Vår Energi revealed a significant budget increase of $1.2 billion (NOK 11.5 billion) for its development of Balder X, citing increased scope of work, continued impact of supply chain challenges global supply, COVID-19 and schedule change. This increase puts the project’s revised budget 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 remains unchanged. However, first oil from the project is now expected in the third quarter of 2024, compared to the end of 2023.
Balder X, which includes the Balder Future and Ringhorne Phase IV drilling projects, is expected to extend production from the Balder Hub to 2045 and support the development of new discoveries nearby by upgrading existing infrastructure and drilling new wells.
The main impact on production from the revised schedule is expected in 2024, partly mitigated by a faster production ramp-up as more Balder Future production wells are expected to be ready to start. Vår also expects most of the additional capital expenditure to be incurred in 2024.
“We are committed to safely executing the remaining scope of the project to complete the renovation of the jotun FPSO as efficiently as possible,” said Torger Rød, Managing Director of Vår Energi. “Balder X remains a highly profitable project that is expected to increase gross production from Balder Hub to over 70,000 barrels of oil equivalent per day at peak with an attractive breakeven price.”
The new cost estimate and schedule change are primarily related to Balder Future, with increased scope and additional engineering and construction work on the jotun FPSO lifetime extension.
Balder X is expected to unlock approximately 143 million barrels of recoverable reserves. Once the jotun The FPSO is reinstalled and connected to the Balder Future producing wells, it will be connected to the new Ringhorne wells. Additionally, the King and Prince discoveries announced in 2021, estimated at an additional 60-135 million barrels of oil, are being considered for ties to the Jotun FPSO. Vår Energi is also evaluating new exploration prospects in the Balder area.
“The Balder Hub will remain an important contributor to the long-term value creation of the Norwegian Continental Shelf (NCS). Balder is part of the first production license granted in Norway and has produced around 500 million barrels of oil and gas equivalent since 1999, contributing to the security of European energy supply and the development of Norwegian society,” added Rod. “We see potential to increase production from the greater Balder area up to 1 billion barrels based on planned projects, recent discoveries and the addition of at-risk exploration resources.”
The Balder field is under 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, vessel upgrade, drilling new wells on Ringhorne III/IV and Balder Future, including jotun FPSO life extension and drilling of 14 new production wells and one water injection well.
The project reuses existing infrastructure to reduce the development footprint and pave the way for potential future retirement of generation assets, which could reduce annual CO2 emissions by approximately 100,000 tonnes per year.
Vår Energi has a 90% working interest in PL 001; Partner Mime Petroleum AS holds the remaining 10%.