Vår Energi has revealed a significant budget increase of $1.2 billion (NOK 11.5 billion) for its Balder X development citing increased scope of work, the continued impact from global supply chain challenges, COVID-19, and schedule change. The increase places the revised budget for the project at $4.3 billion (NOK 40.7 billion). Vår added that its production target of more than 350,000 BOE/D by the end of 2025 remained unaffected. However, first oil from the project is now expected in the third quarter of 2024, compared to previously late in 2023.
Balder X, which comprises Balder Future and the Ringhorne Phase IV drilling projects, is set to extend production from the Balder Hub to 2045 and support development of new nearby discoveries by upgrading existing infrastructure and drilling of new wells.
The main production impact from the revised schedule is expected in 2024, partly mitigated by a faster ramp-up of production as more Balder Future production wells are expected to be ready for startup. Vår also expects most of the incremental capital expenditure to be incurred in 2024.
“We are committed to the safe execution of the remaining project scope to complete the refurbishment of the Jotun FPSO as efficiently as possible,” said Torger Rød, chief executive of Vår Energi. “Balder X remains a highly profitable project which is expected to increase the Balder Hub gross production to over 70,000 barrels of oil equivalents per day at peak with an attractive break-even price.”
The new cost estimate and schedule change are mainly related to Balder Future, with increased scope and additional engineering and construction work on theJotunFPSO lifetime extension.
Balder X is expected to unlock an estimated 143 million bbl of recoverable reserves. Once the Jotun FPSO is re-installed and connected to the Balder Future production wells, it will tie in the new Ringhorne wells. Additionally, the King and Prince discoveries announced in 2021, estimated to hold an additional 60–135 million bbl of oil, are being considered for tie-ins to the Jotun FPSO. Vår Energi is also evaluating new exploration prospects in the Balder area.
“The Balder Hub will remain a significant contributor to the long-term value creation from the Norwegian Continental Shelf (NCS). Balder is part of the first production license awarded in Norway and has since 1999 produced approximately 500 million barrels of oil and gas equivalents, contributing to European energy supply security and to the development of the Norwegian society,” added Rød. “We see a potential to increase the production from the greater Balder area up towards 1 billion barrels based on planned projects, recent discoveries and adding risked exploration resources.”
The Balder field is in production license PL 001—the very first license on the NCS —acquired in 1965. The Balder X project aims to extend production to 2045 and consists of four ongoing projects: Balder FPU life extension, vessel upgrade, drilling new wells on Ringhorne III/IV, and Balder Future including Jotun FPSO lifetime extension and drilling 14 new production wells and one water- injection well.
The project is reusing existing infrastructure to reduce the development footprint and to open for a potential future retirement of production assets which may reduce annual CO2 emissions by around 100,000 tons per year.
Vår Energi holds a 90% working interest in PL 001; Partner Mime Petroleum AS holds the remaining 10% stake.
