Norwegian oil giant Statoil ASA and its partners have unveiled their development plan for the Skrugard and Havis discoveries in the Barents Sea.
The companies have proposed to transfer oil via the 280-kilometer pipeline from the Barents Sea to a new terminal in the country's far north. The liquids will be accumulated in 2 mountain caverns prior to being exported by a tanker.
The oil terminal at Veidnes outside Honningsvåg in Finnmark is expected to be commissioned by the end of 2018. The facility is designed to cope with more resources in the future as new oil finds are made in the Arctic Barents Sea. This is likely to pave the way for a permanent oil hub in the Arctic.
Statoil plans to perform a joint development of the finds, with combined recoverable oil resources of around 400 million to 600 million barrels. The development will be carried out by means of a subsea system, tied to a semi-submersible platform.
The Norwegian operator aims to submit a development plan for the Skrugard and Havis project to the authorities in 2014 and targets to commence production in 2018. The yield is expected at around 200,000 barrels of oil equivalent per day.
Although a final investment decision is expected in summer 2014, early cost estimates provided by Statoil for the Skrugard and Havis developments are in the range of NOK 80 billion to 90 billion ($14.5–$16.3 billion).
Statoil operates the project with an interest of 50%. Other partners are Eni SpA (E - Free Report) and state holding company Petoro AS with 30% and 20% stakes, respectively.
Skrugard was found in the frontier Arctic region in early 2011, while the nearby Havis was discovered in early 2012. These are 2 independent structures within the same license.
During 2013–14, Statoil intends to drill 9 new prospects in the Barents Sea, as part of its exploration campaign. Currently, it is spudding 4 other prospects in the Skrugard and Havis area, the drilling of which is likely to be completed by this summer.
Statoil carries a Zacks Rank #3, which is equivalent to a short-term Hold rating. However, other stocks in the oil and gas sector like Cabot Oil & Gas Corporation (COG - Free Report) and Memorial Production Partners L.P. hold a Zacks Rank #1 (Strong Buy) and are expected to perform better.