The Stavanger committeeShuttle tanker Polytrader named and launched

Electricians threaten strike

person By Trude Meland, Norwegian Petroleum Museum
The first labour dispute with workers on Statfjord involved working time and the tour cycle. Thirty-eight Norwegian electricians threatened to strike for better tour arrangements and refused to go offshore to work on Statfjord A.
— Two electricians check a lifeboat control board on Statfjord A. Photo: Odd Noreger/Norwegian Petroleum Museum
© Norsk Oljemuseum

Brownaker, which had hired the men to do electrical outfitting on the platform, had introduced a new tour cycle which meant that workers spent 14 days offshore and then had 14 days free on land. The previous scheme was based on eight days at work and eight off.

Although the company had applied to the Norwegian Petroleum Directorate (NPD) on 30 December 1977 to introduce the 14-day cycle, this application had yet to be considered.[REMOVE]Fotnote: Aftenposten 13 January 1978. Statfjord-elektrikere vil ha 8-dagers turnus. 

Norway’s new Working Environment Act of 1977 included rules on working time. These specified that an eight-day tour cycle was the normal routine, but that certain companies could apply for up to 16 days and – in exceptional cases – as many as 32 days.

Electricians from the Elcon group[REMOVE]Fotnote: The partners in Elcon were Asea, Siemens, Stord Elektro, Sønnico and Nebb. reacted strongly to Brownaker’s new tour cycle. “The physical and mental strain on electricians arises because, in addition to tough working days, they have to share four-berth cabins – often with platform workers from the USA or Spain,” Helge Hammerseth, the union convenor at Asea, told Norway’s NTB wire service.

They also reacted over tendencies to make them do night work without this having been discussed with their union officials. At the urging of their union, electricians already on the platform refused to work nights.[REMOVE]Fotnote: Haugesunds Avis, 13 January 1978. “40 elektrikere blir hjemme, arbeidsordningen uholdbar”.

The threat to strike was successful and, after a tussle between the two sides, the eight-day tour cycle was reinstated.[REMOVE]Fotnote: Ny Tid. 19 January 1978. Streiketrussel ga seier.

Another stoppage was staged by the electricians on Statfjord A during 13 May 1978. For 12 hours, from 00.00 to 12.00, 160 of them downed tools in a demonstration against an agreement between the National Union of Electricians and Power Station Workers and the National Association of Electrical Installers on payment for shuttle traffic.

This was a wildcat strike, and the workers acted against the existing structure of elected officials and their own union to demand overtime payments for shuttling between the workplace and their living quarters while offshore.

The outcome of the union-management negotiations was that the electricians would get full overtime payment for the first hour of shuttle time, and then waiting and overtime pay. This meant an hourly reduction of 40 per cent, which the electricians on Statfjord A refused to accept.

In their view, the 1977 Working Environment Act clearly specified that shuttle time should be regarded as working hours, and noted that other groups on the platform were paid overtime for shuttle periods. It could take up to six hours per day to get to and from the worksites to the flotel by helicopter.

Shuttling was used only when the weather was so bad that the gangways linking the platform and the flotels had to be disconnected. That reduced rest time from 12 to six hours and represented a safety risk.[REMOVE]Fotnote: Bergens Tidende, 16 May 1978. Elektriker-streik på Statfjord A.

The Stavanger committeeShuttle tanker Polytrader named and launched
Published November 22, 2019   •   Updated December 9, 2019
© Norsk Oljemuseum
close Close

The Statfjord B letter

person by Trude Meland, Norwegian Petroleum Museum
Preparations for building the Statfjord B platform were well under way in the autumn of 1976. But the Norwegian Petroleum Directorate, as the regulator responsible for offshore safety, had its own views on the project. It expressed these in a letter sent to operator Mobil on 11 November 1976, which came to change all the plans.
— Norway's most expensive letter, it was called, the letter that instructed the Statoil/Mobil group to change the structure of Statfjord B.
© Norsk Oljemuseum

At that time, contract negotiations had been pursued with Norwegian Contractors on building a four-shaft Condeep gravity base structure (GBS). They were at the point where a letter of intent was ready.

The recently established Norwegian Petroleum Consultants (NPC) joint venture had also signed a contract on project management and engineering design for Statfjord B. Read more about NPC in the section on Statfjord B – the first plan.

While the contract for building the platform topside and mechanical outfitting of the GBS shafts had yet to be awarded, an option agreement had been secured with the Aker group.

So all the main contracts for the project appeared to have been put in place. The Storting (parliament) had also approved phase II of the development plan in June 1976, and most people assumed that it was simply a case of starting to build.

Until the NPD letter arrived

The Vogt commission

New safety regulations for the Norwegian offshore industry had been adopted on 9 July that year. A key issue for Statfjord B and the field licensees was the introduction of a more restrictive attitude towards simultaneous drilling and production combined with living quarters on a single integrated platform.

The new rules had been developed by a commission of inquiry appointed by the government as early as 22 May 1970 with a mandate to propose regulations for the safety of production and storage facilities on the seabed and of exploiting petroleum deposits.[REMOVE]Fotnote: Norsk Oljerevy. (1976). no 2. Kontroll med sikkerheten fordelt på ni instanser. 

Work in the commission progressed slowly and its chair, Jens Evensen, asked to be relieved. He was replaced in November 1972 by director general Lars Oftedal Broch, who was replaced in his turn during May 1974 by Nils Vogt from the NPD.

The latter gave his name to the commission’s report, which was submitted to the Ministry of Industry on 12 July 1975. It was then circulated for consultation to affected companies and institutions.[REMOVE]Fotnote: Hanisch, T., Nerheim, G., & Norsk petroleumsforening. (1992). Fra vantro til overmot? (Vol. 1). Oslo: Leseselskapet: 324.

Adopted by royal decree of 9 July 1976, the new safety regulations were based on the recommendations of the Vogt commission and on comments received in the consultation process. One provision of the decree was that the NPD would bear primary responsibility for supervising fixed offshore installations.

Safety issues on Statfjord were viewed by the directorate through the prism of the new regulations. It kept the industry ministry informed about its work, and wrote the following in a letter dated 7 July 1976:

“Given the work being done on safety conditions, it has been found necessary to adopt a more restrictive attitude to those concepts which are based on combined drilling and production, where the living quarters are also placed on the same platform. The main intentions of the Vogt commission’s recommendations run counter to both combined activity and the above-mentioned placement of living quarters … The NPD would emphasise that combined drilling and production will only be accepted following individual analyses and assessments. The same applies to living quarters which it is proposed to place on a drilling/production platform. No final choice of concept has been made for Statfjord B, so no specific safety analysis has been submitted. Comments from the NPD will accordingly have to wait until it the actual conditions have been presented.”[REMOVE]Fotnote: Norsk Oljerevy.

In other words, the ministry had been informed of the NPD’s work and of its scepticism about the plans for Statfjord B. As the letter indicated, the regulator could not adopt a final position until the Statfjord Unit Operating Committee (SUOC) had approved the concept chosen for the B platform in late August 1976. Only then could the NPD conduct its own safety analysis.

