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    1. Field Development

    Equinor explains cost increases, start-up delays at three offshore Norway projects

    Oct. 7, 2020
    Equinor says the Martin Linge, Johan Castberg, and Njord projects will see postponed start-up and cost increases as a result of increased scope of work, COVID-19 infection control measures, and the weak Norwegian krone.
    (Photo: Øyvind Gravås and Even Kleppa / courtesy Equinor ASA)
    SAL Trina offloading Johan Castberg subsea templates at Polarbase, Hammerfest, on May 4, 2020.
    SAL Trina offloading Johan Castberg subsea templates at Polarbase, Hammerfest, on May 4, 2020.

    Offshore staff

    STAVANGER, Norway – The COVID-19 pandemic and weakened Norwegian krone have increased costs and postponed start-up of several Equinor projects offshore Norway.

    The Martin Linge, Johan Castberg, and Njord projects have experienced the largest changes since the plans for development and operation (PDO) were submitted and will see postponed start-up and cost increases as a result of increased scope of work, infection control measures, and the weak Norwegian krone.

    Since the PDO in 2012 the costs related to Martin Linge have increased by almost NOK 30 billion ($3.2 billion), a 96% cost increase.

    In March Martin Linge had to demobilize all personnel due to COVID-19, and later remobilized with a limited workforce in accordance with new infection control measures.

    Since last year the cost estimate has increased by NOK 3.6 billion ($387 million). Half of this is estimated to be due to COVID-19 infection control measures. Add to this increased scope of work on the platform and the drilling of up to three new wells. Start-up is postponed until the summer of 2021.

    Exclusive of currency effects the cost estimates for Johan Castberg have declined by NOK 1.5 billion ($161 million) since the PDO in 2017. Due to an estimated currency loss of about NOK 4.4 billion ($473 million) the project will still see a total cost increase of NOK 2.8 billion ($301 million) since the PDO was approved in 2018.

    Since last year costs have increased by NOK 3.4 billion ($366 million), with increased costs related to COVID-19 accounting for about NOK 2.5 billion ($269 million).

    The FPSO hull delivery is delayed by one year. Sembcorp Marine in Singapore has been fully shut down and still has a sharply reduced workforce. Work to repair welds on the hull is under way.

    Johan Castberg is still a project with good profitability, the company said. The scheduled production start is postponed until 4Q 2023.

    The investment estimate for Njord Future has increased by NOK 8.5 billion ($914 million), an increase of 53% since the PDO in 2017. The increase is largely due to the work on the Njord A platform’s life extension being more extensive than expected, and the increased scope of the Njord Bravo upgrading and tie-in work. Kværner Stord is upgrading the Njord A platform, whereas Aibel’s yard in Haugesund is upgrading the Njord Bravo floating storage and offloading vessel.

    Since last year the investment estimate has increased by almost NOK 4 billion ($430 million). About half of this is associated with delays in connection with COVID-19 measures and extended project execution period.

    The Njord Future project is expected to recover 175 MMboe on the Njord and Hyme fields. This corresponds to the reserves produced on the Njord field since start-up in 1997.

    Planned start-up is delayed to 2021.

    10/07/2020