OSLO, Oct 29, 2006 (Dow Jones Newswires) Statoil ASA (STO) is producing oil and gas at its Kristin field in the Norwegian Sea at a slower-than-expected rate in order to mitigate against the risk of collapsed reservoirs, the company's chief financial officer said Monday.
Speaking at Statoil's third-quarter results presentation in Oslo, Chief Financial Officer Eldar Saetre said: "We need to take a careful approach. We've reviewed this, and need a production buildup which is robust."
The field was cited amongst others by Statoil Sept. 29 as contributing to a 3% cut to its 2006 production targets to 1.14 million barrels of oil equivalent a day, although few details were available at the time.
In July, Statoil set its 2006 production target at 1.175 million boe/d, which was in turn a cut from its earlier estimate of 1.2 million boe/d.
"This is an extreme reservoir with extreme pressures and temperatures. We have sufficient well capacity to produce at peak levels. If we wanted to take that risk we could do it now," Saetre said of Kristin.
"But we couldn't guarantee that we weren't ruining the reservoirs close to the well because of the pressure," he added. "This is mitigating risk, we don't want to risk this, they could collapse. We want to do this very carefully," he said.
At the time of its production cuts, Statoil said: "Complex technical challenges in projects with demanding reservoirs lead to postponements which have a negative effect on production estimates."
"On the Kristin field, stepping up production will be further deferred. Running up the wells has to be done cautiously to ensure stability in the reservoir," the company said.
It added that plateau production is expected to be reached at the field in the first quarter of 2007, pending completion of work on the field during the winter.
Estimated Kristin production rates for 2006 are 47,000 barrels a day of oil and around 8.1 million cubic meters of gas a day, according to the Norwegian Ministry of Petroleum and Energy.
Statoil's total oil and gas production in the third quarter of 2006 was 1.076 million boe/d compared with 1.128 boe/d in the same period in 2005, the firm said in its third-quarter results.
The company also cut its oil and gas output target for 2007 by 3% earlier this year, to 1.3 million boe/d split between around 1.06 boe/d from the Norwegian continental shelf and around 240,000 boe/d internationally.
Statoil operates Kristin and has a 41.6% stake in the field. Other stakeholders are Italy's Eni SpA (ENI.MI), Exxon Mobil Corp. (XOM) of the U.S., Norway's Norsk Hydro ASA (NHY) and Petoro AS, and France's Total SA (TOT).
Copyright (c) 2006 Dow Jones & Company, Inc.
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