The results of the latter were presented to the Statfjord licensees in the above-mentioned letter of 11 November 1976, where the NPD questioned the safety of an integrated platform and ordered the construction of a separate quarters platform:

“The NPD is currently assessing the concept for Statfjord B on the basis of a general evaluation of the safety rules on the field in the light of the new regulations (royal decree of 9.7.76)

“Statfjord B is expected to involve:

  • particularly complex and extensive production facilities concentrated on a single platform
  • a large number of producing wells with high capacity, along with water and gas injection
  • permanent living quarters for 200 occupants, which will be used by 400 people during the construction phase and possibly the drilling phase
  • possible simultaneous drilling and production.

“The total risk is characterised by the contributions from each of the activities and processes which include the examples given above. The NPD’s assessment is that the total risk associated with these conditions lies at too high a level.

“In the NPD’s view, the best way to reduce the total risk would be to reduce the number of people who are present on the platform at any given time. The NPD has accordingly concluded that a separate quarters platform connected to Statfjord B should be built.”

This safety assessment was not confined to Statfjord B. Questions were also posed about the A platform, construction of which was far advanced at the time. It was due to be towed out to the field in six months.

“The considerations mentioned above also apply to Statfjord A, if to a somewhat lesser degree. The NPD would accordingly, on the basis of the provisions in the royal decree of 9.7.76, request that the company undertakes a new overall assessment of safety conditions [on this installation] in relation to the planned drilling and production programme, with particular attention paid to the accommodation issue.”

This letter was signed by Gunnar Hellesen, chair of the NPD board, and director general Fredrik Hagemann.

New concepts proposed

Statfjord B was intended to be a virtual copy of the A platform, but with four support shafts instead of three. The process facilities would be equally large and complex, with a production capacity of 300 000 barrels per day, and the 200-berth quarters module was to be installed on the platform.

It was the last feature in particular that the NPD wished to prevent. The regulator took the view that cutting the number of people on the platform at any given time would reduce the overall risk.

As the letter indicates, the desirable solution was seen to be the construction of two platforms – one for production and drilling, and the other for accommodation. The NPD also emphasised the need for overall safety thinking, and wanted a separate safety study carried out before detailed planning began.

Statoil and Mobil expressed surprise at the letter, and claimed they had not heard that such assessments were being made. Arve Johnsen, then Statoil’s chief executive, described his reaction to the letter in his book Utfordringen (The Challenge): “As chief executive of Statoil, I received many kinds of letters … I have forgotten most of them, but I will remember one to my dying day … It sent a shock wave through the licensees in the Statfjord group.”[REMOVE]Fotnote: Johnsen, A. (1988). Utfordringen : Statoil-år. Oslo: Gyldendal: 202.

It might seem incomprehensible that the partners had failed to see this coming. They had long been aware that the NPD was looking at problems associated with simultaneous drilling and production, and the Vogt commission’s report had been through a consultation process. Comments in the latter as well as the report itself formed the basis for the new safety regulations.

Adopted in June, four months before the letter was despatched, the regulations specified that simultaneous drilling and production was prohibited without special permission. This should have sent certain signals that the plans for Statfjord B might be more difficult to implement than Mobil and Statoil thought.

As late as 12 October, section head Harald Ynnesdal had explained the NPD’s view on the issue in a speech he gave in Kristiansand:

“The new platform types are particularly complex and difficult to assess from a safety perspective with regard to these combined activities. As far as possible, fields should be planned with separate quarters platforms. The production platforms could then, with their combined activities, be assessed purely as industrial plants.

“In an assessment of simultaneous drilling and production in the Statfjord project, for example, the problem would have been much simpler if separate quarters platforms had been adopted. The cost of such platforms would have had little effect on profitability for this project, but would have meant a great deal for overall safety and the desire for an early start to production.”[REMOVE]Fotnote: Norsk Oljerevy. (1976). no 9. Statfjord – planer og virkelighet. On the basis of this letter, an extraordinary meeting of the SUOC was called on 26 November. It decided that all activities related to Statfjord B would be halted. The project would have to be re-evaluated, and extensive conceptual studies were to be carried out for every option from one to three platforms.

A meeting of the Statfjord field engineering committee (SFEC) – the technical project team – took place in January 1977. A 35-strong sub-committee was appointed to study and assess various conceptual solutions for Statfjord B, and came up with 39 variants for consideration.

When the SUOC met again on 18 March, Statoil expressed concern at the progress made. The project had a tight timetable, and order books at the Norwegian shipyards were empty. To speed up the process, the company proposed a separate drilling platform linked by a bridge to a combined production and quarters unit.

A drilling platform supported on a steel jacket, for instance, would be relatively cheap to build and could be ready for tow-out as early as 1979. Drilling of production wells could start as soon as the platform was in place, and continue while the associated production and quarters facility was under construction.

As soon as the latter had been installed, oil and gas could thereby begin.[REMOVE]Fotnote: Norsk Oljerevy. (1977). no 5. Industrien må fortsatt vente på Statfjord B.  This meant in turn that the original schedule set in the field development plan could be met.

Mobil and Saga were strongly opposed to this plan, but did not have enough votes to block it. Their interests added up to only 25 per cent, while resolutions in the SUOC needed 70 per cent support. The Statoil proposal was thereby adopted – against the operator’s vote.

Esso also proposed its own solution at the meeting, comprising an integrated production, drilling and quarters (PDQ) platform but with processing capacity halved to 150 000 barrels per day. This facility would be simpler, since only one process train was required rather than the original two, and overall safety would be improved.

Mobil supported the Esso proposal. The two companies were uncompromising in their opposition to two platforms, and maintained that this would provide no safety benefit. A factor in their assessment was the poor seabed soil conditions on Statfjord, which meant that installing two platforms so close to each other and linked by a bridge carrying high-pressure pipelines would pose a safety risk.

The thought of the substantial capital investment required for two platforms also worried the operator. On the other hand, experience from other North Sea projects suggested that a capacity of 150 000 barrels per day would be sufficient. Such a solution would reduce construction costs by simplifying the platform, and production could also start earlier.

Threats

A further meeting of the SUOC was held on 28 April, when Mobil proposed an integrated platform with a single process train and an average capacity of 180 000 barrels per producing day. This size had been chosen in the hope of avoiding a separate quarters platform.

The change to the original concept was so large that a completely new field development plan might have to be produced. According to the proposals approved the Storting in the summer of 1976, three platforms with a combined capacity of 900 000 barrels per day were to be installed.

Reducing the size of the process facilities on each platform would either require more structures to maintain the planned output, or a slower pace of production.[REMOVE]Fotnote: Norsk Oljerevy. (1977). no 5. Industrien må fortsatt vente på Statfjord B.  Fresh consideration by the Storting could delay the project further.

