Statoil Issues Impact Assessment Program For Johan Castberg

Statoil (OL:STL) ASA (NYSE:STO) , operator of Johan Castberg project, has sent out a proposed impact assessment program for the largest field to be developed so far on the Norwegian continental shelf (NCS).

Per the schedule, the planned impact assessment program is a vital aspect of the arrangements before a final development plan for Johan Castberg is submitted in 2017. The plan will report the development, applicable development solutions and expected impacts on other businesses and communities. The planned program is being forwarded to consultative bodies so that they can submit any issues for debate during the consultation process associated with the Johan Castberg impact assessment work.

Per a spin-off report from Agenda Kaupang, based on an investment estimate in the range of NOK 50–60 billion, the Johan Castberg project will be an important part of NCS investments in the period 2018–2022. The first phase of the Johan Sverdrup development is expected to be completed within this period. However, these plans may be adversely impacted if prices of oil continue to remain low.

Moreover, the estimated value creation in Norwegian supplies of goods and services to Johan Castberg is of NOK 29 billion. This amount exceeds half of the project’s total investments. During the development period value creation in North Norway is projected to be NOK 1.7 billion.

Statoil has undertaken a comprehensive assessment of the possible power solutions for Johan Castberg, on behalf of its partners. The power solutions comprise full and/or partial electrification based on power from land as well as gas-fired power.

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Owing to the long distance and technical challenges the cost of the measures associated with partial/full electrification will be high, from just above NOK 5000 per ton of CO2 to just above NOK 8000 per ton of CO2. Investment costs for full/partial electrification will span from over NOK 4 billion to over NOK 12 billion. The Johan Castberg power solution effort indicate that costs for land-based power, including technical challenges, signify a risk to both the timeline and viability of the project.

Johan Castberg will be equipped for future electrification by usage of alternating current technology in case this becomes an efficient and feasible solution in the future.

Due to the use of gas turbines, emissions from Johan Castberg will be 0.27 million tons of CO2 per year. This is equivalent to 2% of current annual emissions from the NCS.

The proposed impact assessment program covers only the offshore field development. It does not include a possible terminal at Veidnes, which is a separate project with a different timeline. Statoil is cooperating with the other licenses on Wisting, Goliat and Alta/Gotha to secure sufficient volume for the terminal.

Statoil currently carries a Zacks Rank #3 (Hold). Some better-ranked players from the energy sector are Matador Resources Company (NYSE:MTDR) , NGL Energy Partners LP (NYSE:NGL) and Enviva Partners L.P. (NYSE:EVA) . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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