazprom Neft 90 billlion rubles (€1.24 billion).
Also for ENI, the Arctic adventure turned into a nightmare-like story. The Italian company originally planned to start production in the project in 2013. However, Norway’s Petroleum Safety Authority formally approved the use of the Goliat platform only in January 2016.
Construction of the platform in South-Korea was long delayed and costs overrun are estimated to NOK 17 billion (€1,8 billion). The total price tag for the project is now NOK47 billion (€5 billion).
None of the two projects are making much money these days. Norwegian experts previously argued that to break-even ENI needed the price of oil to be more than $95 per barrel. Likewise, Russian oilmen in 2014 argued that Gazprom Neft needed an oil price of a minimum of $80 per barrel to make profits in the project.
Related stories from around the North:
Canada: Canada ponders exceptions to relief well rule for Arctic oil drilling, Alaska Dispatch
Finland: Solar and wind power yield cheapest energy say Finnish experts, Yle News
Greenland: #SavetheArctic… from Greenpeace, Blog by Heather Exner-Pirot
Iceland: From Arctic Circle 2013-2014, a big drop in the price of oil, Blog by Mia Bennett
Norway: How new Barents oil licenses can help build Russia-Norway ties, The Independent Barents Observer
Russia: No more licenses on Russian shelf, The Independent Barents Observer
United States: Alaska oil advocates urge Obama to leave Arctic drilling options open, Alaska Dispatch News