OSLO, March 31 (Reuters) - 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 activities.
Plateau production is seen at about 31,500 barrels of oil per day, with eight producing wells, the company said in a statement.
“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