Lundin Petroleum begins commercial oil production in Edvard Grieg field, located in the Norwegian waters of the North Sea. Photo courtesy of the Norwegian Petroleum Directorate.
STOCKHOLM, Sweden, Nov. 30 (UPI) -- The start of commercial oil production from the Edvard Grieg field in the North Sea could be transformational, operator Lundin Petroleum said.
Commercial production started Saturday. The company discovered the field in 2007 and estimates it holds about 187 million barrels of oil equivalents. Most of the reserves in the field located in Norwegian waters are in the form of oil.
Early delays in infrastructure installation at Edvard Grieg prompted Lundin, which has headquarters in Sweden, to revise its full-year production guidance lower to 32,000 barrels of oil equivalents per day.
Lundin President and Chief Executive Officer Alex Schneiter said first oil was a "remarkable achievement ... that was made possible by the excellent support received from our partners and the government in Norway."
The National Petroleum Directorate revised its data for the field during the summer. Preliminary calculations from an exploration well led to a potential increase of between 6.2 million and 50 million barrels of recoverable oil in the field. Peak production is anticipated at 90,000 barrels of oil and 53 million cubic feet of natural gas per day.
The start of commercial production comes at a time when a market favoring the supply side is leaving crude oil prices lower. That, in turn, leaves companies with less capital for investments.
The NPD said the development costs of Edvard Grieg where higher than originally planned, but within the range of expected uncertainty.
Lundin reported a net loss for the third quarter of $200 million, compared with net profit of $5.6 million over the same period last year. Shares in the company (LUPE) were up 3.1 percent in early trading Monday after the Edvard Grieg announcement.