SLB Schlumberger Ltd

Norway based energy company Statoil ASA (STO) has signed a contract with a unit of Schlumberger Limited (SLB) – Framo Engineeing. Per the contract, the unit will design and build subsea gas compression plants for the Gullfaks field, off Norway and will likely be the first structure globally to use subsea gas compression.

Subsea gas compression will assist in raising production from existing fields on the Norwegian Continental Shelf as well as augment the producing life cycle of the gas fields. The output is expected to increase by about 3 billion cubic meters of gas and allow Gullfaks to maintain plateau production for gas export.

The companies agreed to implement a subsea solution as the ideal notion for gas compression to increase yields, around 15 kilometers from the Gullfaks C platform. Statoil plans to boost the recovery rate of the fields to 74% from its current 62% by employing a combination of subsea compression along with conventional low-pressure production at a later phase.

Starting with immediate effect, the contract will continue till November 2015. Further contracts relating to Gullfaks development – platform alterations and marine operations – are likely to be awarded in the summer or autumn of 2012.                                                                                                            

Statoil, the operator of the field, and its partner – Norwegian state owned firm Petoro – hold 70% and 30% interests, respectively. The contract is valued at NOK 900 million ($155 million).

Statoil aims to achieve an equity production of above 2.5 million barrels of oil equivalent in 2020. The growth is expected to come from new projects between 2014 and 2016, resulting in a compound annual growth rate (CAGR) of 2% to 3% for the period 2012 to 2016. This will be supported by the various efforts made by the company to enhance recovery from the existing fields by applying new technologies.

For the long term, we maintain a Neutral recommendation on Statoil.

 
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