Norway based energy company Statoil ASA (STO) has set aside NOK 8.5 billion ($1.45 billion) to enhance recovery in Gullfaks South field in the Norwegian North Sea.
Statoil, along with its partner Norwegian state owned firm Petoro ASA, plans to set up two new subsea templates and drill six additional wells — four oil producers and two gas injectors — at the field. This forms part of its fast-track development and is likely to increase output by 65 million barrels of oil equivalent out of the mature reservoir.
Semi-submersible rigs — Deepsea Atlantic and Songa Dee — will be used to drill new wells. These rigs are already operating in Statoil-operated Production Licence 050.
Production in Gullfaks South takes place through a satellite tie-back to the Gullfaks A platform. Certain parts of Gullfaks South stopped production in 2008 to maintain reservoir pressure at an acceptable level for future drilling operations.
In the course of 2012, the existing wells are being restarted. Further, new holes are being spud utilizing already installed subsea templates. These new holes will be tied back to the A platform and drilled from existing seabed templates on Gullfaks South.
The project is scheduled to come online by 2014 and is likely to extend the platform’s production life beyond 2030. The development will use unused processing capacity on Gullfaks A.
Earlier in 2012, Statoil had signed a NOK 900 million ($155 million) contract with a unit of Schlumberger Limited (SLB) — Framo Engineering, whereby the unit would design and build subsea gas compression plants for the Gullfaks field. Subsea gas compression would assist in raising production from the existing fields on the Norwegian Continental Shelf as well as augment the producing life cycle of the gas fields. This again has formed a part of its fast-track program.
Statoil holds a Zacks #2 Rank which translates to a Buy rating for a period of one to three months. Longer term, we maintain a Neutral recommendation on the stock.
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