This excerpt taken from the STO 6-K filed Mar 10, 2005.
The result of the ordinary updating of the investment estimate for the Kristin project operated by Statoil (OSE: STL, NYSE: STO) in the Norwegian Sea is ready. The estimated investment has been increased by NOK 1.4 billion.
In addition, the project has resolved to provide an extraordinary project reserve of NOK 500 million because great uncertainty persists about future drilling and completion work.
“Kristin is the most demanding reservoir ever developed on the Norwegian continental shelf,” says Terje Overvik, executive vice president for Statoil’s Exploration & Production Norway business area.
“The drilling and reservoir challenges call for completely new technological solutions. This is the first time wells are being drilled in such demanding formations from a floating rig.”
The new investment estimate, including the extraordinary project reserve, is NOK 20.8 billion.
Mr Overvik emphasises that the development satisfies Statoil’s profitability requirements, and that it creates new industrial opportunities for the group.
The Kristin reservoir is very complex and deep, located more than 4,500 metres beneath the seabed. It has a number of faults, and communication is not as good as the development plan forecast.
In addition, the reservoir has a record-high pressure of 910 bar and temperature of 170°C. Plans call for it to begin producing on 1 October.
The field is being developed with a total of 12 subsea-completed wells, including seven which will feature a combination of extended length with high deviation. Drilling long wells with high deviation has been necessary in order to secure the assets in the reservoir.
Kristin’s platform is under construction at Aker Kvaerner’s Stord Verft yard south of Bergen, and is due to leave there this month as planned. It will be fully complete at tow-out.
The cost increase relates primarily to drilling and completion operations:
“The challenges and uncertainties relating to Kristin’s reservoir conditions have been known all along,” says Mr Overvik.
“They were described in detail in the plan for development and operation (PDO). We’ve had to use new technology from an early stage.”
Safety and quality have guided progress all along.
Several discoveries and prospects with reservoir conditions which resemble those on Kristin are to be found in the same Halten Bank area of the Norwegian Sea.
The development of this field represents a technological leap forward, strengthening opportunities to develop these other resources.
Opportunities opened by Kristin for new field projects in the area
were also described in the PDO.
Licensees in the latter are Statoil, with 41.6 per cent, Petoro with 18.9 per cent, Norsk Hydro with 14 per cent, ExxonMobil with 10.5 per cent, Eni with nine per cent and Total with six per cent.
Further information from:
Mari Thjømøe, vice president investor relations, tel: +47
90 77 78 24 (mobile), +47 51 99 77 90 (office)