Annual report 2011
Release Date:
17 April 2012
2011 was a year of high investments and considerable activity, mainly with regards to the development of the Skarv field and the new Valhall field centre.
BP Norge AS (BPN) is owned by BP Global Investments Ltd and Amoco Norway Oil Company. Both companies are part of the BP Group, which again is one of the world’s largest integrated oil and gas companies.
BPN carries out production and exploration for oil and gas on the Norwegian Continental Shelf. The company was established in Norway in 1920 as Norsk Brændselolje A/S. The company’s exploration and production division was established in 1965, through the former company Amoco Norway’s application for blocks in the first licensing round on the Norwegian Continental Shelf. The company’s head offices are located in Stavanger.
The company has 14 licenses, and is the operator of ten of these. The fields currently in production and operation by BPN are Valhall, Hod, Ula and Tambar. In addition, the company is the operator for the development of the Skarv field which was approved in 2007 and will start production in 2012. The company also holds stakes in the Draugen field, operated by A/S Norske Shell.
BPN carries out production and exploration for oil and gas on the Norwegian Continental Shelf. The company was established in Norway in 1920 as Norsk Brændselolje A/S. The company’s exploration and production division was established in 1965, through the former company Amoco Norway’s application for blocks in the first licensing round on the Norwegian Continental Shelf. The company’s head offices are located in Stavanger.
The company has 14 licenses, and is the operator of ten of these. The fields currently in production and operation by BPN are Valhall, Hod, Ula and Tambar. In addition, the company is the operator for the development of the Skarv field which was approved in 2007 and will start production in 2012. The company also holds stakes in the Draugen field, operated by A/S Norske Shell.
Production on the Ula field started in 1986, and is expected to be maintained until 2028 or longer. After reaching a production peak in the early 1990s, and a subsequent decline in production in the mid-1990s, the Ula field has received a new lease of life using new technology and by receiving production from other fields in the area. Tambar and Blane already process their hydrocarbons on Ula, while Oselvar, which is being developed and will enter into production in 2012, has selected a development solution where hydrocarbons will be processed on the Ula platform. The facilities on the Tambar field consist of one unmanned platform 16 kilometres south of Ula, which is remotely operated from Ula.
The Draugen field operated by A/S Norske Shell out of Kristiansund, started production in 1991. Considerable investments are planned both in the platform and drilling area in the coming years.
The Skarv field located in the Norwegian Sea, is being developed with a Floating Production, Storage and Offloading vessel (FPSO) and related subsea systems. The FPSO, constructed in South Korea, will have the world’s largest gas processing plant placed onboard a ship. It was towed to Norway early 2011 for final completion, and was anchored at the field in August. Following hook up of the subsea systems to the FPSO, the production on Skarv will commence in 2012.
The Draugen field operated by A/S Norske Shell out of Kristiansund, started production in 1991. Considerable investments are planned both in the platform and drilling area in the coming years.
The Skarv field located in the Norwegian Sea, is being developed with a Floating Production, Storage and Offloading vessel (FPSO) and related subsea systems. The FPSO, constructed in South Korea, will have the world’s largest gas processing plant placed onboard a ship. It was towed to Norway early 2011 for final completion, and was anchored at the field in August. Following hook up of the subsea systems to the FPSO, the production on Skarv will commence in 2012.
Profit
Petroleum revenues in 2011 amounted to NOK 7 945 million. This was up from last year’s NOK 7 424 million. The main reason was higher prices on petroleum products, partly offset by a production decrease of 19%.Other operating revenues amounted to NOK 66 million.
The operating profit amounted to NOK 4 347 million. This is a decrease of NOK 280 million from 2010 due to higher operating expenses, mainly production costs, partly offset by higher revenues. Net financial items gave a loss of NOK 526 million. This was a small improvement compared to the previous year due to a positive movement in the net foreign exchange profit of NOK 190 million partly offset by higher net interest expense of NOK 168 million.
Pre-tax profit was NOK 3 821 million compared with NOK 4 079 million in 2010. The decrease is mainly due to higher operating expenses of NOK 738 million partly offset by NOK 458 million in increased revenue. The profit after tax was similar to the year before, NOK 1 425 million compared to NOK 1 426 million. The tax cost was reduced by NOK 257 million to NOK 2 396 million.
Balance Sheet
Assets increased from NOK 26 920 million in 2010 to NOK 30 774 million in 2011. This was mainly caused by continued investments in the development of the Skarv field and the new Valhall field centre. The investments are financed by loans from the BP group and funds from the operations. Other balance sheet items had only minor changes as a result of normal operation conditions. Equity at the end of the year amounted to NOK 3 167 million, compared to NOK 2 742 million at the end of 2010.
