Åsgard up less than feared

September 14, 1999, 10:00 CEST

The estimated cost of Statoil's Åsgard development has risen by NOK 686 million - well below the earlier forecast of a possible NOK 1 billion increase.

While spending on the Åsgard B gas floater and drilling/completion has risen, the A production ship on the Norwegian Sea field is costing rather less than expected.

And reduced expenditure on the Åsgard Transport and Europipe II trunklines which will carry gas from the field also has a positive effect on the overall bill.

The biggest overrun from earlier estimates has been incurred on Åsgard B, with forecast investment up by NOK 445 million to roughly NOK 11.4 billion.

This rise partly reflects a renegotiated contract between Statoil and Kværner, main contractor for the facility. Concluded in July, the deal could boost the cost of the semi-submersible platform by NOK 325 million.

Another contributory factor is that work to complete topside modules for Åsgard B has been carried over from the fabricators to Kværner's Rosenberg yard in Stavanger.

Construction is also behind schedule. However, Statoil expects the productivity of remaining work on completing the platform to be good. Kværner is due to deliver the finished unit on 1 August next year.

The estimated cost of drilling and completion on Åsgard has risen by NOK 319 million to just under NOK 11 billion, reflecting over-optimistic earlier forecasts by Statoil.

Completion work on the Midgard section of the field is costing more because of a redesign. Statoil has opted to drill one well less than planned and instead complete a more complicated additional well for the Smørbukk section.

The number of wells due to be drilled for Åsgard as a whole accordingly remains unchanged at 52.

Additional spending has also been incurred as a result of revised seismic data which were not planned or included in the previous estimate.

And a clarification of the way costs will be split with other licences for using the Scarabeo 6 drilling rig also adds to costs.

Finally, a NOK 78 million cut in the estimated bill for Åsgard A - which came on stream this spring - gives the total increase of NOK 686 million.

That compares with an earlier warning from Statoil that the cost of Åsgard B and drilling/completion might rise by NOK 500 million in each case.

The expected bill for Åsgard Transport has been cut by NOK 167 million to just under NOK 8 billion, while Europipe II should be NOK 48 million cheaper at NOK 7.2 billion - giving a total reduction for these projects of NOK 215 million.