New Production Milestone at Balder Field in the North Sea
The commencement of oil production at the Balder field in the North Sea signals a significant milestone for the inaugural production license in the Norwegian Continental Shelf. Vår Energi has reported that the Jotun floating production, storage, and offloading (FPSO) vessel, positioned in approximately 125 meters of water within production license PL001, commenced operations on June 23. Just a week prior, the company had announced a final investment decision (FID) for the expedited development of the Balder Phase VI project.
Production Capacity and Future Prospects
The Jotun FPSO, which departed from Worley’s facility in Rosenberg, Norway, in March, is projected to manage around 80,000 barrels of oil equivalent per day (BOEPD) from the Balder field. Vår Energi has successfully completed all 14 production wells as part of the Balder X initiative, which will be gradually activated during the ramp-up phase toward peak output. The company estimates that the recoverable reserves from the project amount to 150 million barrels of oil equivalent (BOE).
Currently, the Balder field is producing approximately 30,000 BOEPD through the Balder floating production unit (FPU) and Ringhorne facilities. However, Vår Energi plans to retire the FPU in the coming years and transition a portion of that production to the Jotun FPSO. “The Jotun FPSO, designed for extended production capabilities beyond 2045, presents significant opportunities for value creation in the region,” stated Vår Energi CEO Nick Walker in a press statement.
Strategic Development Plans
Vår Energi has outlined its strategy to enhance production at the Jotun FPSO through infill drilling, exploratory activities, and tieback developments that have a quick turnaround. The previously authorized Balder Phase V project is set to commence production later this year, aiming for gross 2P reserves that exceed 30 million BOE. Collectively, the ongoing Balder and Phase V projects are expected to achieve a payback period of approximately two years following the start of production.
Insights on Balder Phase VI and Beyond
When Vår Energi approved the $260 million (NOK 2.6 billion) Balder Phase VI project on June 18, the company emphasized that this rapid development initiative would play a crucial role in maintaining sustained production for the Jotun FPSO. COO Torger Rød conveyed that the Balder area harbors significant future resource potential. With the Jotun FPSO now operational, Vår Energi aims to unlock further high-value resources from the Balder region through various development phases and field optimization efforts. He noted that Balder Phase V is expected to start production later this year, and with the FID for Balder Phase VI, the company is taking an essential step toward ensuring continuous output through rapid development timelines. The Balder Phase VI project is anticipated to start production at the Jotun FPSO by the end of 2026.
Future Developments and Environmental Considerations
The Balder Phase VI initiative aims to develop around 15 million BOE of gross proved plus probable (2P) reserves. This project will involve the addition of one multilateral production well, the installation of a new subsea template, and a flowline connection to the Jotun FPSO, with production expected to commence by the end of 2026. The project boasts a breakeven cost of less than $35 per barrel and is projected to achieve payback within a year of production commencement based on current prices.
In addition to these developments, Vår Energi is advancing its Balder Next project, which targets approximately 55 million BOE of additional contingent resources. The plan includes decommissioning the existing Balder FPU by 2028 and shifting production from certain wells currently linked to the FPU to the Jotun FPSO. The company anticipates that this transition will lead to a reduction in operating expenses by around $130 million annually and cut CO2 emissions by approximately 80,000 tonnes each year. Vår Energi also aims to expedite production as part of an FPSO optimization initiative.
The company has indicated plans to reach FID on a total of eight projects this year, with the goal of maintaining productivity in the Balder area through 2045. Vår Energi holds a 90% stake in the Balder field, managing operations on behalf of its partner, Kistos Energy Norway AS, which owns the remaining 10%.
