Norway's Arctic Castberg oil field startup delayed into 2025

The startup of Norway's delayed Arctic oil project Johan Castberg has been further postponed into January or February following harsh Barents Sea weather; however, startup preparations are "in the final phase of completion," state-controlled Equinor said Dec. 10.

Johan Castberg was delayed by some two years before the latest announcement, largely due to issues with welding quality at the yard in Singapore responsible for fabricating the floating production storage and offloading vessel -- issues documented at length in a report by Norway's offshore safety regulator.

However, the latest delay was caused by poor weather hampering the "hook-up" of the FPSO to the field, a process that has now been completed -- and not any difference of opinion over safety, Equinor said.

The field, some 240 km north of the Norwegian mainland, is set to become the second oil field in production in the Barents Sea, with the facilities able to handle 220,000 b/d of crude.

"We are now in the final phase of completion. The operations have been somewhat delayed by bad weather. Our plan is to start up Johan Castberg in January/February 2025, " Geir Tungesvik, Equinor's vice president for projects, drilling and procurement, said.

"The floating production, storage and offloading [vessel] has been hooked up to the subsea facility and the project is now in a final phase towards startup," Equinor added.

"Today's announcement is not related to our dialogue with the Norwegian authorities," an Equinor spokesperson told S&P Global Commodity Insights, referring to the regulatory process for starting production.

Castberg reserves are estimated at 450 million-650 million barrels, and a number of additional discoveries are expected to be tied back to the facilities, Equinor noted.

"So far, 14 wells have been drilled on the field, 12 are already ready for production, which is sufficient to bring the field to plateau production (220,000 b/d)," it added.

Project scrutiny

Castberg crude is expected to fetch particularly strong prices as it will produce unusually low volumes of vacuum residue at the refining stage, and could therefore prove highly attractive in Europe, according to Commodity Insights analysts. It has an API gravity of 34.7 and sulfur content of 0.16%.

The safety regulator, the Norwegian Ocean Industry Authority (Havtil), confirmed it had yet to give consent for the project to start production. "Havtil is currently processing the application for consent to use" the facilities, a Havtil spokesperson told Commodity Insights.

Problems with the welding of the FSPO have heightened scrutiny of the Castberg project, culminating in a highly critical report in 2021 by the Petroleum Safety Authority, now renamed Havtil. That followed a catalog of errors at Norway's first Barents Sea oil project, Goliat, outlined in a 2019 report by the country's Auditor General that described colliding crane arms, falling objects, gas leaks and power outages -- as well as a two-month shutdown due to electrical safety breaches.

The upstream regulator, the Norwegian Offshore Directorate, confirmed Dec. 10 that harsh weather lay behind the latest Castberg delay. "The main reason for the delayed start-up, now scheduled for January/February 2025, is weather conditions. There has been, and still is, tough weather up north, which is quite normal," an NOD spokesperson told Commodity Insights. "We do not see any problems with a later start-up."