Production
In 2011, BPN had production from the following fields:- Valhall (ownership interest 36.0 per cent),
- Hod (ownership interest 37.5 per cent),
- Ula (ownership interest 80 per cent),
- Tambar (ownership interest 55 per cent),
- Tambar Øst (ownership interest 46.2 per cent)
- Draugen (ownership interest 18.4 per cent).
BPN’s share of the 2011 production amounted to 34 600 barrels of oil equivalents per day compared with 42 700 in 2010. This was mainly due to a decrease on Ula of 5 400 barrels of oil equivalents per day, corresponding to 33%, reflecting reduced operating efficiency on producing wells. Valhall had a decrease in production of 1 400 barrels of oil equivalents per day, corresponding to 10%. This was due to a shut in of the production in the third quarter following a fire on the platform. There were only minor changes for the other fields.
Investments
BPN invested NOK 4 494 million in 2011. This was NOK 3 325 million lower than 2010, but still a year of high investments. The main investments are for the development of the Skarv field and activities in connection with the new Valhall field centre.The Skarv development continued in 2011. There was considerable activity at the field including installation of flowlines and subsea systems, and rock dumping. The FPSO arrived in Norway in the first quarter of 2011 after being towed from the yard in South Korea. Following a yard visit for completion and preparation, the vessel was anchored at the field location in August. Following this, hook up work to connect the flowlines to the FPSO started. Skarv had drilling operations all year.
The activity to complete the new process and hotel platform on Valhall continued through all of 2011. The living quarters and helicopter deck was put into use in 2011 whereas the processing facility will come on stream in 2012. Another 2011 milestone was that a portion of the energy demand at the field has been supplied by the new power from shore cable.
Valhall had drilling operations from the injection platform in the last three quarters of 2011.
Furthermore, an integrated pre-project looking at construction of a new Hod platform, a new Valhall west flank platform, an expanded Life of Field seismic program and an upgrade of the produced water and gas handling capacity on Valhall started up.
Oselvar Plan for Development and Operation (PDO), operated by Dong, was approved in 2009 where the development solution means that the Ula field will receive and process production from the Oselvar field. Oselvar is being developed with a subsea structure tied back to Ula with a pipeline. The Ula modules were installed offshore in 2011. Production will start up in 2012. The gas from Oselvar is purchased by the Ula group and will be used as injection gas to increase Ula’s reserves and extend the field’s lifetime.
Furthermore, an integrated pre-project looking at construction of a new Hod platform, a new Valhall west flank platform, an expanded Life of Field seismic program and an upgrade of the produced water and gas handling capacity on Valhall started up.
Oselvar Plan for Development and Operation (PDO), operated by Dong, was approved in 2009 where the development solution means that the Ula field will receive and process production from the Oselvar field. Oselvar is being developed with a subsea structure tied back to Ula with a pipeline. The Ula modules were installed offshore in 2011. Production will start up in 2012. The gas from Oselvar is purchased by the Ula group and will be used as injection gas to increase Ula’s reserves and extend the field’s lifetime.
The external environment
BPN’s environmental management is certified under ISO 14001. BPN continues to receive good feedback on its environmental management in connection with the annual review. The certification was renewed in 2009 with the next recertification in 2012.Discharges to sea
The BP group has challenging internal targets for re-injection of produced water and only fields with unusual difficult circumstances or high risk profile are exempted from these targets. A thorough process has resulted in a conclusion that reinjection at the Valhall field leads to a significantly increased risk for reservoir souring and corrosion. BPN has therefore received permission from the Climate and Pollution Agency (Klif) to choose an alternative method for handling of produced water on Valhall.
The produced water volumes on Ula in 2011 are similar to 2010 as several “water producing wells” became available. Ula had an reinjection rate of 30.4%, which was lower than expected. This was due to problems with the water injection pumps. The annual average of oil in produced water was 9,2 mg/l for Ula and 4.2 mg/l for Valhall, well below the authority regulation of 30 mg/l.
Regarding chemicals use, BPN continues its systematic efforts to reduce the use of environmentally harmful chemicals and 2011 was an important milestone for phasing out “red” chemicals for drilling.
Regarding unintentional discharges, Valhall had two oil discharges (diesel) and no chemical discharge in 2011, whereas Ula had one oil discharge and two chemical discharges. Skarv had five chemical discharges.
Emissions to air
BPN has approvals from the authorities for emissions under climate quotas and has purchased CO2 quotas of 214 754 tonnes for Valhall and 228 029 tonnes for Ula. There was one reportable hydrocarbon emission to air (Ula) of more than 0,1 kg/s in 2011.
