Aug. 27 (UPI) -- While submitting development plans to the government, Norwegian energy major Equinor said the oil potential from Johan Sverdrup was bigger than expected.
Equinor and its joint venture partners submitted their plan for development of the second phase of the Johan Sverdrup oil field to the Norwegian government. At the same time, the company raised its resource estimate for the entire field by about 4 percent to 2.7 billion barrels of oil equivalent.
Johan Sverdrup is the largest development offshore Norway in nearly 40 years. For the operating partners, it has a breakeven cost of less than $20 per barrel. Brent crude oil, the global benchmark for the price of oil, was trading near $76 per barrel on Monday.
Development of the first phase of Johan Sverdrup is already underway and Equinor estimates that a drilling platform could be operational late this year and first oil will be produced from the field in late 2019. Phase 2 will take production capacity from around 440,000 barrels of oil per day to 660,000 barrels per day by 2022.
Equinor CEO Eldar Sætre added that total costs for development are down about $700 million since February.
"Since the plan for development and operation for the first phase in 2015, we have reduced the total estimated investment for Johan Sverdrup full field development by more than $9.5 billion," he said in a statement.
Contracts worth more than $5.7 billion have been awarded for Johan Sverdrup so far and most of those have gone to companies in Norway. The development partners estimate the project will have a ripple effect across the entire Norwegian economy.
Statistics Norway, the government's record-keeping agency, said it expected total investments in the oil and gas sector next year of $19.8 billion, about 6 percent higher than its previous estimate.
For July, total oil production averaged 1.53 million barrels per day, about 2.7 percent below forecast. Total natural gas production, however, was 6 percent higher than forecast, putting total production above government forecasts by 2.2 percent.
Johan Sverdrup should be in production for at least 50 years.
"Throughout the entire history of this industry, I don't think we have ever seen a project that has been improved as much as Johan Sverdrup has over the last three years," Margareth Øvrum, a vice president for drilling, said.