Norwegian politicians have agreed a compromise pact on full-scale electrification of four Utsira High fields after an apparent climbdown by a powerful parliamentary committee, reducing the risk of a further delay to the giant Johan Sverdrup project.
As exclusively reported by Upstream, the Energy & Environment Committee is now demanding that area-wide electrification of the Johan Sverdrup, Edvard Grieg, Gina Krog and Ivar Aasen fields is carried out at the latest by 2022 – three years later than planned start-up of Sverdrup at the end of 2019.
The unanimous decision by opposition members of the committee marks a retreat from an earlier demand that a power-from-shore solution be adopted for all fields from start-up of Johan Sverdrup, which Statoil and its partners warned would require changes to the field concept and risk a further costly delay to the project.
“Statoil will therefore continue the work on Johan Sverdrup in relation to the plan and ongoing studies for the first fabrication stage, without any delay,” a spokesman for the state-owned oil company, acting as pre-unitisation operator, told news wire NTB.
He said the field partners anticipate the second stage of facilities construction will be in place by late 2022, adding the company will now assess the implications for the project of the committee’s latest recommendation.
“We wish to contribute to realising the committee’s recommendation for full electrification by 2022 without delaying Sverdrup’s first phase,” he added.
However, the committee is also demanding that a study is carried out by the Norwegian Petroleum Directorate to determine how quickly cable connections between the four fields can be established and whether these could be in place by start-up of Sverdrup in 2019 without delaying the project.
It also stated in its recommendation that start-up of phase two on Sverdrup or satellite fields should not be permitted before area-wide electrification solution is up and running.
Petroleum & Energy Minister Tord Lien expressed relief that a compromise had been reached as any further delay on Johan Sverdrup – already pushed back a year – would hit contract tenders and therefore jeopardise potential work for Norwegian contractors.
“We are happy that the cross-party majority has met the government parties [Conservative and Progress] on this issue,” he was quoted as saying.
Lien has said the second phase of Johan Sverdrup is seen starting “three to five years at the earliest” after the first stage.
However, analyst Teodor Sveen Nilsen of Swedbank First Securities warned in a note the risk of a delay on Johan Sverdrup may not have been totally averted.
While he believed the risk had been reduced as there was now a definite timetable for electrification in place, Nilsen stated “we are not 100% convinced that the deadline of 2022 does not require any re-engineering”.
While phase one may proceed on schedule, he suggested a possible scenario could be a slower ramp-up of the second phase due to electrification.
Meanwhile, committee member Heikki Holmaas of the Socialist Left party suggested there were other forces at work to achieve the compromise deal, claiming “the oil industry has become the bully in the class that uses pressure as a method”.