Statoil’s new Arctic project needs $30 a barrel oil prices to be profitable

The projected floating production vessel for the Johan Castberg field (Illustration by Statoil)
The Johan Castberg will come on stream in year 2022 and prepare the way for the development of more northern fields, a new company report reads.

According to a new analysis commissioned by the company, an oil price of $30 per barrel will be sufficient for the field Johan Castberg 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 life time 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 km north of Hammerfest, the town on the Norwegian Arctic mainland. Water depths in the area are about 400 meter and the company intends to use a floating production vessel for extraction.

Planned investments and jobs in Norway

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 1700 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 1800 will be in North Norway.

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

Related stories from around the North:

Canada: Arctic offshore drilling too dangerous: Trudeau, Radio Canada International

Finland: Finnish economic growth overtakes Sweden’s in first quarter of 2017, Yle News

Germany: Cheap oil from the Arctic? Fake news, says climate economist Kemfert, blog by Irene Quaile, Deutsche Welle

Norway: Norway offers oil companies 93 new blocks in Arctic waters, The Independent Barents Observer

Russia: Gas company Novatek to build four artificial islands in Russian Arctic, The Independent Barents Observer

Sweden: Swedish government unveils new climate law, Radio Sweden

United States: Company delays drilling at Smith Bay, leaving a big Alaska energy prospect unconfirmed, Alaska Dispatch News

Atle Staalesen, The Independent Barents Observer

For more news from the Barents region visit The Independent Barents Observer.

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