June 12 (UPI) -- Norwegian energy company Equinor said Tuesday its Johan Castberg field could be profitable so long as the price of oil is about $35 per barrel.
The Norwegian Parliament approved the company's plans for development of the Barents Sea field on Monday and it awaits formal approval from the Norwegian Ministry of Petroleum and Energy.
Oil was first discovered at Johan Castberg in 2011. Its future was in doubt when the price of crude oil collapsed and Equinor was envisioning a break-even cost above $80 per barrel. New solutions since then have improved the economics for a field with a recoverable reserve estimate of between 450 million and 650 million barrels of oil equivalent.
"Today the project is profitable at an oil price below $35 per barrel," the company's statement read.
The price for Brent crude oil, the global benchmark, was trading in the mid-$70 per barrel range early Tuesday.
The company said total capital spending on the project was estimated at $6.1 billion. Development plans call for a floating production vessel with 30 wells and, by Equinor's estimate, this is the largest subsea project of its kind that's currently under way.
Norway is an important energy player as it designates nearly all of its offshore oil and natural gas production for exports to the European market. Closer to home, the company said the development of Johan Castberg could create about 47,000 man-hours of work for the Norwegian economy.
With contracts focused in the domestic market, Equinor said the field could generate "ripple effects" across the energy sector's economy.
"The project is on schedule, and gradually we will see the results of the construction work, Knut Gjertsen, the project director for Johan Castberg, said in a Tuesday statement. "Many [construction] yards and companies across the country will be busy with Johan Castberg deliveries in the years to come."
Johan Castberg should enter production in 2022.