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Ærfugl phase 1 project starts production

Operator Aker BP and partners Equinor, Wintershall Dea and PGNiG report that production has started from Ærfugl phase 1 in the Norwegian Sea.

“I am very proud of the excellent performance shown by the Aker BP project team and our alliance partners to deliver this profitable project safely and efficiently on time and cost. This truly is One Team at its best,” said CEO in Aker BP, Karl Johnny Hersvik.

Ærfugl is one of the most profitable development projects on the Norwegian continental shelf. The initial estimated break-even oil price was $18.5 per barrel, converted from gas. Due to increased reserves, earlier production, stronger dollar and accelerated tax depreciation, the break-even price has improved to below $15 per barrel.

Aker BP’s goal is to produce oil and gas as efficiently as possible to return greater value from our oil and gas resources to investors and the society. The successful start-up of production from Ærfugl phase 1 demonstrates our ability to deliver on this strategy, Mr Hersvik added.

The Ærfugl development is a major subsea project in two phases. Both phases are tied into the existing production vessel on the Skarv field, which is located approximately 210km west of Sandnessjøen.

The Plan for Development and Operation for Ærfugl was approved by the Ministry of Petroleum and Energy in April 2018.

The reservoir holds a total of around 300 million barrels of producible oil equivalents.

Total investment costs for the Ærfugl project are around NOK 8 billion.

Reorganising the value chain through strategic partnerships and alliances is an important part of Aker BP’s strategy.

“The subsea alliance, semi alliance and modification alliance have all been vital in this project. The alliances have not only been delivering on cost and schedule, despite Covid-19 related challenges; they have as well achieved major improvements since the PDO was approved, including significantly accelerated development of phase 2 and better economics,” said SVP Projects, Knut Sandvik.

Development of Ærfugl is enabled in particular by two new technologies: more efficient drainage of reservoir through new vertical valve trees; and long distance, electrically heated flow lines to avoid hydrates in the gas pipelines. This technology significantly improves heat efficiency compared with regular technology and enables longer tie-backs.

“The Ærfugl field development is adding five years lifetime extension to the Skarv FPSO. Ærfugl is an important part of the area development and value creation in the area. When both phases of Ærfugl come on stream, we will significantly increase our utilisation at the Skarv FPSO, representing roughly a doubling of production compared to current levels,” said Sverre Isak Bjørn, VP Operations and Asset Development, Skarv area.

“Production from the Ærfugl reservoir will also improve the energy efficiency. Consequently it will bring down CO2 emissions by 30 to 40% per barrel produced from Skarv FPSO,” Mr Bjørn added.

Exploration success in the area in 2019 gave fresh perspectives on the geology around Skarv, generating new ideas on drilling prospects in the coming years.

“We are collaborating closely with our license partners. Together we have developed a solid strategic foundation to bring Skarv into the future,” Mr Bjørn said.

Load out of Ærfugl subsea structures in Sandnessjøen in the autumn of 2019. The work was carried out by the Subsea Alliance.

Phase 1, which develops the southern part of the Ærfugl field, consists of three new wells. Phase 2 consists of an additional three wells in the northern part of the field.

“The successful start-up of production from Phase 1 is a major milestone and a great achievement. However, there is no time to relax; we will keep momentum to safely deliver phase 2 on time and cost by the end of next year. Then we will celebrate,” said Project Manager for the Ærfugl development project, Tom Storvik.

He points at the close and efficient collaboration in- and between the involved alliances as a key success factor for the successful execution.

“The Subsea alliance between Aker BP, Subsea 7 and Aker Solutions has demonstrated substantial improvements and increased value creation over several years. The performance by the rig alliance with Odfjell and Halliburton and the Modification alliance with Aker Solutions in collaboration with Kongsberg Maritime, has been key to these achievements. The production start-up of from Phase 1 shows how the alliances enable us to increase the value creation and to deliver in line with our ambitious improvement agenda,” Mr Storvik added.