At the same time, Mobil vetoed a separate quarters platform.[REMOVE]Fotnote: Moe, J. (1980). Kostnadsanalysen norsk kontinentalsokkel : Rapport fra styringsgruppen oppnevnt ved kongelig resolusjon av 16. mars 1979 : Rapporten avgitt til Olje- og energidepartementet 29. april 1980 : 2 : Utbyggingsprosjektene på norsk sokkel (Vol. 2). Oslo: [Olje- og energidepartementet]. With strong support from Esso, the operator noted that it could not accept a solution which complied with the NPD’s principle that drilling and production should not take place simultaneously on the same installation.

Clear instructions had been sent from Mobil’s head office in New York that a compromise solution which would involve an acceptance of the NPD principle was out of the question. It feared that conceding this demand from the Norwegian regulator could lead to similar requirements on other continental shelves, which would have major consequences for both Mobil and its fellow oil companies.

A telex from New York emphasised that, the way things looked, concrete platforms on the scale of Statfjord A had outplayed their role on this field. Mobil was willing to renounce the operatorship for Statfjord B if a two-platform solution was adopted. This attitude took Statoil and the Norwegian government by surprise.[REMOVE]Fotnote: Norsk Oljerevy. (1977). no 5. Industrien må fortsatt vente på Statfjord B. 

Statoil explored the possibility of another operator, but none of the other partners was willing to take on the role without a reallocation of licence interests. Mobil and Esso had staked their prestige on the issue, and they finally managed to convince Statoil of the technical problems posed by a two-platform solution. The argument that this could affect later developments in deeper water was central to the Norwegian company’s change of mind.

The discussion on one or more platforms and the studies of various concepts were paralleled with the presentation of new seismic data for the field. These cut its estimated oil reserves from 3.9 billion barrels – equivalent to 527 million tonnes – to 3.2 billion or 432 million tonnes. That reduced the need for two process trains on Statfjord B.

Clarification

On 5 August, the SUOC approved plans for a platform with the capacity to process 180 000 barrels per day. It was resolved on 29 November to apply to the NPD for permission to build such a structure. The application, accompanied by a separate safety study, was submitted on 1 December.

Plans now called for Statfjord B to be installed in 149 metres of water at the southern end of the field. Seabed conditions were poorer there than over the rest of Statfjord, and the base area of the GBS accordingly had to be increased.

While Statfjord A had 19 cells, the B version would have 24. Planned topside space would expand correspondingly, from 5 200 square metres to 7 800. The platform would still have four shafts even though only one process train was to be installed. With the fourth shaft reserved for risers, space was freed up in the others.

Additional safety barriers were introduced by the decision to make the decks and modules open, reducing the danger of an explosion and possible damage from such an incident. The various functions would also be positioned in such a way that no hazardous operations were close to or beneath the living quarters. And the quarters modules would be protected by an additional fire wall. These plans were approved by the NPD on 19 December.

The project had been delayed by a year and incurred substantial costs through a number of conceptual studies and reports. According to Henrik Ager-Hanssen, deputy chief executive of Statoil, the letter from the NPD was the most expensive in Norwegian history and cost the project NOK 25 million per word.

Viewed from a different perspective, former Statoil staffer Bjørn Vidar Lerøen has noted that oil prices reached record levels over the next few years. That meant the letter became one of Norway’s most profitable.[REMOVE]Fotnote: Lerøen, B., Gooderham, R., & Statoil. (2002). Drops of black gold : Statoil 1972-2002. Stavanger: Statoil: 149.

Published May 23, 2018   •   Updated November 22, 2019
© Norsk Oljemuseum
close Close

Gas pipeline agreements

person By Håkon Lavik, former Statoil employee
The sale of gas from Statfjord made it necessary to connect the platforms with flowlines to gather gas for export via the Statpipe system. Oil flowlines also linked the platforms, but these had been installed as part of the field development.
— Statfjord field with associated gas pipelines. Source: Storting Report 39 1984–85
© Norsk Oljemuseum

A separate project, the Statfjord intrafield pipeline system (Sips), was established to engineer and install the gas lines. Once the work had been completed, Sips was taken over, owned and operated by the Statfjord Unit. In formal terms, Sips
forms part of the Statfjord Facilities – in other words, all the platforms, flowlines, wells and so forth which have been developed to operate the field.

Since the British licensees in Statfjord were not allowed to sell their gas to continental Europe, a separate UK Gas Offtake pipeline was laid as part of Sips from Statfjord B to the UK side of the boundary. There it tied into the Northern Leg Gas Pipeline (NLGP), a gas gathering line for fields north of Brent. The Statfjord Unit owns that part of the UK Gas Offtake line which lies within its boundaries, while the British licensees own the section to the west, including the NLGP tie-in. The UK government demanded the inclusion of a non-return valve in this line, so that British gas could not be conducted to Statfjord B.

This line was regulated by the Agreement for Installation and Tie-in of the UK Pipeline to the Statfjord B Platform and to the Northern Leg Gas Pipeline , which entered into on 1 February 1983. The UK Statfjord Gas Offtake Operating Services between Mobil Exploration Norway Inc and Conoco (UK) Ltd service agreement was also signed on 27 September 1985. A gas pipeline was laid from Gullfaks A to Statfjord C under a separate Agreement for Tie-in and Operation of the Gullfaks Pipeline to the Statfjord C Platform between the two sets of licensees,   dated 27 September 1984.

Gas from Gullfaks was carried via Sips before entering Statpipe until the end of the 1990s, when Gullfaks acquired a new tie-in to Statpipe south of Statfjord. Gas transit via Statfjord accordingly terminated, but the pipeline from Gullfaks is still intact and usable and the tie-in agreement remains operative.

Statpipe tie-in

Gassrøravtaler,
Statpipe map from Gullfaks brochure 1984. Illustration: Equinor

Although the Statpipe system starts from the field, it does not form part of the Statfjord Unit. A separate pipeline and transport company was established after the gas from Statfjord, Gullfaks and Heimdal had been sold in 1982.

The purpose of this joint venture was to install pipelines and build the Kårstø processing plant north of Stavanger in order to export gas from the Norwegian continental shelf (NCS) via Ekofisk to Emden in Germany. Where Statfjord was concerned, this meant that a contract was signed on 12 July 1984 between the Statfjord Unit and Statpipe concerning the tie-in of the pipeline to Statfjord and its subsequent operation.

 Statfjord B serves as the starting point for Statpipe, and the valve system on the seabed is operated from that platform. But it was Statfjord C, via Sips, which was responsible for maintaining pump pressure in the pipeline and ensuring that the gas flowed to Kårstø.
Statpipe later became part of the Gassled joint venture, and the section from Statfjord to Kårstø now lies in Gassled’s tariff zone 1. In connection with the Statfjord late life (SFLL) project, the connection between Sips and Gassled was severed in 2007. Statfjord B now provides the connection with Gassled.

Statpipe-Statfjord transportation agreement

Dated 30 September 1985, this contract secured transport rights in Statpipe for the Norwegian share licensees in Statfjord. The agreement still exists in principle, but was converted on 1 January 2003 to individual contracts for each licensee following the adoption of the EU’s gas directive. Each company accordingly has its own transport agreement. That was also the original position, but based on a single contract.
Similarly, each of the licensees in the Norwegian share of Statfjord had separate sales agreements for its proportion of the gas with the buyer consortium in continental Europe. These contracts were terminated in 2007, since the volume sold under them was deemed to have been delivered. Statfjord gas, including output from the SFLL project, is sold today to the UK.

