OSLO, March 31 Norwegian oil company Det norske
oljeselskap DETNOR.OL submitted on Monday a 3 billion crowns
($588.1 million) plan to redevelop the dormant Froy oilfield in
the North Sea, the group said.
"Det norske hopes to produce at least 50 million barrels of
oil from Froy over a six-year period," said the company, which
was spun off by DNO (DNO.OL) and took over its Norwegian shelf
Plateau production is seen at about 31,500 barrels of oil
per day, with eight producing wells, the company said in a
"Provided that the (plan for development and operation) is
approved before the summer of 2008, the company expects drilling
and production to commence during the third quarter of 2012,"
Det norske said.
Froy was in production in 1995-2001 with Elf as operator,
but the recovery rate was lower than projected, and low prices
and technical challenges related to the reservoir caused it to
be shut down earlier than planned, Det norske oljeselskap said.
Det norske got the licence and operatorship in a 2005
licensing round for mature areas of the Norwegian shelf.
Its partner in the field with a 50 percent interest is UK
independent Premier Oil (PMO.L).
"We need an oil price over $50 dollar per barrel to be
profitable on the project," Det norske's Chief Executive Erik
Haugane told a news conference.
Froy will be developed with a jack-up platform containing
drilling and production facilities, the company said, adding
that oil will be stored in a tank on the seabed before
offloading to shuttle tankers for transport.
Produced gas and water will be injected into the reservoir
to raise pressure and enhance recovery, it said.
"On a licence basis, expected investments for development
and operation of the Froy field amount to 3 billion Norwegian
crowns (fixed terms) in the 2008-2014 period, assuming a leased
production facility," Det norske oljeselskap said.
"The Froy field is expected to generate a net present value
amounting to 5 billion crowns before taxes, provided a cost of
capital of 7 percent before taxes and oil prices based on the
market's forward curve," it said.
This will provide Det norske with "a significant cash flow"
for further investments in exploration and development on the
Norwegian shelf, the company said.
Premier Oil Norge has yet to endorse the plan submitted to
the Norwegian authorities, Det norske said.
"Premier believes it's too expensive, but they haven't put
up any alternatives for us," Haugane told the news conferanse.
He added that Det norske has asked Premier if it wants to
sell its stake, but Premier has not been willing to sell.
In any case, Det norske does not want to own more than 50
percent of the project, he said.
(Reporting by John Acher and Ole Petter Skonnord)