High costs for Arctic oil projects
All of the development projects on Norwegian shelf north of the 64th latitude seem to go with large budget overruns compared to original plans for development and operations (PDO).
Development of petroleum resources in Arctic waters is more expensive than the operators’ original plans for development and operations estimated. Oilinfo has put together a list:
The largest budget overrun – both in percent and sum, is at BP’s Skarv field in the Norwegian Sea. The expenses have increased NOK 11,5 billion (€1,5 billion) or 32,4 percent compared to the investment proposals in PDO. The most important reasons for the overruns are changes in design and construction of underwater installations; postponements of drilling program because of delays in construction of drilling installations and higher costs related to higher weight of platform.
Eni’s development of the Goliat field in the Barents Sea will be NOK 6,2 billion (€836,7 million) more expensive than estimated in 2009. The PDO showed a NOK 30,9 billion price tag, while the updated investment estimate amounts to NOK 37,1 billion. According to the operator the extra expenses is a result of higher market prices, longer delivery time for equipment and higher raw material costs owing to pressure in the supplier market.
Statoil’s subsea gas compression plant at the Åsgard field in the Norwegian Sea has a new investment estimate of some 2 billion kroner over the previous NOK 15,7 billion estimated during the time of approval by the Norwegian Parliament in March 2012. The increase is a result of changes of the technical concept and a tight supplier market.
Also the smaller projects on Norwegian shelf, like Eni’s Marulk field and Statoil’s Skuld and Hyme fields have higher investment estimates than originally, but these are not as big as on the larger projects, Oilinfo writes.