Tampen Link

Gassrøravtaler,
Tampen Link. Illustration: Equinor

As part of SFLL, the decision was taken to lay a new pipeline from Statfjord to tie into the Far North Liquids and Associated Gas System (Flags) in the UK North Sea. The latter runs from Brent to St Fergus in Scotland.
Tampen Link is a separate company operated by Gassled. Dated 22 February 2005, the contract related to Statfjord has a long name: Agreement Between the Tampen Link Joint Venture and the Statfjord Group for the Installation and Tie-in of the Tampen Link Transportation Facilities to the Statfjord Facilities and the Operation of the Tampen Link Statfjord Facilities and the Operation of the Tampen Link Statfjord Facilities and the Transit Services at the Statfjord Facilities.
This agreement makes it possible to transport gas from Statfjord directly to Flags and the UK, and from other fields in transit via Statfjord to the same destination.

Crossing agreements

Since Statfjord is a hub for oil and gas exports from the northern North Sea, a number of pipelines large and small have been laid. Where these cross over each other, a crossing agreement has to be established. You cannot simply lay your pipeline over one belonging to somebody else and possibly cause damage. This must be regulated.

The following agreements have been established so far:

  • Crossing of the Statfjord B Pipeline and the Statfjord Control Umbilical by the Penguin Pipelines and Cable , dated 22 March 2002. (Penguin is a small UK field tied back to Brent.)
  • Pipeline Crossing and Laying Agreement Between Statfjord Unit and Sygna Unit , dated 14 April 2000.
  • Pipeline Crossing Agreement Between Statfjord East and Statfjord North Flank , dated 1 April 1999. (the north flank is the northernmost part of Statfjord, developed with subsea wells).
  • Pipeline Crossing Agreement Between Tampen Link and Statfjord Unit , dated 20 November 2006.

Published October 30, 2019   •   Updated February 18, 2020
© Norsk Oljemuseum
close Close

Changing the operator

person By Håkon Lavik, former Statoil employee
Transferring the Statfjord operatorship from Mobil to Statoil ranks as one of the biggest controversies in Norwegian oil policy. The 1973 licence allowed a change of operator to be requested 10 years after a discovery was declared commercial, and Statoil asked to exercise this right in 1984. Mobil was opposed, and felt it would suffer a huge loss of prestige from such a transfer.
— Statoil takes over operator responsibility from Mobil. Martin Bekkeheien and Mike Smith pictured together with a model of Statfjord A. Photo: Leif Berge/Equinor
© Norsk Oljemuseum

The US major at least wanted a visible compensation for the loss of the operatorship. It asked first to become operator for block 30/6, which proved to contain the Oseberg field.

When that failed, Mobil “declared war” on Statoil and began to fight to retain the operator role. It argued that the state oil company had gone behind its back by securing the exploration operatorship for 30/6.

Although Mobil secured an interest in the block, it felt that this was not enough. Moreover, the operatorship for 30/6 was transferred from Statoil to Norsk Hydro in 1982 – Norway’s first political decision on such a change.

Mobil next sought to secure the operatorship for block 34/7, where Snorre, Vigdis, Tordis and Borg were to be discovered, but again without success. Norway’s Saga Petroleum became the operator – and Mobil was not even offered a holding in the block.

The Statfjord operatorship became a hot political issue during the early 1980s. That was because it involved Statoil and the size of that company, and because “clipping Statoil’s wings” had been a manifesto commitment for the Conservative Party in the 1981 general election. That promise in turn led eventually to the creation of the state’s direct financial interest (SDFI) in 1984, in effect from 1985.

Before that, however, the operator issue had to all intents and purposes been settled in 1983, with a formal decision in 1984. The question was considered by the standing committee on industry of the Storting (parliament) in 1983 in connection with the annual Statoil report to the committee.

Both Mobil and Statoil were asked to submit their arguments. The former decided to devote its time to rubbishing the state oil company. That annoyed so many members of the committee that its chair, Reidar Due, noted afterwards that a majority already existed for the fastest possible change of operatorship.

Operatørskiftet,
Kåre Kristiansen. Photo: Stortingsarkivet/Scanpix

Kåre Kristiansen from the Christian Democratic Party, who became petroleum and energy minister in 1983, was opposed to a transfer. So were prime minister Kåre Willoch and finance minister Rolf Presthus, both Conservatives.

However, a majority recommendation from the industry committee in favour of a transfer was backed by members of the Centre and Christian Democratic parties. Since these were both part of the governing centre-right coalition, this act was political dynamite.

The outcome was that Willoch himself contacted the committee and had the recommendation revised before the document was submitted to the Storting’s presidium. This meant in practice that Due and the other members of the coalition party – including Arnljot Norwich and Svein Alsaker – agreed to postpone the issue for a year. Kristiansen failed to grasp that.

When the issue came up again in the autumn of 1984, the fronts had consolidated. Mobil was battling desperately to retain the operatorship, while Statoil fought just as hard to secure it.

In an attempt to resolve the question without bringing down the coalition, local government minister Arne Rettedal asked the two companies to agree on a collaboration agreement.

Such a deal was actually drawn up, but rejected the following day by Mobil before it could be submitted to Rettedal and Kristiansen. This was because the US company had received clear signals from Kristiansen that a decision on the operatorship would be postponed, perhaps for a decade.

Before Mobil rejected the agreement, it asked Kristiansen whether he stood by his word. He did. But things fell apart when the deal was turned down. The government could no longer prevaricate, and the message from the industry committee was once again clear. Both the Centre and Christian Democratic Parties would support Labour and ensure a majority for a change.

If the issue was not resolved that autumn, the government would be defeated and might fall apart or have to resign. Faced with that prospect, the coalition resolved unanimously on the following day that the operatorship would be transferred.

The Storting followed up with a decision in December 1984, and the transfer was implemented painlessly during 1986. Statoil became operator on 1 January 1987. The transfer decision marked the end of the last major Norwegian political controversy over Statfjord.

Published October 30, 2019   •   Updated February 14, 2020
© Norsk Oljemuseum
close Close

Building the concrete GBS

person by Trude Meland, Norwegian Petroleum Museum
Statfjord B represented a new generation of Condeep gravity base structures (GBS). When built, it was the world’s largest human construction in history and much bigger than the Statfjord A concrete support structure.
— Statfjord B's concrete gravity base structure (GBS) under construction in 1979. Photo: Geir Ivar Jørgensen/Norwegian Petroleum Museum
© Norsk Oljemuseum

The GBS accordingly represented the biggest challenge yet faced by Condeep builder Norwegian Contractors (NC). It surpassed all previous platform projects in both size and complexity.

