On 16 March, Spirit Energy started oil production on the Oda field, almost five months earlier than the original plan. The project has also come in under budget, with development costs reduced by around 15%.
The Oda field is Spirit Energy’s first development as operator on the Norwegian Continental Shelf. When the Plan for Development and Operation (PDO) for the field was submitted to the authorities in November 2016, production start was scheduled for 1 August 2019 and total investment costs were estimated at 5.4* billion kroner (£485 million).
The most recent calculations indicate that the project will be delivered at a price of around 4.6* billion kroner (£413 million) – an improvement of nearly 15%. Important reasons for the cost cuts include efficient drilling of production wells and a new type of cooperation with suppliers.
“Norway is a key region for our business and we have now reached production start for our first development project as operator on the Norwegian Shelf, without serious incidents. When we are also well ahead of schedule and well below budget, there is every reason to be proud,” says managing director Rune Martinsen in Spirit Energy Norway AS.
Spirit Energy discovered Oda in 2011 in the southern part of the Norwegian sector of the North Sea. The field is developed with a subsea template tied in to the Ula platform, 13 kilometres away.
The oil is exported to Ekofisk and then onward in Norpipe to the Teesside terminal in the UK. The gas from Oda is injected into the Ula reservoir to improve oil recovery from the Ula field.
The subsea connection between Oda and Ula is an innovative solution, with reuse of equipment on the Ula platform.
“Reuse is a smart approach in the oil industry. Oda would have been more expensive if we had not used equipment that was already offshore. Now, the economic case for the Oda field is strong,” says Martinsen.
New supplier cooperation
Prior to start-up of the Oda project, Spirit Energy entered into long-term contracts with four supplier companies; Aibel, Subsea 7, TechnipFMC and DNV GL.
The agreements were based on a new initiative on the Norwegian Shelf, and were signed for up to 10 years. The objective was to achieve long-term cooperation, as well as to create value and predictability.
“We wanted to have the suppliers with us from start to finish, rather than defining the project ourselves and then putting it out for tender. In this way, we created predictability, cooperation and a long-term perspective – also for the suppliers. We’ve let the experts do what they do best. There is no doubt that this cooperation model has contributed to high-quality delivery. We have also had excellent cooperation with Aker BP, operator of the host platform on the Ula field,” says Martinsen.
Preliminary estimates show that this cooperation with the suppliers, which has been called ‘Strategic partner alliance’, has helped reduce costs by around 50% within the various delivery areas, from concept selection to commissioning.
Oda’s recoverable reserves are estimated at about 33 million barrels of oil equivalent, of which 95 per cent is oil. Peak daily production is expected to reach nearly 35,000 barrels.
Spirit Energy Norway AS is the operator for Oda, with an ownership interest of 40%. The partners are Suncor Energy Norge (30%), Faroe Petroleum (15%) and Aker BP (15%).