BPN has approvals from the authorities for emissions under climate quotas and has purchased CO2 quotas of 214 754 tonnes for Valhall and 228 029 tonnes for Ula. There was one reportable hydrocarbon emission to air (Ula) of more than 0,1 kg/s in 2011.
Safety
In 2011, BPN had three high-potential incidents. The first was a personal injury on one of our normally unmanned platforms, where a person was hurt by a spring loaded pipe support. The second incident was ignition of a cold vent at Valhall. The third incident was a gas leak at Ula. The incidents were investigated and have been closely followed up in order to prevent similar incidents in the future.BPN had 17 reportable personal injuries in 2011, three less than in 2010. Relative to working hours this gives a Total Recordable Injury Frequency (TRIF) of 0,48 per 200 000 hours.
There has been a considerable HSE activity to reduce risk also in 2011, including:
- 170 000 safety observation cards (STOP cards)
- 20 000 safety observation conversations (SOC conversations)
- 4 200 people have attended the HSE course “HSE Basic”
- Management has conducted more than 140 management visits
- Seven internal and 19 external audits have been carried out
Health
Absence due to illness remained low in BPN in 2011, at 1.7 per cent, which is well below the national average. Good follow-up from our health service is a key factor in achieving this.
Community engagement
In the Stavanger region, BPN’s community engagement is linked to the University of Stavanger, sponsoring agreement with the Norwegian Petroleum Museum and contribution to the new Stavanger Concert Hall. In addition, the company provides substantial support to employees’ community engagement and charitable organisations including the annual TV fund raising event.Through considerable participation in work fairs, career events and school meetings, in particular in the Helgeland region, BPN wishes to motivate young people to choose education within the engineering and technology field. There is a strong need for this type of education, not only within the oil business, but in Norway in general. BPN recruits apprentices and newly educated university candidates who are undergoing a company internal training program. At present we have two Phd students in collaboration with the Nordland County, one in Mo i Rana and the other in Narvik.
Our longstanding collaboration with the University of Oslo and the web site www.matematikk.org continued in 2011 including, a “Math Fair” for children in the BPN office in Stavanger. BPN is also supporting the NPF work for young people in the business.
The Skarv development has given considerable ripple effects for the business community at Helgeland. The collaboration with the University of Nordland for a report on ripple effects from Skarv continues, with the final report due in 2012.
Personnel and organisation
The headcount increased in 2011 from 1 045 to 1 123, including international BP employees with positions in Norway, primarily due to increased demand for operations support and projects. This figure also includes contracted consultants.The job market has been tight for some positions. Eleven employees left the company in the course of the year. Nine employees retired.
BPN recruited 50 new employees in 2011, of which five were former apprentices. Twelve of the new employees are women. The company did not bring in new apprentices in 2011. BPN had 16 employees stationed abroad at the end of the year.
About half of the permanent employees have higher education. Substantial amounts are spent each year to maintain and further develop the competence in the organisation.
Diversity
The company has an active personnel policy with regards to diversity and inclusive working environment (IA). BPN is an IA company. The company has flexible working hour schemes which many employees make use of.The proportion of female employees is 17%. The company wants to increase this percentage, and seeks to achieve this by recruiting “Challengers” and apprentices, but also through the regular recruitment activity. The proportion of women in the “Challengers” programme is 38%. Men and women are treated identical with regards to wage levels. 19 employees work part-time, of whom three are male.
The company follows BP group guidelines (“Code of Conduct”) which provides standards for equal treatment of employees regardless of sex, race, religion and ethnicity.
The future development of the company
During 2011 and 2012, BPN will complete its two major development projects on Skarv and Valhall, which will ensure long-term and stable activity for the company and a significant increase in production over the next decade. For Ula, the strategy to be a processing hub for adjacent smaller discoveries has strengthened the field’s long-term position.The strong results within HSE and operational regularity ensure that the developments are based on a robust operating environment.
As a result of the large investments taking place, there is currently an accumulation of capital in the company. BPN is following the BP group guidelines and processes for managing various financial risks, such as oil price and currency risk, to ensure that the capital is managed in a controlled and effective manner.
Accounts
BPN is not aware of any material and significant matters which would affect the assessments of the 2011 profits or the company’s general position as of 31 December 2011, other than those described above or in the accounts. The annual accounts have been prepared on the basis of the going concern assumption, in line with the accounting act § 3-3.Allocation of the year’s profit
Profit for BPN AS is allocated as follows:Profit: 1 424 934 000 NOK
Dividends: 1 000 000 000 NOK
Transferred to other equity: 424 934 000
On the board of BP Norge AS, Stavanger 27 March 2012:
Peter J. Mather
R. L. F. Wiles, C. I. Minos, K. Ekroll, O. Fjellså
A. Kloster, M. Birkedal