Standing 174 metres high, the completed structure contained 135 000 cubic metres of concrete and roughly 35 500 tonnes of reinforcement bars (rebars). Its base section was 169 metres long and 143 metres wide, covering an area of just over 1.8 hectares – or three football pitches.

Its 24 cells could store about 1.8 million barrels of oil, and 98 steel and concrete skirts were installed under its base..[REMOVE]

Fotnote: Steen, &., & Norwegian Contractors. (1993). På dypt vann : Norwegian Contractors 1973-1993. Oslo: [Norwegian Contractors]: 44.

By comparison, Statfjord A and all the other previous Condeeps had 19 cells and three shafts. They had a base area of 8 000 square metres, 89 000 cubic metres of concrete and 17 240 tonnes of rebars.

An important part of the GBS’s function was to transport itself and the topside out to the field. And big benefits were obtained by completing as much as possible of the support structure, topside and outfitting in sheltered inshore waters, before towing the platform out and sinking it on the field without any preparation of the seabed.

One design parameter for the GBS was the ability to support a topside tow-out weight of 35 000 tonnes. The corresponding figure for Statfjord A had been 20 000 tonnes. So the Statfjord B GBS had to be substantially increased in size to cope with the extra weight. Its buoyancy needed to be high, with a corresponding large volume of ballast where the moment between buoyancy and ballast was small.[REMOVE]Fotnote: Dahl, Per C. og Olsen, Olav.  (1978, 20. oktober). Statfjord B – interessant konstruksjon med mange nye trekk. Norsk Oljerevy Ba 4, nr. 7/8. 

As mentioned above, the base area was increased from about 8 000 square metres on the earlier Condeeps to no less than 18 000 square metres in order to ensure sufficient buoyancy. Cell storage was increased from 1.2 million tonnes on Statfjord A.

Another reason for such a big expansion in the base area was that seabed conditions at Statfjord B’s intended location were significantly poorer than for the A platform. Several innovations were developed to alleviate this problem.

First, the GBS was provided with a “cellar” section, an enclosed space under the cells and above the base plate. In addition to helping overcome the bottom conditions, this solution had several advantages.

It provided space for piping systems which had been cast inside the concrete on earlier Condeeps, for instance. Since the cellar was dry until the cells had been cast, pipework could be installed during that period.

The external pipelines – risers – to and from the platform had been installed outside the cell walls on earlier Condeeps, which called for extensive diving work to weld pipes together on the seabed. But the cellar on Statfjord B provided space to conduct the risers through pipes directly to the fourth shaft, where they could be welded in the dry once this “riser” shaft had been emptied of water.[REMOVE]

Fotnote: Dahl, Per C. og Olsen, Olav.  (1978, 20. oktober). Statfjord B – interessant konstruksjon med mange nye trekk. Norsk Oljerevy Ba 4, nr. 7/8. 

Installed beneath the cellar/base plate, the 98 steel and concrete skirts also had several functions. Plans called for the platform to be installed directly on the unprepared seabed. As in many other areas, the upper layers of the sea bottom were less consolidated than those lower down.

So rigid steel skirts were important, because they would cut down into the soil to reach a depth which could bear the load. They also protected against the seabed being washed out, and served as a framework for concrete grouting beneath the platform.

Pressure in the skirts was also kept below the ambient level. Combining overpressure and underpressure in the spaces between the various skirts, the platform could be manoeuvred more surely during its installation.

Thanks to the skirts, too, the structure could also be safely placed on sloping ground. Maintaining overpressure in the relevant skirts kept the platform level until grouting had been completed.[REMOVE]

Fotnote: Dahl, Per C. og Olsen, Olav.  (1978, 20. oktober). Statfjord B – interessant konstruksjon med mange nye trekk. Norsk Oljerevy Ba 4, nr. 7/8. 

Yet another innovation on Statfjord B was the increase in the number of shafts from three to four. Experience with Statfjord A and other earlier concrete platforms showed that a four-shaft layout was more appropriate for supporting the topside. Although the Statfjord B GBS was built in the same way as its predecessors at Hinnavågen outside Stavanger, it incorporated so many changes that it ranked as a new Condeep generation.

Project organisation

A dedicated organisation comprising NC’s own personnel was needed to manage and control such a giant project. Both Mobil as the client and NC also hired external expertise, with Mobil awarding a consultancy contract to EMC – a joint venture between Brown & Root and Norway’s NPC.

For its part, NC hired Grøner og Noteby to support the construction management team and to conduct quality control of its own work. It also hired the Olav Olsen A/S consultancy to do construction engineering, prepare drawings and make calculations for the concrete work, the Norwegian Geological Institute (NGI) for foundations and instrumentation, and Det Norske Veritas (DNV) for technical calculations.

The Norwegian Petroleum Directorate (NPD), which was responsible for seeing that work complied with official safety regulations, hired Dr Ing Aas Jacobsen to check drawings, calculations and the execution of concrete and steel construction. This consultancy had done the same job on Statfjord A.

With DNV checking the mechanical systems, drawings were accordingly assessed by three different bodies – Aas Jacobsen for the NPD, DNV for NC and EMC for Mobil. The level of change orders for building the Statfjord B GBS was low.[REMOVE]

Fotnote: Moe, J. (1980). Kostnadsanalysen norsk kontinentalsokkel : Rapport fra styringsgruppen oppnevnt ved kongelig resolusjon av 16. mars 1979 : Rapporten avgitt til Olje- og energidepartementet 29. april 1980 : 2 : Utbyggingsprosjektene på norsk sokkel (Vol. 2). Oslo: [Olje- og energidepartementet]: 231.

Work begins

NC began the job of readying the construction site before Mobil had awarded it the contract to build the Statfjord B GBS. The first step was to move a pipeline used to pump out seawater which seeped under the sheet pile retaining wall. This extended too far into the dock.

A larger foundation was also required. It had previously covered some 0.8 hectares, but the planned dimensions of Statfjord B meant this had to be expanded to two hectares. After an investigation, it was decided that the existing foundation could be incorporated in the new one.[REMOVE]Fotnote: Stavanger Aftenblad. (1978, 24. januar). Klar for B-plattformen.

Once the contract had been formally signed, work on improving the ground began before the new foundation was cast. The dock had to be drained and part of the spoil had to be removed. A good base for the concrete foundation was important – it had to cope with a weight of 110 000 tonnes which was unevenly distributed.

The bottom section of the GBS was towed out of the dry dock on 11 June 1979 and moored in the Gands Fjord off Stavanger while preparations were made to slipform the cells. This tow-out was a critical phase. The section had to be pulled out of the inner dock for 100 metres, before being turned 23 degrees and then towed out of the opening.

Very little wind could be tolerated, and the job had to be postponed twice. The first attempt was aborted after it transpired that bottom conditions at the dock gate had not been properly prepared, so that the draft was too shallow. A 70 000-cubic-metre support bank had to be removed. Excessive wind prevented the second try.

But everything went according to plan the third time, and the bottom section was pulled out of the dock by winches with just 70 centimetres of clearance over the bottom.[REMOVE]Fotnote: Stavanger Aftenblad. (1979, 28. juni).

