Equinor - December 2019

EQUINOR

© Equinor ASA - Johan Sverdrup

EQUINOR

Third Largest NCS Field Starts Up PRODUCTION: Joe Forshaw

For Equinor, operator of the Johan Sverdrup field in the North Sea, start of production and first oil are significant milestones in a major 50-year project.

The oil and gas from this field will contribute to jobs and prosperity for the company, its partners, and for Norway, for at least the next half-century. www.emea-energy.net / 3

INDUSTRY FOCUS: OIL & GAS

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7 January 2020 will be a momentous day for all at Equinor and all involved in the Johan Sverdrup mega project.

His Majesty King Harald V will officially open the Johan Sverdrup field centre in the North Sea. Delegates, including Norway’s Prime Minister Erna Solberg and the Minister of Petroleum and Energy Kjell-Børge Freiberg, will join field centre personnel from Equinor and partner organisations Lundin Norway, Petoro, Aker BP and Total for lunch and a guided tour.

Equinor is one of the world’s energy majors, based in Norway, developing projects globally, with 20,000 employees, and involved in oil, gas, wind and solar energy. “We’re shaping the future of energy,” is the company’s boast.

Previously known as Statoil, the company changed its name to Equinor in May 2018 to better reflect its operations as its leads the way in a global shift towards new energy systems, relying less on oil and gas.

Equinor is derived from ‘equi’, the Latin root of words like equality and

Credit - Arne Reidar Mortensen © Equinor

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equilibrium, and ‘nor’, which salutes the company’s proud Norwegian origins.

“We’re becoming a broad energy company and need a name that’s relevant for our entire business, not just oil, especially if you bear in mind the future, with new energy forms and greater demands on carbon efficiency in production. That’s why it’s important for me as CEO to make sure we are as well equipped for the future as possible,” said CEO Eldar Sætre, discussing the new identity last year.

THIRD LARGEST At a time of transition, away from only oil and gas towards a broad energy portfolio, Equinor is clear that oil remains a vital element in the company’s strategy. “Equinor will continue to invest in oil and gas—while transforming into a broad energy company,” said Sætre.

Nowhere has this been clearer than at the Johan Sverdrup oil field in the Norwegian southern North Sea. Around 90 miles off the coast of Stavanger, Johan Sverdrup was discovered in 2010 and is one of the

// AT PEAK, THIS FIELD WILL ACCOUNT FOR AROUND ONE THIRD OF ALL OIL PRODUCTION IN NORWAY AND DELIVER VERY VALUABLE BARRELS WITH RECORD LOW EMISSIONS // most exciting finds of modern times.

Expected to hold up to 2.7 billion barrels of recoverable oil, at depths of 1900, the value attached the field is vast. Equinor estimates that, over the field’s 50-year lifespan, income could read NOK 1430 billion (depending on oil price). There will also be significant spin off for Norwegian tax revenues and employment opportunities.

Continues on page 14

EQUINOR

Maximize Oil and Gas Production with a Digital Twin Strategy Author: Eddy Lek, AVEVA, Global Industry Marketing Manager Rising trade and geopolitical tensions are heightening volatility in the oil market with crude prices swinging widely in the past months. Given the increased volatility and expectation of a lower crude price environment, oil and gas companies are accelerating their Digital Transformation initiatives to drive effective capacity, not only through CAPEX, but also OPEX investments by optimising operations and improving asset availability as these are more scalable and have a shorter lead time, enabling companies to swiftly respond to market changes. Digital initiatives, if well executed, can unleash enormous opportunities in value creation.

Leveraging Digital Twin Strategy in Digital Transformation A digital twin is a complete 360-degree replica of a physical asset such as pipelines, gathering systems, heat exchangers, turbines, pumps, compressors or entire plants that enables modelling of process and control, and monitoring of equipment health. It is the foundation of a digital transformation that optimises production, detects equipment problems before failures occur, uncovers new opportunities for process improvement, all while reducing unplanned downtime. Tagging operating assets with low quality and noisy data at the start of the process is likely to generate inferior or inaccurate results at downstream, reducing the value that can be extracted from the data. Therefore, ensuring a robust information management infrastructure to store, manage and contextualize data is first steps towards building a Digital Twin.

Building a Digital Twin To build a digital twin for an asset, an initial 3D model is created. This model is then tagged with all the necessary attributes and engineering documentation – such as geometry, layout, connectivity of key components and process data, and other business and safety-critical engineering and design information. Through AVEVA NET - a robust information gateway, information and data around the asset are extracted from disparate data sources and validated for accuracy against known standards to create viewable renditions of documents and drawings. This acts as a data validation layer to ensure that all data meet the correct standards throughout the asset lifecycle.

With the unified data-centric models, engineers are empowered with the ability to visualise the downstream impacts of their actions when they make either design or operational changes during operations. As a result, it eliminates information silos and reduces the decision cycles through improved collaboration and change management process.

A good illustration is the data-centric engineering and design platform deployed by Aibel that facilitates collaboration across multiple offices, enabling them to work closely with Equinor during project execution and deliver the Johan Sverdrup offshore platform on time and under budget.

