Norway's Sverdrup Phase 2 drilling started, Q4 startup on track: Lundin

Drilling on the $4.6 billion Phase 2 expansion of Norway's Johan Sverdrup oil development began in January and the project is "firmly on track" for startup in the fourth quarter of 2022, Nick Walker, CEO of project partner Lundin Energy, said Feb. 1.

In a results statement, Lundin, which is being bought by upstream company Aker BP to create Norway's second largest producer, said the Sverdrup expansion, intended to lift output to 755,000 b/d, was 70% toward completion.

The Johan Sverdrup find, estimated at 2.2 billion-3.2 billion barrels of oil equivalent, has transformed Norway's oil production profile, with the current first-phase capacity of 535,000 b/d accounting for some 30% of the country's oil production.

The crude is a relatively heavy, more sour grade than traditional light sweet North Sea grades such as Brent or Ekofisk, and not currently part of Platts Dated Brent price assessments.

Lundin, which is a third-owned by Sweden's Lundin family, made the original Sverdrup find in 2010-11 and state-controlled Equinor operates the project.

Following preliminary work on the second processing platform, "the operation to install the second processing platform topsides on the jacket is planned for March 2022," Lundin said. "The subsea facilities and flowlines installation work is progressing as per schedule and will be completed early 2022, with drilling operations on the subsea wells having commenced in January 2022."

Lundin reiterated plans for a world-beating 70% recovery rate over the life of the field, helped by a "water alternating gas" injection process, with 28 wells to be eventually drilled under the Phase 2 plans.

Production boost

Lundin, which holds a 20% stake in Sverdrup, reported a 5% year-on-year increase in its overall production in the fourth quarter to 195,000 b/d of oil equivalent. Sverdrup accounted for just over half that, with the company also increasing its production from the main asset it operates itself -- Edvard Grieg.

Edvard Grieg produces a medium-gravity crude that feeds into the Grane crude stream. Lundin has been adding production from two satellite projects, the Solveig field and the Rolvsnes Extended Well Test, and said overall Edvard Grieg production was up 8% year on year in Q4.

The Edvard Grieg facilities also process oil from Aker BP's Ivar Aasen field, another contributor to the Grane blend and a point of tension at times between the two operators, which are now set to merge in a cash and shares deal worth about $10.5 billion.

Data from the Norwegian Petroleum Directorate showed Edvard Grieg area crude output was 99,000 b/d in the first 11 months of 2021.

Grane crude loadings are set to average 193,548 b/d in March, according to a copy of the program seen by S&P Global Platts Jan. 28.

Walker added the planned purchase by Aker BP was a "win-win outcome" that "creates a business that is positioned to prosper through the energy transition and deliver increased and sustainable dividends." Lundin has focused recently on selling certified "carbon-neutral" crude cargoes, with emissions from the production process offset from nature-based carbon capture projects, and the company targeting overall carbon neutrality by 2023.