Once the structure was clear of the dock, the winch cables were severed and the tugs took over. Compressed air, buoyancy and 20 000 horsepower divided between five tugs made it possible to move Statfjord B to the mooring site at a speed of two-three knots.

Attaching and tightening the moorings took two days.[REMOVE]Fotnote: Rogalands Avis. (1979, 11. juni). Condeep-utslep med forviklinger.

The chains intended to hold the structure in place were fixed to new attachment points. Four lengths measuring a total of six-seven kilometres were used.

The chains were of better quality than those used before, since the GBS would be significantly larger. With a breaking strength of 1 500 tonnes, compared with 1 300 tonnes before, they were attached to Lihalsen and Einerneset on the eastern shore of the Gands Fjord, and Vaulen and Kvalaberg on the western side. The attachments were simpler in design than their predecessors. No winches were placed on land, only steel plates set into the bedrock.[REMOVE]Fotnote: Stavanger Aftenblad. (1979, 5. januar). Svær kjetting til Statfjord b. 

Slipforming of the cells started at the same time as the school summer holidays. This was important in order to recruit students and thereby obtain sufficient labour. The job was well paid, and it was not difficult to get workers. People had to be turned away. Most of the holiday personnel pushed wheelbarrows, but NC also held courses for them in iron fixing and formwork construction.

This was the most hectic period, with 1 150 people at work. NC’s own personnel accounted for 860 of these. The slipforming continued around the clock for 27 days, making it the world’s biggest operation of its kind until then. A total of 58 000 cubic metres of concrete were poured from wheelbarrows. Each of the latter held 80 litres and, to achieve the desired slipforming speed of 1.5 metres per second, one wheelbarrow had to be filled every three seconds.[REMOVE]Fotnote: Steen, &., & Norwegian Contractors. (1993). På dypt vann : Norwegian Contractors 1973-1993. Oslo: [Norwegian Contractors]: 44.

The work was heavy and a high pace was maintained. Workers were divided into four shifts. After six hours of pushing wheelbarrows or binding rebars, the body ached and fingers were stiff. Concrete was mixed in a plant on a barge moored alongside the GBS.

A dozen temporary office buildings for administrators were also installed out in the fjord. Personnel were ferried to and from the GBS by high-speed craft.[REMOVE]Fotnote: VG. (1979, 12. juni). Betong-gigant PÅ FJORDTUR.

Slipforming the cells was carefully planned, with no margin for error. Hundreds of hydraulic jacks controlled by laser beams thrust the formwork upwards. The job was completed by 18 July, and a temporary halt was called to permit completion of the cells and make preparations for slipforming the shafts. That operation began the following January, and the top was reached on 24 February. The GBS was now no less than 174 metres high. Despite the tight schedule, work was finished a day early.

NC now had to reduce its workforce again, from 650 people to about 350. The 150 employees recruited for slipforming the shaft moved on to other jobs, while many of the remaining 150 returned to jobs with the partners in NC – Furuholmen, Høyer-Ellefsen and Selmer. NC found work for the rest elsewhere, including at Rosenberg Verft. The latter was in the middle of building the Statfjord B topside.[REMOVE]

Fotnote: Rogalands Avis. (1980, 11. mars). På toppen av Statfjord B. 

Accidents

Work on the Statfjord B GBS proceeded largely without dramatic incidents, but one accident did occur in December 1979. This involved a silo containing 50 tonnes of fine-crushed iron ore, a small barge and a loading shovel worth several hundred thousand kroner, which sank in the Gands Fjord. Nobody was injured.

The mishap occurred during discharging of fines (iron ore crushed into small-grained particles) representing half the 40 000 tonnes due to be used as ballast in the GBS base. Two cranes on the ore carrier were transferring this cargo to two silos standing on separate pontoon moored to the platform. Conveyor belts ran from the silos to the GBS.

Without informing the crane driver, the belt from one silo was halted to check some hoses. The driver thought ore was still flowing out of the silo and continued loading even when the latter was full. Thanks to the overload, the pontoon concerned developed a list, the legs supporting the silo broke and the container fell onto a barge moored alongside and carrying a loading shovel. Silo, iron fines, barge and shovel vanished in 243 metres of water and a thick layer of bottom mud.[REMOVE]

Fotnote: Stavanger Aftenblad. (1979, 21. desember). Shovel og silo gikk til bunns. 

Published May 23, 2018   •   Updated January 3, 2020
© Norsk Oljemuseum
close Close

Statfjord agreements

person By Håkon Lavik, former Statoil employee
An extensive network of agreements weaves a web around operations on the Statfjord field. They either regulate these activities or influence what can and cannot be done. In addition come contracts with other licences and fields on the sale or exchange of services and so forth.
— Statfjord C. Photo: Øyvind Hagen
© Norsk Oljemuseum

This set of agreements is fairly intricate and complex, but nevertheless makes the whole operation possible. They include:

  • the dividing line treaty
  • licences
  • unitisation deals
  • the Statfjord treaty
  • the bridging agreement
  • the production swop agreement

Dividing line treaty

The hierarchy of agreements actually starts with the treaty between the UK and Norway which defines the median line between their continental shelf areas in the North Sea. Signed in 1965, this agreement is rooted in international law pursuant to the UN Convention on the Law of the Sea adopted in 1958.

This convention provides several possible principles for dividing up a continental shelf between states. But Norway opted for the median line principle when it began negotiating on North Sea boundaries in 1963. That means the dividing line is drawn midway between the base lines – which define the coasts – of the states bordering the continental shelf area in question. This principle is applied in all the treaties entered into by Norway on North Sea boundaries in 1965. Only the treaty with the UK is significant in Statfjord’s case.

A minor curiosity which had consequences for Statfjord arose as a result of the dividing line treaty. The boundary with Denmark, Germany, the Netherlands and the UK was determined in 1965 from the Swedish-Norwegian border northwards to 61°20’40”N. Those responsible for defining the dividing line thought they had settled it for many generations to come. But a need to extend the boundary further north arose within a few years.

This was also the origin of the Norwegian practice of referring to operations on the NCS as being south or north of the 62nd parallel. When Norway put parts of the North Sea on offer to oil companies in 1965, it informally extended the boundary northwards to 62°N and then along this parallel of latitude to the Norwegian mainland. That established a northern limit to the North Sea. The only motive was the desire for a practical division of the blocks to be put on offer, since the boundaries of each full quadrant of 12 blocks is defined by one degree of both latitude and longitude.

Since Statfjord lies mainly north of the 61st parallel, this rather unclear boundary meant that the British refrained from extending licences right up to the dividing line when awarding acreage in this part of the UK continental shelf during 1971. That created problems later on.

A rather amusing story can also be told in relation to the determination of continental shelf boundaries. During the negotiations on the law of the sea convention in the late 1950s, Norway’s sole concerns were to safeguard freedom of the seas for shipping and clear fishing limits. As a result, Norway did not ratify the convention until 1963. And it was not until 1973 that the boundaries of fishing zones in the North Sea coincided with the median line. So before it could offer licences for petroleum exploration, Norway had to ratify all parts of the law of the sea convention, declare Norwegian sovereignty over the NCS and then negotiate dividing lines in accordance with the rules in the convention.

