Jacket contract for Johan Sverdrup phase 2

October 31, 2018 07:05 CET | Last modified October 31, 2018 09:21 CET
The Johan Sverdrup field
The Johan Sverdrup field in the North Sea. (Photo: Bo B Randulff / Roar Lindefjeld / Woldcam)

Equinor and the Johan Sverdrup licence have awarded a jacket contract for the processing platform for Johan Sverdrup phase 2 to Kværner. The contract value is around NOK 900 million.

“With this contract, Kværner and the Norwegian supplier industry has once again proved it is competitive in an international market. In the first phase of the Johan Sverdrup development more than 70% of the contracts were awarded to suppliers in Norway. With this contract to Kværner, we expect an even higher share of Norwegian suppliers in the second phase of the development,” says Trond Bokn, senior vice president for the Johan Sverdrup development.

This is an EPC contract covering engineering, procurement and construction of the steel substructure for the second processing platform for the Johan Sverdrup field. The 12,300-tonne substructure will be constructed at Kværner’s yard in Verdal and installed at the Johan Sverdrup field during the spring of 2021.

“The Johan Sverdrup phase 2 contracts awarded earlier this year will ensure activity at many yards along the Norwegian coast in the years to come – primarily in Haugesund and Egersund and at Stord. With this jacket contract we can now also add Verdal to this list”, he says.

Kværner’s offices at Fornebu will be responsible for engineering and design services. The contract will create around 300 direct jobs in the construction period.

Both Johan Sverdrup phases combined are, according to the consultancy Agenda Kaupang, estimated to involve more than 150,000 man-years in the period 2015-2025.

Continuation of the improvement agenda into phase 2
Kværner has so far delivered three of the jackets for the first phase of the Johan Sverdrup project. This contract means that Kværner will have delivered four of five jackets to the giant field when the second development phase is completed in Q4 2022.

“As one of the main suppliers to Johan Sverdrup, Kværner has contributed with several significant high-quality deliveries, on time and budget. And now Kværner has once again won a contract in strong international competition”, says Peggy Krantz-Underland, Equinor’s senior vice president for procurement and supplier relations.

“The improvement work in Johan Sverdrup, and in Equinor more generally, is a result of close collaboration with our suppliers. The contract with Kværner allows us to further build on this collaboration and the experiences from the first phase of the project, to ensure continued safety, quality and efficiency in the next phase of Johan Sverdrup as well,” she says.

The first phase of the Johan Sverdrup project is expected to start production in November next year and includes four installations with steel substructures: A utility and living quarters platform, a drilling platform, a riser platform and a processing platform.

The second phase of the Johan Sverdrup project will also have a jacket-based processing platform, and modifications are made to the field centre to expand production capacity from 440,000 barrels of oil per day to 660,000 barrels of oil per day.

The contract is subject to approval of the plan for development and operation of Johan Sverdrup phase 2 that was submitted to Norwegian authorities on 27 August 2018.

A press conference will be held in Kværner’s premises in Verdal at 10.30am today.
Attendance by 10.15 at the latest.

Equinor representatives:

  • Trond Bokn, senior vice president for the Johan Sverdrup development
  • Trond Stokka Meling, project director for Johan Sverdrup phase II
  • Trond Lorås, head of procurement in the Johan Sverdrup project

Kværner representatives:

  • Karl Petter Løken, CEO, Kværner 
  • Sturla Magnus, executive vice president Structural solutions, Kværner

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Facts about Johan Sverdrup

Phase 1

  • Includes the development of four platforms, three subsea installations for water injection, power from shore, export pipeline for oil (Mongstad) and gas (Kårstø)
  • Under development. Approximately 80% of the development is completed.
  • More than NOK 60 billion worth of contracts awarded. More than 70% of the suppliers with a Norwegian billing address.
  • Over 60 milliarder kroner tildelt i kontrakter. Over 70 % leverandører med norsk fakturaadresse
  • Production capacity of 440,000 barrels of oil per day.
  • CAPEX estimate: NOK 86 billion (nominal terms based on fixed currency)
  • Production start expected in November 2019

Phase 2

  • Includes development of another processing platform for the field centre + the Avaldsnes, Kvitsøy and Geitungen satellite areas, in addition to power from shore to the Utsira High (including the fields Edvard Grieg, Ivar Aasen and Gina Krog) by 2022
  • Plan for development and operation submitted to Norwegian authorities on 27 August 2018
  • Additional production capacity of 220,000 barrels of oil per day
  • CAPEX estimate: NOK 41 billion
  • Production start expected Q4 2022

Full field (Phase 1 + Phase 2)

  • Includes both Phase 1 and Phase 2 of the Johan Sverdrup development
  • Resource estimate of between 2.2-3.2 billion barrels of oil equivalent (with expected resources of 2.7 billion boe)
  • Total production capacity of 660,000 barrels of oil per day
  • Break-even price: below 20 dollar per barrel
  • PARTNERS: Equinor: 40,0267 % (operator), Lundin Norway: 22,6 %, Petoro: 17,36 %, Aker BP: 11,5733 % and Total: 8,44 %