Lundin building reserves at Sverdrup, Grieg offshore Norway

Offshore staff

STOCKHOLM, SwedenLundin Petroleum has budgeted $1.3 billion for field development, appraisal, and exploration this year.

Out of the $1.095 billion earmarked for development, around 99% relates to development projects offshore Norway, mainly ongoing activity on Phase 1 of the Johan Sverdrup project, development drilling at Edvard Grieg, and further infill wells on the non-operated Alvheim and Volund fields.

Johan Sverdrup accounts for 70-80% of the development outlay, with 2017 set to be the peak year for construction activity. Construction has started on all elements of Phase 1 with the first steel jacket due to be installed offshore this summer followed by the remaining three jackets in 2018.

The riser and drilling platform topsides should be installed in 2018 and the processing and living quarter topsides in 2019.

Eight production wells have so far been completed, with six water injectors scheduled to be drilled this year. The project remains on schedule for first oil in late 2019 and thanks to lower service costs and optimization measures is achieving significant reductions compared to the estimate in the originally submitted development plan.

The Lundin-operated Edvard Grieg which started producing in late November 2015 currently has four producer wells onstream with water injection support from two more wells. Five more development wells (producers and water injectors) are set to be drilled this year, with development drilling likely to be completed in 2018, when 14 producers and water injectors are expected to be in place.

As for the Alvheim and Volund fields, Aker BP plans two infill wells on Volund this year and two more at Alvheim.

Lundin’s Bertam oil field offshore Malaysia, which produces from 12 wells, will undergo facilities improvement works this year. In addition, the company will co-finance one development well in the Dutch North Sea.

Much of the company’s appraisal budget for 2017 of $125 million will be allocated to two operated wells on the Alta and Gohta discoveries in the Barents Sea, and on one further appraisal well in the southwestern part of the Edvard Grieg field targeting up to 30 MMboe. This well is due to spud at the end of 1Q.

The appraisal budget also includes expenditure on development concept studies for Johan Sverdrup Phase 2. Concept selection is expected by mid-year, with front-end engineering and design starting thereafter.

Lundin has budgeted $85 million for drilling five exploration wells, all offshore Norway planned. The operated Filicudi well in PL533 (WI 35%) in the southern Barents Sea is drilling ahead, and the company plans another operated well in PL609 (WI 40%) in the same sector on the Loppa High targeting the Børselv prospect (subject to partner approval).

In addition, it will participate in an exploration well in Barents Sea license PL859 targeting the multi-billion barrel Korpfjell prospect; another in the North Sea on the Volund West prospect; and in a further well on the Tonjer prospect (a potential northern extension of Johan Sverdrup).

Lundin has upgraded its global resources to 743.5 MMboe and its best estimate contingent resources to 267 MMboe.

Edvard Grieg’s reserves have risen following analysis of drilling results to date which indicate more oil-in-place on the field’s western flank (this will be the location for the forthcoming appraisal well).

Johan Sverdrup’s reserves too are higher, following improved understanding of the reservoir, in particular the waterflood performance characteristics. And more reserves have been attributed to Alvheim as further infill drilling targets have been identified, and also at the Bertam field due to reservoir outperformance.

The company’s contingent resources offshore Norway increased by 47 MMboe last year, mostly thanks to Johan Sverdrup (infill drilling opportunities and water alternating gas injection potential).

In addition, the company has added contingent resources at its recent Neiden discovery in the southern Barents Sea.

01/19/2017

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