Statoil faces Utsira power pressure

Statoil may already have found a solution for area-wide electrification of the Utsira High region in the North Sea, but fears persist that the partners in the Johan Sverdrup licence might call a halt to Norway's largest field development project in decades.

Last week a parliamentary majority decided that Sverdrup and three other fields in the Utsira High area must be powered by a cable from shore rather than by offshore turbines.

However, it remains unclear whether the partners managed to agree on a joint development of based on power from shore.

Upstream has learned that meetings were held between Statoil and political parties where the company signalled that it would be possible to build a solution involving the placement of a power module on the riser platform at the Sverdrup field centre.

An email from one member of Statoil’s Sverdrup team to project management group confirms that Statoil ajudges a 200 MW power solution to be a technically and economically feasible solution without causing delays to the project.

Statoil, in response to Upstream's queries, denied that the email in question was ever received by Sverdrup’s project management.

However, sources have told Upstream that the company fears the partners – Sweden’s Lundin Petroleum, Norwegian player Det Norske Oljeselskap and Danish outfit Maersk Oil — will reject it in the Sverdrup licence vote.

The parliamentary decree on an area-wide electrification project has revived the conflict between the various companies in different licences over the division of costs for a power cable from shore, and partners in all four fields are now scrambling to identify the effects of the decree — both practical and financial — on their respective development projects.

Statoil and state-owned compatriot Petoro have about 50% of the resources in the Sverdrup field, but the three other partners are in a majority of the votes.

It is not clear how the partners will vote after the clear instructions from the Norwegian parliament, but several sources have told Upstream that Lundin, Det Norske and Maersk have been actively working against an area-wide electrification project.

Lundin has a large share of about 25% of the Johan Sverdrup field. The company also has operatorship of the nearby Edvard Grieg development, which would be included in an area-wide electrification project.

It may be the company hardest hit by the change, as it is being forced to hook a power cable to its Edvard Grieg field even though it will still have to install gas turbines on the production platform.

Sources said that Lundin felt sure there would be no demand for Grieg to be connected to the power cable, so much so that it decided earlier this year to put other equipment into the topsides space that had been reserved for a boiler to produce heat from electricity.

The company is now trying to avoid any delays to the project as a result of this development. “We are in dialogue with the authorities to try to understand their decision. The way we understand it, the decision should not cause a delay,” a Lundin spokeswoman told Upstream. She refused, however, to discuss internal negotiations between the Sverdrup licensees.

Det Norske also declined to comment on internal negotiations in the licence.

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