STAVANGER, Norway, March 1 (UPI) -- Norwegian energy company Statoil said Tuesday it started drilling the first well for the Johan Sverdrup field, one of the largest ever discovered.
Johan Sverdrup is one of the five biggest oil fields ever discovered on the Norwegian continental shelf, with a reserve basin of as much as 3 billion barrels of oil equivalent. At midnight local time, the Deepsea Atlantic drilling rig started spinning to tap the first of the 35 wells slated for the preliminary phase of the field's development.
"This is a central operation in a complex Johan Sverdrup puzzle," Kjetel Digre, a senior vice president for the Johan Sverdrup project, said in a statement. "Pre-drilling allows the production capacity on the field to be utilized as efficiently as possible when Johan Sverdrup has come on stream late in 2019."
There are 8 total wells designated for the pre-drilling stage. Permanent drilling platforms will be at the site by 2018, in time for full-scale production.
Fabrication for parts of a 22,000-ton platform for Johan Sverdrup started in mid-February at a shipyard in Haugesund, a port city in northern Norway. Contracts worth more than $5.7 billion have been awarded for the project, with more than 70 percent of them going to Norwegian companies.
Pre-drilling at Johan Sverdrup, which has an initial cost of around $13 billion, comes as the global oil and gas sector faces challenges presented by crude oil prices that are about 70 percent lower than two years ago.
Data gathered by Statistics Norway, the government's record-keeping agency, found total investments in oil, gas, manufacturing, mining and electricity for 2015 were around $28 billion, down 9.4 percent year-on-year.
Statoil is betting in part on Johan Sverdrup, which could generate $200 billion in revenues over the next 50 years. The company outlined a capital spending plan for 2016 of around $13 billion, down about 11 percent from last year. Earnings for the fourth quarter were down 44 percent year-on-year to $1.75 billion.