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Norwegian oil and gas major Statoil ASA (STO - Analyst Report) has proposed to invest NOK 31 billion ($5.6 billion) for the development of the Dagny field, according to the Plan for Development and Operation (PDO) submitted to the Norwegian authorities.

Statoil intends to bring the Dagny field online using a fixed platform, which will be attached to the Sleipner field for gas export. The Dagny field comprises four licenses and is estimated to hold recoverable reserves of about 225 million barrels of oil equivalent.

Per the plan, the license partners are likely to pre-invest in equipment targeted to receive power from the shore and for the setting up of a gas-fired turbine for power generation. This facility will only be employed till power from the shore is obtained.

Along with the submission of the PDO, the authorities will award various contracts relating to the development project. The companies are expected to award the main contracts during 2013 on the basis of the design studies executed by different Norwegian and international supply companies. Maersk Drilling has already received a contract for production drilling on the field in early 2012.

The Dagny is scheduled to be commissioned during the first quarter of 2017 and has an estimated productive life of 20 years. During the plateau phase, the yield is projected at 60,000 barrels per day of oil and 9 million cubic meters per day (MMcm/d) of gas. In order to enhance output, dry gas injection will be employed at a rate of 8 MMcm/d.

Statoil expects to submit the PDO for its associated field – Eirin – by 2013, where a subsea template will be attached to the Dagny platform.

Det Norske also announced that it has inked an agreement to purchase a total 3.3% interest in Dagny, where it is already a partner of the permit, which forms part of the production license 029B.

Statoil is the overall operator of the field which consists of PL303, PL048 and PL029C and PL029B, together with partner Total SA (TOT - Analyst Report).

Statoil holds a Zacks #5 Rank (short-term Strong Sell rating).

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