Danes Gear Up for Tyra Spending
The Danish state received krone 1.6bn ($272mn) from its state holding Nordsofonden (North Sea Fund) in 2017 in terms of taxes and dividends. But the state won't reap such dividends in the coming years, as it must dig into its pocket for an industry-led redevelopment of the country's strategic gas hub.
Nordsofonden's net 2017 result was krone 466mn ($76mn), versus a 2016 loss of kroner 443mn, thanks to higher oil prices and a sustained oil and gas production levels, its annual report released April 25 said. The fund's net share of produced oil and gas in 2017 was 8.4mn bbls and 745mn m3 respectively. Oil output was flat year on year, but gas increased as a result of new gas production wells drilled 2016 and 2017. Nordsofonden's total sales were kroner 4.1bn. Capital expenditure by the fund in 2017 of krone 1.7bn was relatively minor, and of that production costs accounted for krone 1.4bn.
Investments will rise steeply in the coming years, as Nordsofonden and the partners in DUC late 2017 sanctioned the investment of up to krone 21bn (then $3.4bn) to redevelop the Tyra offshore gas hub.
"Redevelopment of Tyra is the largest single investment made in the Danish part of the North Sea. Nordsofonden and our partners in DUC have during 2017 worked intensively to prepare the technical and economic basis for the final investment decision. Now the work continues to complete this major project and to redevelop the facilities to be ready again for oil and gas production in 2022," said Nordsofonden CEO Birgitta Jacobsen. Last month Total completed its $7.45bn takeover of Maersk Oil, which had been announced in August 2017.
Danish gas production will decline sharply in 2019-22, as the Tyra field which processes 90% of the country's gas output, will be shut for redevelopment from November 2019 until July 2022.
The decision to rebuild followed after the government and Maersk Oil (as operator of DUC) in March 2017 agreed to an improved framework for oil and gas production from the Danish part of the North Sea. That accord paved the way for the decision due to among other things a change in the depreciation regulation. "With the redevelopment of the Tyra field facilities, the continued production from the Tyra field and the surrounding satellites and a central part of the energy infrastructure in the Danish part of the North Sea is ensured," said Nordsofonden April 25. "An accessible modern infrastructure as well as a long-term and foresighted development in the Danish part of the North Sea is imperative for optimal use of the Danish resources. This can ensure our own production of oil and gas for many years," said Jacobsen.