Norwegian oil and gas company Statoil ASA (STO), along with its partners, plans to invest around 15 billion kroner ($2.7 billion) to construct a subsea compression system at the Asgard B platform.
According to Statoil, natural pressure from the project is expected to lower with time, making it difficult to maintain a stable flow and a high production profile. The company has thus proposed to compress gas on the seabed, which is expected to boost production and at the same time compensate for the decline.
The proposed system is expected to augment recovery from the Midgard and Mikkel fields – that are located 40-50 kilometers from the Asgard B platform, where their output is processed – by about 278 million barrels of oil equivalent. The compression of gas will balance the decline in their natural pressure over time, thereby enabling to maintain a stable flow and a high production profile from the platform.
According to the Norwegian Petroleum Directorate ('’NPD”), production from Mikkel is estimated at nearly 1.74 billion standard cubic meters of gas per year and 8,000 barrels of oil per day in 2011. In 2011, production from Midgard is projected at around 70,000 barrels of oil per day and 11.64 billion standard cubic meters of gas per year.
As the operator of the Asgard field, Statoil holds a 34.57% interest. Eni SpA (E), Total S.A. (TOT), ExxonMobil Corporation (XOM) and Norwegian state-owned firm Petoro hold 14.82%, 7.68%, 7.24% and 35.69%, respectively. Midgard, an oil and condensate field, is part of the Asgard field.
In the Mikkel field, Statoil has a 43.97% interest, with its partners ExxonMobil, Eni SpA and Total holding 33.48%, 14.9% and 7.65%, respectively.
Statoil has a Zacks #3 Rank, which is equivalent to a Hold rating for a period of one to three months. We maintain a Neutral rating on the stock for the longer term.
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