Statoil ASA (STO) has reduced production at its Grane platform in the North Sea for the first time, following disruptions in the injection compressor.
Production was interrupted immediately after a planned maintenance and modification break. A setback in the injection compressor, which is vital for maintaining full production, was responsible for low production. Low levels of output are likely to continue for about three to six weeks.
The Grane field, situated on Norwegian Block 25/11 in 417 feet of water, is estimated to produce 135,000 barrels of oil per day in 2011. The field located around 185 kilometers west of Haugesund is the first on the Norwegian Continental Shelf (NCS) to produce heavy crude oil.
Grane has been developed with an integrated accommodation, processing and drilling platform that has a fixed steel frame construction lying on the sea bed. The field was discovered by Hydro in 1991, and commenced production in September 2003.
The oil is carried by pipeline to the Sture terminal, where it is stored in large rock caverns in the mountainside before being distributed in the world market. In 2010, Statoil’s share of Grane output was 54,700 barrels per day.
Statoil is the operator of the field with a 36.66% interest. The other licensees are ConocoPhillips (COP) with a 6.17% interest, ExxonMobil Corporation (XOM) with 28.22% and Norwegian state owned firm Petoro with 28.94%.
Though Statoil has operations in all major hydrocarbon-producing regions of the world, it has an upstream focus on the NCS. We believe that the company is well positioned to sustain its steady production growth for the next few years on the back of its large resource base at NCS.
Statoil holds a Zacks # 2 Rank, which is equivalent to a Buy rating for a period of one to three months. We maintain a Neutral rating on the stock for the long term.
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