Culzean topsides (illustration: Maersk Oil)

Maersk Oil CEO has announced that the capital costs of its marquee Culzean HPHT gas project have been reduced by USD 500 million as a result of higher drilling efficiency and robust upfront design and project planning.

Investment costs for the Culzean project are now forecasted to be around USD 4 billion, a reduction of approximately USD 500 million on the estimate at project sanction, CEO Gretchen Watkins outlined at the Maersk Group Capital Markets Day in Copenhagen.

A significant improvement of project capex has been achieved in close collaboration with partners, suppliers and the authorities. The present breakeven estimate for the project now stands at USD 33 per barrel of oil equivalent (boe) (including cost since sanction).

“This updated forecast reflects Maersk Oil’s commitment to world class project execution and our aim to continually improve our major capital projects, together with our partners and suppliers. Achieving cost reduction of 11% during project maturation, we are showing our ability to deliver greater value for investors and stakeholders through effective project delivery and controls,” says Watkins.

Culzean, a high pressure, high temperature gas condensate development in the UK Central North Sea was approved by the Oil & Gas Authority in August 2015. Since then, Maersk Oil and co-venturers BP and JX Nippon have worked together effectively and with suppliers to improve the project, supporting positive development in investment costs.

The improved forecast has been achieved through higher drilling efficiency, robust upfront design and project planning, supply chain deflation and supportive foreign exchange movements. Gretchen Watkins says, “Improvement is largely driven by pulling the levers within our control to enhance Culzean’s project economics. Together with our position in the Statoil-operated Johan Sverdrup field development, Maersk Oil is committed to delivering the next generation of significant North Sea developments.”