The largest oil platform in the world, named Goliat, has finally stated to drill for oil in the northernmost offshore oil field. Expectations are high and so are the costs that have accumulated so far due to a two year delay. Despite the good news of the start, troubles are not over yet. Platform operator ENI has been sued by environmentalists over its Arctic drilling plans.
Located 88 kilometers north of Hammerfest in the western part of the Barents Sea, Goliat sets world record for being the northernmost offshore oil field. It is the second offshore oil production unit in the European part of the Arctic, after Russia’s Prirlazlomnoya in the Pechora Sea. Goliat is a joint project between Italian oil company ENI and Norwegian company Statoil. The Goliat project has turned a nightmare-like story for the Italian oil company. Production at the platform was originally to start in 2013. Norway’s Petroleum Safety Authority formally approved the use of the Goliat floating, production and offloading platform in January this year.
Construction of the platform in South-Korea was long delayed and costs overrun are estimated to NOK 17 billion (€1,8 billion). Total price tag for the project is now NOK47 billion (€5 billion). According to calculations from Rystad Energy AS, a consultant company, oil prices between $95 and $100 per barrel will be required to make a profit. ENI, on the other hand, says that even an oil price of less than $50 would make a break-even on Goliat. Currently, the oil price is at about $40 per barrel.
The Goliat field in the Barents Sea was discovered 16 years ago. Estimated production will be some 100,000 barrels per day and experts estimate about 180 million barrels of recoverable oil. The oil will be stored in the floater itself before being reloaded to tankers and sailed to the markets. “This is a big day for northern-Norway,” says Geir Seljeseth, Regional Manager of the Norwegian Oil and Gass Association. Seljeseth says that the project is important for the supply industry, for Hammerfest as a town and with implications for all over northern Norway. “This creates a basis for decades of production that will give solid income for the society and welfare in Norway.”
Source: The Independent Barents Observer; Bloomberg