Taking Operational Efficiency to the next level As the operational life continues, the digital twin is updated automatically, in real time, with current data, work records, and engineering information, to optimise maintenance and operational activities. With this, engineers and operators can easily search the asset tags to access critical up-to-date engineering and work information, and diagnose the health of a particular asset. Previously, such tasks would take considerable time and effort, and would often lead to issues being missed, leading to failures or production outages. With the digital twin, operational and asset issues are flagged and addressed early-on, and the workflow becomes preventative, instead of reactive.

Combining Analytics and Artificial Intelligence The real-time process data from the digital replica, in turn, can be fed into predictive analytics and artificial intelligence with the ultimate goals of optimising overall production, process conditions and even predicting failures ahead of time. The Digital Twin, when combined with powerful analytics and artificial intelligence, enables predictive maintenance and optimal operations.

With advanced pattern recognition, statistical models and machine learning technology, relevant data is then transformed into useful contexts with decision support, empowering workers to make technical decisions on-the-fly to reduce unplanned downtime and to optimise operating conditions.

Embarking on a journey with sustainable long-term results Digital transformation allows companies to create new capabilities, new business models, and innovate ahead of their competition. It is a journey through deployment of technology and driving behavioural change in workforce. Making the transition successfully can be profoundly rewarding for companies. The breadth and depth of products and services in AVEVA’s portfolio offers greater choices and flexibility in designing a path to maximise oil and gas production in a methodical and extensible manner.

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On time.

Under budget.

More efficient.

Equinor’s $1.2 billion, 22,500-ton Johan Sverdrup drilling platform was created in less time and with lower costs than expected, thanks to AVEVA. With 850 engineers across the world contributing 55,000 drawings, our powerful AVEVA E3D design software enabled a 20% reduction in engineering hours, driven by seamless digital collaboration.

By modeling the platform in 3D, our solution allowed asset owners and EPCs to manage projects by cross-refencing one single “digital twin” of the project, keeping costs down and improving safety.

To learn more, visit sw.aveva.com/success-stories/aibel

Photograph by Arne Reidar Mortensen, courtesy of Equinor ASA.

INDUSTRY FOCUS: OIL & GAS

Continued from page 10 Johan Sverdrup is the largest field development project on the Norwegian Continental Shelf since the 80s and has been built through a network of global partnerships, with international best practice being re-established at every milestone. When fully operational, after Phase 2 is complete in 2022, 660,000 barrels of oil will flow to the Mongstad terminal through Norway’s longest and largest pipeline.

Currently, Phase 1 is well under way and receiving much praise for its digitalisation, environmental impact, and efficiency. The field came on stream on 5 October 2019, a full two months ahead of schedule and NOK 40 billion below estimated cost.

ON STREAM Production plateau for Phase 1 is expected to be reached in the summer of 2020 and record low CO2

emissions are providing an example for others to follow.

“Johan Sverdrup coming on stream is a momentous occasion for Equinor, our partners and suppliers,” said Eldar Sætre. “At peak, this field will account for around one third of all oil production in Norway and deliver very valuable barrels with record low emissions. Johan Sverdrup is expected to generate income from production of more than NOK 1400 billion of which more than NOK 900 billion to the Norwegian state and society.”

Getting the project to where it is today has taken significant investment – NOK 83 billion. The plan for development and operation (PDO) was approved in 2015 and all parties have been working with ferocious appetite to make progress each day.

This has resulted in significant time and monetary savings.

“Starting production months ahead of schedule helps realise

Credit - Helge Hansen - Statoil - Mongstad refinery

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additional value from the field and is fitting for a project that over the development phase has redefined excellence in project execution,” says Anders Opedal, Executive Vice President for Technology, Projects & Drilling in Equinor.

“Close cooperation with our partners and suppliers has contributed to high quality in the execution phase, and has been a key part of the improvement story. And we’ve also made courageous decisions with new technology and digitalisation that we’re benefiting from today.”

Phase 1 has been the results of 70 million manhours, and more than 12,000 people from across the globe working in tandem during a two-year construction period.

“The qualification of new installations technology has reduced safety risk, saved more than two million offshore hours and shaved months of the development schedule.

EQUINOR

// IN THE SAME YEAR THAT NORWAY CELEBRATES 50 YEARS SINCE THE EKOFISK DISCOVERY IN 1969, WHICH STARTED THE OIL AND GAS ADVENTURE IN NORWAY, THE START-UP OF JOHAN SVERDRUP LAYS THE FOUNDATIONS FOR ANOTHER 50 YEARS OF INDUSTRIAL ACTIVITY AND VALUE-CREATION ON THE NCS //

We have also invested in digital solutions and ways of working to boost oil recovery, optimise production and improve field operations, and these new ways of working have already saved at least one month in the execution stage,” says Opedal.

Cooperation between many businesses, multiple Equinor divisions, governments, municipalities, and regulatory authorities cannot be underestimated. The result of this success has been the creation, and continuance, of mass employment at a time when the oil price was extremely unfavourable and the global trend was retrenchments.

