Marathon's Alvheim oil field begins production

Uchenna Izundu
International Editor

LONDON, June 11 -- Marathon Petroleum Norge AS has begun producing oil from Alvheim field off Norway via its floating production, storage, and offloading vessel. It expects to increase output with a third development later this year.

Alvheim and Vilje fields are expected to ramp up production to 75,000 boe/d by early next year from a reserves base estimated at 250 million boe. Six wells have been drilled and completed on production licenses 203 (PL230), 088BS, and 036C on the Norwegian continental shelf.

Volund is a satellite scheduled to start production in the second half of 2009 on nearby PL150. Marathon operates Volund with a 65% stake, and its partner Lundin Norway AS has a 35% interest.

Plans originally called for Alvheim to come on stream by yearend 2007, but production was delayed because of the tight supply market for oil equipment. It is a significant asset for Marathon and Norway. The company spent $1.2 billion developing the project, which lies 224 km from Stavanger in 125 m of water. The Alvheim purpose-designed FPSO vessel has a design capacity of 120,000 b/d of oil and 125 MMcfd of natural gas with storage capacity of 560,000 bbl of oil.

Marathon will send gas to the existing UK SAGE system using a new 38 km cross-border pipeline. "The Alvheim FPSO will serve as a central hub in the area," the company said. "The nearby Vilje field is already tied back to Alvheim. As a regional hub, the Alvheim FPSO is well positioned to deliver significant production for the long-term."

Marathon's partners in the Alvheim development are ConocoPhillips Skandinavia AS with a 20% working interest, and Lundin Norway AS, with a 15% stake. Ashley Heppenstall, president and chief executive of Lundin Petroleum, said its production would increase the company's output by 50%.

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