Out by 13 kilometres. When the dividing line with the UK was under negotiation in 1964, a mapping error could have cost Norway the whole Ekofisk field and thereby billions of kroner in oil revenues.The evening before the boundary treaty negotiations between the two countries were to be concluded, the representative of the Norwegian Hydrographic Service at the talks began to wonder whether there might be something wrong with the calculations used to determine the dividing line. He contacted the geodetic department at the Geographical Survey of Norway (now the Norwegian Mapping Authority) and asked it to check the matter.Because time was short, the department had to work on mathematical formulae throughout the night under the leadership of Gunnar Jelstrup to check the coordinates involved.“The results were almost frightening,” Bjørn Geirr Harsson, former principal engineer at the Norwegian Mapping Authority, told the Aftenposten.no website. “They discovered that the southernmost point lay almost 13 kilometres closer to the Norwegian coast than the British. In addition, the two sides had used the wrong map to determine the median line.”

Licences

Shell and Esso contacted the Norwegian government in the autumn of 1972 to report that the recent Brent discovery in the UK North Sea might extend onto the NCS. That presented the authorities in Norway with a problem. According to the regulations, blocks on the NCS could only be awarded through advertised licensing rounds. That meant the first step had to be an amendment to the rules.
This was done in early 1973, and it was announced in March that blocks 33/9 and 33/12 were to be awarded outside the normal licensing rounds. Applications were received at the end of April and, following negotiations, Norwegian production licence 037 was awarded on 10 August 1973. Exploration on Norway’s side of the dividing line could thereby begin.

The UK licence which covered the possible Statfjord field had been awarded in 1971. Block 211/24 (the P104 licence) covered most of the area. Because the eastern limit of the licence did not coincide with the dividing line, however, a new one had to be awarded as P293 to cover the narrow intervening corridor. This was done in early 1974. P293 moreover had the same licensees – Conoco, Gulf (later Chevron) and the British National Oil Corporation (BNOC – later BP) – as P104 to avoid any conflicts of interest. The only aspect which did not harmonise was the duration of the Norwegian and UK licences, but nobody saw the significance of that in 1973-74.

Unitisation

The dividing line treaty contained some vague formulations that, if a reservoir extends across the boundary, efforts will be made to reach agreement on mutual exploitation. The existence of a common reservoir or reservoirs on either side of the boundary must also be proven.

After the Statfjord discovery in the Norwegian North Sea was announced on 26 February 1974, the British had to establish through drilling that this structure extended into the UK sector. The British operator, Conoco UK, drilled a well in the summer and autumn of the same year which clearly showed that the discovery comprised several shared reservoirs.

Negotiations accordingly began on joint development and production, and lasted until the spring of 1976. Agreement was then reached by the licensees on the principles for an accord on joint utilisation. The Statfjord Unit was established in the summer of 1976, with the first management committee meeting in September 1976.

The agreement was not formally finalised and signed until 1979, but a unitised development of Statfjord began in June 1976. This meant that a separate joint venture was established to develop and produce the petroleum-bearing strata, with a common operator. The equity holdings of the licensees were allocated in accordance with their interests in the original licences, multiplied by the percentage division of the reserves between the two countries. It was estimated in 1976 that 88.88 per cent of the field lay on the NCS.

In other words, it was the sub-surface reserves which were merged and not the licences themselves. Formally speaking, the unit embraces a cube which begins 20 metres above the top of the uppermost Brent formation and terminates 20 metres beneath the base of the lowest Statfjord formation. It might seem confusing that the field and one of its formations bear the same name, but the reason is that the latter has been named after the field where it was first identified.

The 1976 pact has a simple and straightforward designation: the Unitisation and Unit Operating Agreement Statfjord Field Reservoirs in the Norwegian and United Kingdom Continental Shelf. Although dated 1 June 1979, this accord actually became effective from 1976. As the title indicates, it is also an operating agreement which regulates how the field should be developed and operated.

Each licensee has a vote in the management committee for the Statfjord Unit, which matches their calculated interest in the field. The agreement also provides that these interests will be calculated to five decimal places.

A binding decision requires the support of at least 70 per cent of the licensees, and only a few exceptions exist to this voting rule. The division of the reserves between the two countries requires 100 per cent support, for instance. So does the use of Statfjord’s facilities by other fields and the cessation of production.

The licensees also contribute to all investment and costs on the basis of their per-centage share of the field, and own a corre-sponding proportion of the oil and gas produced.

Other provisions in the unitisation agreement specify that the division of assets in the reservoirs can be reassessed at certain intervals. These “redetermination” rules (see separate article) have led to a number of bitter conflicts between the licensees and between Norway and the UK. The last process of this kind was concluded in 1998.

Should the percentage split be amended, all investments and the whole allocation of reserves back to day zero in the field’s history must be redistributed between the licensees. Since such a large proportion of the assets had been produced by 1998, any adjustment would have dramatic consequences for those licensees whose share is reduced. It was accordingly agreed that the redetermination in that year would be the last. This concluded that 85.46869 per cent of Statfjord is Norwegian.

The unitisation agreement has also been amended and updated a number of times. More than 20 change agreements to the original accord had been approved up to 2009. These alterations have been required to take account of conditions not foreseen in 1976.

According to the original agreement, the working language in the Statfjord Unit is American English. All agreements are accordingly written in that language with the exception of the Norwegian licence for PL 037. All documentation and reporting are also in English.

The unitisation agreement provides in addition for the resolution of possible conflicts between the licensees in the joint venture. In addition come provisions on where and how assistance can be sought if issues cannot be resolved. The Statfjord Unit licensees are to seek help from the international chamber of commerce in Switzerland’s Vaud canton, which embraces Lausanne. Such aid has never been required.

 The Statfjord treaty

Talks over the unitisation agreement were paralleled by negotiations on a separate treaty for Statfjord. This Statfjord Treaty of 1979 between Norway and UK was finally ratified on 16 October 1979. It was also ready in principle in 1976, but was only finalised just before production began. The treaty makes it possible to produce Statfjord as a single unit. It contains provisions on joint exploitation of the field even though it is split between two different countries.

Why is such unitised development and production important? During the earliest era of the petroleum industry in the USA, and later in Mexico, an oil and gas discovery acted as a signal for all and sundry to rush in and start drilling and producing from neighbouring properties. The result was that many fields were damaged by over-exploitation, so that only a fraction of their reserves were recovered. A unitised and planned development ensures that a much larger proportion of the assets can be produced.

The Statfjord treaty also contains provisions on how possible conflicts between the two countries should be resolved. This has permitted a coordinated and peaceful utilisation of the field. Governments in many other countries have marvelled that this has been possible, and have wanted to develop similar treaties and agreements.

According to the treaty, operations on the field will be pursued in accordance with Norwegian law and statutory regulations. This is because all the installations are on the NCS and operated from Norway, and because the operator is a Norwegian company.

