The Norwegian Parliament has approved Equinor’s development and operation plan for the giant Johan Castberg field located in the Barents Sea within the Arctic Circle.
The plan now heads to Norway’s Ministry of Petroleum and Energy for formal approval.
The Johan Castberg field, with estimated recoverable resources of 450-650 million boe (barrels of oil equivalent), is currently the largest subsea field under development globally.
Johan Castberg was first discovered by then-Statoil in 2011, but its development was pushed back due to the crash in oil prices beginning in 2014.
Statoil, which recently changed its name to Equinor, finally greenlit the project in 2017 after cutting project costs by more than half compared to 2014-2015 levels, reducing the project’s break-even price to less than $35 per barrel of oil.
“This is a great day for the project and for the licence partners. After all, this is the first development plan to be approved for Equinor! And it is not any project either. It was a long road for Johan Castberg after the first discovery in 2011. Today we have a solid project that will be central in the further development of the northern regions,” says Margareth Øvrum, Equinor’s executive vice president for Technology, Projects and Drilling.
First oil from Johan Castberg is scheduled for 2022, with an estimated production span of 30 years.
The field will consist of a Floating Production Storage and Offshore (FPSO) vessel and a comprehensive subsea system, including a total of 30 wells distributed on 10 templates and 2 satellite structures.
Equinor says capital expenditures for the project now stand at a reduced NOK 49 billion ($6.1 billion), less than half the original capital expenditure estimate of NOK 100 billion, when break-even oil price was above $80 per barrel. “We could not take for granted that the project would be realizable when the oil price dropped in 2014,” the company stated.
“The project is on schedule, and gradually we will see the results of the construction work. Many yards and companies across the country will be busy with Johan Castberg deliveries in the years to come,” says Knut Gjertsen, project director for Johan Castberg.
The Johan Castberg field will also have a supply and helicopter base in Hammerfest and an operations facility in Harstad. Equinor and other operators with oil deposits in the Barents Sea are also looking at the possibilities of oil transfer at Veidnes in Finnmark county, including both a downscaled terminal solution as well as ship-to-ship transfer, Equinor said.
Equinor estimates the costs of operating the field at some NOK 1.15 billion per year.
Johan Castberg is operated by Equinor, which holds 50% stake in the project. Eni Norge and Petoro hold remaining stakes of 30% and 20%, respectively.