Offshore Norway – leaner, fitter and much more efficient

Addressing delegates at the Subsea Valley Conference in Oslo this week, Sætre said that the period of high prices had allowed costs to escalate beyond acceptable levels.

However, he said that a radical change in the cost structure is now under way and taking place much faster than expected. The process is enabling Statoil to become much more fit, he said, and capable of operating in a low-price environment for as long as necessary. Sætre revealed the impact of efficiency gains on the breakeven price of oil. In 2013, this stood at about $70 a barrel on average but the same portfolio today, he said, has a breakeven price of around $40. Various projects have been sanctioned at less than $30, Sætre added.

The process was proving many sceptics wrong, he told his audience. “There is a perception that the Norwegian Continental Shelf is an expensive place to be; that oil in the Barents Sea should be left there.” However, this is a misconception and Statoil is proving this through major efficiency gains.

About 500 contracts have been renegotiated by the energy firm since 2014, Sætre revealed. But most of the improvements had not come from shaving supplier margins, he said, but from a new strategy of better planning, more cooperation with suppliers, and simplifying, integrating and standardising.

Earlier, Norway’s Minister of Petroleum and Energy Tord Lien had praised the country’s energy sector for its engineering innovation. This had made Norway into the world’s leading country in subsea technology, he said. According to the Norwegian Petroleum Directorate, there are 90 current discoveries on the Norwegian Continental Shelf, Lien told the conference, and most of these would be developed subsea.

Meanwhile new technologies such as subsea compression, for example, are extending the lives of offshore fields and improving recovery rates. An extra 300m barrels of oil have been produced, he said, by using subsea compression on the North Sea’s Asgard field.