Higher Oil Drives Bets on Norwegian Upstream
Activity on the Norwegian Continental Shelf has been "very high" in the first half of the year, the offshore regulator Norwegian Petroleum Directorate (NPD) said July 16.
Oil prices have been stronger in the first half of the year compared with the 2015 onwards, and not showing signs of serious weakness. However, in the absence of major discoveries, it will be difficult to maintain the high output for much longer, it warns, urging companies to try their luck in relatively unexplored sectors.
In the Norwegian Sea, Austrian OMV proved gas and condensate northwest of the Morvin field in wildcat well 6506/11-10 and the preliminary estimate is between 6mn and 39mn m3 of recoverable oil equivalent (oe) in total. German Wintershall's wildcat well 6604/5-1 southwest of the Aasta Hansteen field found gas with an estimated size of between 7bn and 19bn m3 of recoverable gas and between 1mn and 3 million m3 of recoverable condensate.
In the Barents Sea, Aker BP found gas in wildcat well 7221/12-1. Preliminary volume estimates are between 2bn and 3.5bn m3 of recoverable gas. Initial results from gas samples indicate that the gas may be in the gas-hydrate phase. The licensees will attempt to clarify this through further analysis.
Development projects
The 20 development projects that are under way represent considerable diversity with new installations, minor discoveries that exploit existing infrastructure and major projects for improved recovery from mature fields.
“We are seeing a record-breaking number of projects in the implementation phase, with more projects currently being planned. We find it particularly gratifying that several of the projects aim to increase recovery from mature fields; for example Valhall, Snorre and Njord. These are large and significant developments that will ensure that we recover more profitable oil and gas from the subsurface,” said NPD.
In addition, the authorities have received two new applications for development and operation so far this year, one of which was Equinor's application for development and operation for Phase 3 of Troll, which entails producing the gas cap in Troll Vest. In the third quarter, the NPD also expects a PDO for Johan Sverdrup, Phase 2. All are in the North Sea.
The authorities approved seven applications for development and operation during the first half of 2018 which represent investments of around NKr 100bn ($12.3bn) and a total expected value of about Nkr 165bn. This value creation presumes that production will continue for several decades to come, said NPD, with the investments showing that companies have a long-term commitment on the Norwegian Shelf.
Take care of the pennies...
Alongside the eye-catching projects such as Johan Castberg and Johan Sverdrup, "another important factor is good exploitation of available capacity in the already well-developed infrastructure on the Norwegian Shelf. Our focus is on ensuring that the companies identify solutions for minor discoveries which include good utilisation of the existing infrastructure. Many of these smaller discoveries are very profitable, both for the companies and for our society," it said.
“At the same time, we would like to see more co-ordination activities, where the companies look at larger areas as one, and find joint solutions for developing new discoveries, combined with maximum recovery from existing fields."
The NPD expects that 40-50 exploration wells will be drilled in 2018, compared with 36 in 2016 and 2017, and remarks: “It is positive that we see an increase in exploration activity. It is particularly important that more exploration wells are now being drilled in the North Sea and the Norwegian Sea, where additional resources must be identified and recovered while the infrastructure is still operational.”
There has been great interest in new exploration acreage in recent licensing rounds, which is due in part to new insight based on better seismic and well results that have led to new exploration concepts. Other important factors are access to infrastructure and lower costs.
“However, if production is to be maintained at a high level, there must be larger discoveries than what has been the average over the last ten years. The possibility of making large discoveries is greatest in areas that have not been explored much,” said the NPD.
(Banner photo shows the Troll A platform; credit: Harald Pettersen/Equinor)