Oil Prices Spur Statoil's Drilling Campaign

Stronger oil prices and the need for reserves replacement have persuaded Statoil to plan around 30 exploration wells this year, 30% more than last year, assuming rig availability and partner approvals, it said January 4. More than half will be drilled on the Norwegian Continental Shelf (NCS).

Last November, Opec announced its intention to rein in production from the start of this year, and other countries such as Russia may join it. This sentiment has helped push prices over $50/barrel. This time last year, crude was at a long-term low, going below $30/b, prolonging the widespread upstream investment freeze that began with the oil price crash in mid-2014; while for many, $50/b or more is seen as a sign to produce.

“Taking advantage of our own improvements and changed market conditions, we have been able to get more wells, more acreage and more seismic data for our exploration investments in later years,” said Statoil's executive vice-president for exploration Tim Dodson.

“This allows us to firm up a strong drilling program for 2017, totalling around 30 exploration wells as operator and partner.” He said the campaign was “balanced” between proven, well known basins and new frontier opportunities off South America and in southeast Asia.

In 2016, Statoil completed a total of 23 exploration wells as operator and partner – 14 of them on the NCS. This was far less than forecast owing to efficiency improvements and market effects.

In Norway, the five to seven well exploration campaign in the Barents Sea is at the core of the activity plan. In the Norwegian Sea and the North Sea, the ambition is to prove near field volumes to prolong the productive lifetime of existing infrastructure and so postpone decommissioning; and determine the growth potential.

In total, Statoil expects 16-18 NCS exploration wells to be completed in 2017. New discoveries are crucial to counteract decline on the NCS. The last two years have seen record Norwegian gas production running at around 116bn m³ both years, much of which is Statoil-operated.

“The Barents Sea has yielded several of Norway’s most significant oil discoveries in recent years. We are looking forward to test new targets, both in the relatively well known geology around in the Johan Castberg and Hoop/Wisting area, as well as some new frontier opportunities with greater geological uncertainty but also high impact potential. This campaign can provide us with crucial information about the long term future of the Norwegian shelf,” says Dodson.

Statoil's upstream VP Tim Dodson

(Credit: Ole Joergen Bratland)

Overseas, Brazil is a major area for investment. “Following our take-over as operator for the Carcara discovery last summer, Brazil has become even more important in Statoil’s portfolio, not least on the exploration front. We are stepping up exploration also in the UK, with plans for three Statoil operated exploration wells in 2017,” said Dodson.

Elsewhere, partner operated wells are planned to be spudded in established basins like the US Gulf of Mexico and in in new frontier areas like Indonesia and Suriname. Statoil is also partnering in onshore exploration drilling planned in Russia and Turkey.

William Powell