Another treaty covering the nearby Murchison field was signed at the same time as the Statfjord accord. This made it possible to produce Murchison as a single unit in the same way as Statfjord. Since the Norwegian PL 037 licensees originally held 22 per cent of Murchison, it has been developed and produced from the UK side. So the Murchison treaty is a mirror image of that for Statfjord.

 Bridging agreement

The bridging agreement was entered into by the British and Norwegian licensees in the Statfjord Unit. Known as the Agreement between P104 (293) and PL037 Groups, this was ready at the end of 1990 but not signed until 1 June 1991 at the same time as the first change agreement. The reason for the delay was that it was not needed before then, and the first change agreement corrected an oversight about redelivery points for petroleum from the field. Such a point is one or more locations whether those delivering oil and gas to Statfjord for processing get their products handed back for onward transport.

A bridging agreement was required because the unitisation agreement contains provisions that petroleum which might be proven in the original Norwegian and British licences would have the right to use the production facilities on the three Statfjord platforms for processing if spare capacity was available. Substantial additional reservoirs – Statfjord East and North – had already been proven in PL 037 before unitisation in 1976. Terms were accordingly incorporated in the unitisation agreement on the way “non-unit operations” were to be pursued. But supple-mentary rules were needed in order to develop Statfjord East and North.

Work on developing these two satellites began in 1986. The position of Statfjord North was straightforward, since the whole field lies within PL 037. But it falls outside the Statfjord Unit area. That means that the Norwegian licensees in Statfjord, which had the sole rights to Statfjord North, were entitled to use the production facilities if spare capacity was available. Although this was incorporated in the unitisation agreement, the British licensees had reserve-tions and wanted certain details to be specified more precisely.

Statfjord East, on the other hand, lay only partly in PL 037. The rest extended into the adjacent PL 089 licence. The Norwegian Statfjord licensees accordingly had the right to process half of Statfjord East under the provisions of the unitisation agreement, but not the part which lay in PL 089.

The British licensees were concerned in 1986-87, with good reason as it turned out, over what was colloquially known as the prioritisation rules. According to the unitisation agreement, oil and gas produced from the Statfjord Unit reservoirs had a prior right to use the processing and export facilities. If production capacity was to be sold to others, the external volume had to accept that it took second place – in other words, rest content with the capacity available after the Statfjord Unit’s needs had been met.

So the bridging agreement set a number of conditions which mean that the Statfjord facilities can be used by others – providing this does not interfere with the Statfjord Unit’s own output. The licensees of other fields are welcome to invest in increased processing capacity and to acquire the prior right to use this, but the Statfjord Unit’s licensees must unanimously agree on how much capacity can be offered to others.

The bridging agreement also states that all oil from Statfjord East is to be regarded as produced within the PL 037 licence. That issue should therefore have been resolved, or so people thought in 1991. But a couple of complications were to emerge.

Statfjord East was unitised and a joint venture established in 1991. This field thereby became a separate legal entity within PL 037, and a separate tie-in and processing contract was needed to use the Statfjord facilities. But this was not entered into with the Statfjord Unit but with PL 037, because the latter had the right under the bridging agreement to have the whole of Statfjord East processed pursuant to the provisions in the Statfjord unitisation agreement.

However, a minor point had been forgotten. Statfjord East, including the part which lies in PL 037, contains some gas. The oil from the whole field was covered by the bridging agreement and thereby ranked as a second priority, but nobody had thought about the gas. When the time came that this had to be clarified, the gas from that part of Statfjord East which originally lay in PL 089 was assigned fourth priority for using the Statfjord facilities. That might sound a little cumbersome – the oil and gas arrive at Statfjord C in the same pipeline and are separated there, but have different rights to use the facilities. In practice, this has functioned straightforwardly.

When Statfjord East and North were approaching the start to production, it was clear that processing capacity on Statfjord C was far too small to handle output from these satellites. Statfjord East was due to be ready to produce on 1 October 1994. The day before, on 30 September, a change agreement was adopted for the bridging accord.

This second amendment has been called the underlifting agreement. The satellite units purchased the right to process up to 156 000 barrels (25 000 standard cubic metres) per day on Statfjord C, and the Norwegian licensees in the Statfjord Unit reduced their production from that platform to make room for that volume. Since the British licensees were unwilling to accept such a reduction, they received their share of the output as if the satellites were not using the capacity. In reality, they received oil from Statfjord East and, from January 1995, from Statfjord North.

In order to give the satellites first priority in this way, the British licensees also received a fee of a few US cents per barrel from the satellite licensees. In principle, the Norwegian licensees purchased processing capacity for the satellites.

That made it possible to produce the satellite fields at full capacity, without restrictions. This was also important because they had been developed with subsea wells. Constant start-up and shut-down of such facilities, with pipeline transfer of the wellstreams on the seabed, can cause hydrate (a form of hydrocarbon ice) to form in the lines and block them.

Such hydrate plugs are extremely difficult to dissolve. Anti-freeze, usually methanol, can be injected into the pipelines. But methanol has the disadvantage that reacts with the gas and undermines the quality of the gas exported. If the gas falls outside the specified quality parameters, it attracts a lower price.

This underlifting continued for a number of years, and meant in reality that the UK licensees received too much oil in relation to actual production from the Statfjord Unit. Repayment for this British overlifting was supposed to have started in late 1998 but was postponed for five years until 2003. The Norwegian licensees benefited heavily from this, because oil prices were below USD 10 per barrel in 1998 but were rising in 2003 and three-four times higher.

The underlifting agreement is an example of how an issue can be resolved which could otherwise have caused problems for the satellite licensees, who had invested in their development and had to secure a return on that capital.

The production swop agreement

One of the first acts of the Labour government which took office under Gro Harlem Brundtland in 1986 was to order a temporary 10 per cent cut in Norway’s oil output. Intended to support Opec and boost oil prices, this measure also applied to Statfjord – particularly because that field was by far the largest on the NCS at the time.

But the UK government had no desire to reduce the country’s oil production, and refused to allow the British Statfjord licensees to participate in any diminution of the field’s output. The solution was that Statfjord was exempted from the Norwegian measure, and the cut which should have occurred there was switched to Gullfaks instead.

This arrangement was put in place by Statoil, and a swop agreement was entered into. The Gullfaks licensees would get back the production they had postponed in the years after the Norwegian measures had ended. It was not until the late 1990s that this account was finally settled and the agreement terminated.

A minor oddity can be noted here. When the Norwegian government announced its production restrictions in June 1986, oil prices immediately rose by USD 0.50 per barrel. On the same day, Statoil had an oil cargo from Statfjord ready to depart. It was resolved to wait to sell this consignment until it was clear what the new Labour administration would do. The cargo was sold after the price had risen. With 770 000 barrels on board, the company earned at extra USD 335 000 by waiting. That represented about NOK 2.5 million in additional revenue on this one cargo.

Published October 30, 2019   •   Updated January 28, 2020
© Norsk Oljemuseum
close Close