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Norwegian giant Statoil ASA (STO - Analyst Report) has teamed up with ABB to develop solutions for subsea electrical power transmission and distribution for electrification of fields off Norway and in other parts of the world. The project is likely to involve investments of around $100 million over a five-year period.

The jointly funded program, led by Statoil and participation by other oil companies, will have ABB as its technology partner. It will be in the form of a cost-shared joint industrial programme (JIP).

The project will entail development of technologies to supply electrical power for subsea pumps and gas compressors as well as provide power conversion systems for water depth of about 3,000 meters and over long distances.

The JIP is the outcome of an extensive subsea electrification study performed by Statoil and ABB. The main objective behind the development effort is to provide a cost-efficient and reliable solution using a single cable to control subsea equipment over long distances, rather than multiple cables for each component.

The Norwegian state-owned company also aims to provide new field developments off Norway with electricity supplies from land rather than using more pollutive gas-fired turbines on platforms. The solutions are expected to boost utilization of the oil and gas resources through higher recovery rates, reduced production costs as well as facilitate deepwater production.

Statoil’s management believes that this project is likely to decrease capital expenditures by over $500 million on a power distribution system supplying to eight subsea installations 200 kilometers from the shore.

The technology is believed to be the key element for supplying power to Statoil’s so-called “subsea factory”, with the target of putting the entire processing system on the seafloor by 2020.

The solution will be mostly applicable in remote fields like the Arctic, where electrical transmission needs to be executed over long distances to develop remote fields, and deepwater regions such as the Gulf of Mexico.

Statoil carries a Zacks Rank #4 (Sell). However, other Zacks Ranked #1 (Strong Buy) stocks – Range Resources Corp. (RRC - Analyst Report), China Petroleum & Chemical Corp (SNP - Analyst Report) and Dril-Quip, Inc. (DRQ - Analyst Report) – appear more attractive for the short term.

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