Norwegian oil exploration and development company Aker BP has announced its decision to proceed with the second development phase of the Ærfugl offshore development project, three years ahead of the original plan.
Aker BP and its partners approved the final investment decision for Ærfugl Phase 2 in early November 2019, accelerating development of Ærfugl Phase 2 to begin production in the first half of 2020.
The Ærfugl project comprises two development phases, which will both be tied into the existing floating production storage and offloading (FPSO) vessel on the nearby Skarv field. The plans for development and operation (PDO) for both phases were submitted to the Norwegian Ministry of Petroleum and Energy in December 2017.
The development of the Ærfugl project is also expected to extend the lifetime of the Skarv FPSO. Skarv vice-president of operations Ine Dolve said: “In parallel with development of Ærfugl Phase 1, work has been proceeding to increase gas processing capacity on Skarv. Modification of the plant will contribute to an increased capacity by more than 15%.
“We have also optimised the phase 2 scope and will use existing infrastructure on Skarv for the first phase 2 well.”
Phase 1 will see the installation of three wells in the southern part of the Ærfugl field, while Phase 2 will construct three additional wells in the northern part of the field; Aker BP has developed the two sections simultaneously, and now plans to begin phase 2 production earlier than phase 1.
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Production for Phase 1 is expected to start in the fourth quarter of 2020, as per the original schedule, with the production system for Phase 1 successfully installed earlier in 2019.
Akerp BP operations and asset development senior vice president Kjetel Digre said: “Acceleration of Ærfugl Phase 2 means earlier production and increased value creation from the field.
“This is good news for the Ærfugl joint venture, the supplier industry and the Norwegian society in the form of increased revenues.”
The Ærfugl gas reservoir is located in production licence 212 in the Norwegian North Sea, measuring 2-3km wide and extending over 60km.
Aker BP is the operator of the project, with an operating interest of 23.8%. Partners in the Ærfugl project include Equinor (36.2%), Wintershall DEA (28.1%) and PGNiG (11.9%). Total investment costs for the project are around 8 billion Norwegian kroner ($874m).
According to Aker BP, Ærfugl is one of the most profitable development projects on the Norwegian shelf, with a break-even price of around $15 per barrel and gas reserves of around 300 million barrels of oil equivalent.
The company also promises “significant local ripple effects” from Ærfugl Phase 2 through additional opportunities for local suppliers in the Helgeland region.