“Johan Sverdrup is a giant development, built across nearly 30 construction sites in Norway and globally, and the field centre assembled in the North Sea counts as one of the largest on the NCS.

Sanctioned right at the beginning of the downturn in the oil and gas industry, it helped ensure activity for tens of thousands of people, especially in Norway, at a critical time for many,” says Opedal.

Arne Sigve Nylund, Executive Vice President for Development & Production Norway highlights the importance of Johan Sverdrup to the wider Norwegian economy: “The field will be operated from Equinor’s offices in Stavanger, whereas base and helicopter services will be delivered from Dusavika and Sola,” he explains.

“The oil transported from the field will also sustain activity at the Mongstad terminal outside of Bergen, and the gas will be exported to Kårstø. The importance of this field for both the national and regional economies in Norway cannot be overstated.

“In the same year that Norway celebrates 50 years since the Ekofisk discovery in 1969, which started the

Credit - Ole Jørgen Bratland © Equinor

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INDUSTRY FOCUS: OIL & GAS

oil and gas adventure in Norway, the start-up of Johan Sverdrup lays the foundations for another 50 years of industrial activity and value-creation on the NCS,” he adds.

FIRST OIL One of the major successes for Equinor at Johan Sverdrup has been the reduction in CO2 emissions during production. The field is powered with electricity from shore and CO2 emissions are estimated at 0.67 kg CO2 per barrel. CO2 emissions reductions from the field due to power from shore are estimated at more than 620,000 tonnes per year, totalling more than 25 million tonnes of CO2 over the life of the field. After 2022, Johan Sverdrup will also provide power from shore to other fields on Utsira High, including Edvard Grieg, Ivar Aasen and Gina Krog.

These project characteristics are

important when it comes to the sale and marketing of oil, which Equinor handles through oil trading units in Stavanger, London, Singapore and the USA. First oil started flowing from Johan Sverdrup to Mongstad, near Bergen, on 21 October. The oil flows through a 283 km pipeline in the North Sea to the plant at Mongstad where it is stored in caverns before being exported to markets around the world.

Irene Rummelhoff, Executive Vice President for Marketing, Midstream & Processing (MMP) in Equinor was delighted when the first oil started flowing. “This is a great day for Equinor and the Johan Sverdrup partnership,” she said. “First oil to Mongstad only a few days after production start confirms that the field is producing well. This day also marks the start of a new phase as we prepare to bring Johan Sverdrup oil to the international market.

// MONGSTAD PLAYS AN IMPORTANT ROLE IN REALISING SIGNIFICANT VALUE ASSOCIATED WITH THE FIELD // “Mongstad plays an important role in realising significant value associated with the field. At the same time, Johan Sverdrup triggers high activity at the plant and new opportunities for the future,” she adds.

The first cargo of oil from Johan Sverdrup has already been sold to China International United Petroleum & Chemicals Co., Ltd. (UNIPEC). UNIPEC is part of the SINOPEC Group, one of the world’s largest refiners. The cargo left Norway aboard the Orpheas, via

© Equinor

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EQUINOR

© Equinor

// JOHAN SVERDRUP IS TRULY A WORLD CLASS FIELD // the Suez Canal, heading straight for China. The vessel contains one million barrels with a market value of around USD 60 million.

“This is a big day for everyone who has worked for a long time on preparing Mongstad for oil from Johan Sverdrup. It has been a major effort involving plant modifications and completion of pipes. The work has been carried out properly and efficiently. As head of Mongstad I am proud of the great effort leading up to this day,” said Rasmus F. Wille, Vice President for the Mongstad complex.

FINANCIALLY SOUND In July, Equinor concluded a deal with Lundin which saw it further increase its ownership stake in Johan Sverdrup.

The agreement saw Equinor divest around 54.5 million shares in Lundin at a price of SEK 266.4 per share. Total consideration for the divestment of shares in Lundin amounted to around USD 1.56 billion. Equinor acquired a further 2.6% direct ownership share in the Johan Sverdrup field for a cash consideration of USD 910 million. Now, Equinor holds a 42.6% ownership share in the Johan Sverdrup field and a 4.9% shareholding in Lundin Petroleum.

“Since 2016 we have more than doubled the value of our investment in Lundin. This transaction gives us the opportunity to capitalize on this

value creation, and at the same time increase our direct ownership in the Johan Sverdrup field,” says Sætre.

“Johan Sverdrup is truly a world class field. An increased direct ownership share gives us the opportunity to create even more value for our shareholders,” he adds.

With the field coming on stream, and first oil reaching Mongstad, Johan Sverdrup is already generating value for shareholders, and providing quality oil with lower CO2 emissions than ever before. As an engineering demonstration and an example of a modern mega project, Johan Sverdrup is now setting the standards.

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December 2019

EQUINOR

Third Largest NCS Field Starts Up ALSO IN THIS ISSUE:

A&P Falmouth / DeRegt Cables / GeoSea / Borouge

AS FEAT UR ED IN

ENERGY FOCUS

DECEMBER 2019