Norwegian oil company Statoil ASA (STO) plans to electrify the platforms around its new Johan Sverdrup field in the North Sea. The firm plans to power the Utsira High area from Norway's onshore grid in place of the conventional practice of burning gas from the well stream, which in turn raises carbon emissions.
Statoil along with operators, Lundin Petroleum and Det Norske Oljeselskap, and license partners will study the feasibility of electrification of Ulstra High. The project involves the transfer of electricity through a 200-kilometer cable to an offshore hub serving the fields – Johan Sverdrup, Luno, Draupne, Dagny and Eirin – in the North Sea. The study will be conducted under the purview of the Norway’s Ministry of Petroleum and Energy.
The study aims to form a company or partnership that would mastermind the distribution of electricity from land to sea, from a distribution hub that would feed the receiving platforms with power.
The analysis will take in an offshore distribution platform situated near Johan Sverdrup, along with DC cables from land to the distribution platform and AC cables on to the receiving platforms. Additional converters and transformers will be needed on the distribution platform and on land. AC cables will be essential, while the existing switching station will need to be extended for connection to the grid network
The study will also involve a scrutiny of the power situation at the prospective land-based connection points. Several favorable factors such as substantial power needs, the short distance from shore as well as relatively shallow water depth make electrification at Utsira High ideal.
The progress strategy for the study will considerably be influenced by the plans of those who will be receiving power. Selection of a concept and investment decision will be made by the fourth quarter of 2012. The ultimate decision to electrify, though, will be taken by the license holders, based on the profitability, the official conditions and conditions stipulated. Arrangements for potential tie-in of other installations on the Norwegian Continental Shelf will be subsequently made.
Under a NOK25 billion ($4 billion) development plan submitted to the Oslo authorities in early 2012, Total SA (TOT) also proposes to use electricity supplies from land to control its Hild oil and gas field in the Norwegian North Sea.
Statoil holds 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 long term.
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