Strong potential in Norwegian far north

Norway's unexplored offshore regions could be rich in resources, particularly gas, according to a new report from the Norwegian Petroleum Directorate (NPD).

BeckmanJeremy Beckman • London

Norway's unexplored offshore regions could be rich in resources, particularly gas, according to a new report from the Norwegian Petroleum Directorate (NPD). This report outlines findings based on recent surveys over the southeastern sector of the Norwegian Barents Sea, and the Jan Mayen area in between Norway, Iceland, and Greenland.

In both cases, mapping is a step in the process of opening both areas to petroleum activity.

NPD commissioned seismic surveys in 2011-2012 over the 44,000-sq km (16,988-sq mi) section of the Barents Sea that had been off limits until Norway and Russia resolved their median line dispute. To date no wells have been drilled in this sector even for scientific purposes, although there is well data to draw on, based on drilling results across the Russian side of the line and the various discoveries to the west in the southern Norwegian Barents Sea.

Analysis of the seismic suggests the Bjarmeland Platform in the far north of the sector and the Fedinsky High in the east are probably pure gas provinces, while the Finnmark Platform, Nordkapp, and Tiddlybank basins are likely oil and gas-prone. Petroleum deposits could also span the maritime border area.

NPD's calculations suggest probable resources overall of around 300 MMcmoe, with a bias toward gas, based on understanding of the region's source rocks. In the opened Norwegian part of the Barents Sea and the far north, undiscovered resources are estimated at 960 MMcmoe, so the southeast could add a further 37%.

As for Jan Mayen, this area consists geologically of the volcanic Jan Mayen Island and the subsea Jan Mayen Ridge that runs southward from the island. The ridge is surrounded by oceanic crust thought to have started forming 55 million years ago as the North Atlantic Sea, leading to separation of the ridge from both Norway and Greenland and the formation of a small micro-continent. In recent years, seismic and aeromagnetic data have been acquired, along with various rock samples, over a 100,000-sq km (38,610-sq mi) area that could eventually be opened for exploration. NPD estimates expected resources in the area at 90 MMcmoe, with potential upside in the event of a discovery of up to 640 MMcmoe.

Iceland has already opened parts of its shelf surrounding Jan Mayen for licensing.

Floating platform for Barents Sea oil fields

Statoil and partners Eni and Petoro have opted for a semisubmersible platform for the second oil development in the Barents Sea. This will be stationed on the Skrugard field in license PL532, 150 km (93 mi) from Eni's ongoing Goliat oil project, and 240 km (62 mi) from the Statoil-operated LNG plant at Melkoya, northern Norway, serving the Snøhvit field.

The platform would tie in produced oil from both Skrugard and the nearby Havis find via a subsea production system in 380 m (1,247 ft) of water. Statoil estimates the two fields' combined oil and gas reserves in the 400-600 MMboe range. There may be potential for further tie-ins following the results of upcoming wells planned on other prospects in the Skrugard area.

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How the Skrugard/Havis development might pan out.

Assuming the development plan is submitted next year, Statoil aims to start production in 2018, targeting output close to 200,000 boe/d. Oil would be exported from the platform via a new 280-km (174-mi) subsea pipeline to a planned terminal at Veidnes on the Finnmark region coast, for storage in two mountain caverns. From there it would be piped to the quayside for loading onto tankers.

In the Norwegian Sea, Statoil has awarded three contracts for the Polarled 36-in. pipeline that will transport gas from the Aasta Hansteen field spar platform 482 km (299 mi) to Nyhamna for processing. Water depths along the route extend to 1,265 m (4,150 ft). Allseas will install the pipeline in 2015, with Marubenin Itochu/JFE fabricating the linepipe in Japan. Pipes will then be shipped to Malaysia for internal coating and external anti-corrosion coating, before heading to a new production base at Mo I Rana, Norway, for application of a protective concrete weight coating. Total value of the contracts is $720 million.

Project spree to lift UK production

Spending on UK offshore projects is on an upward curve, according to the latest review by industry association Oil & Gas UK. Its 2013 survey forecasts total investments this year of at least £13 billion ($19.56 billion), compared with £11.4 billion ($17.16 billion) in 2012. Aside from stable oil prices, the main trigger has been a series of petroleum tax changes introduced by the government last year following dialogue with the industry. Oil & Gas UK claims the level of investment in new development and in existing offshore facilities is the strongest for more than three decades.

The new series of measures, which included allowances for heavy oil fields and clarification of decommissioning tax relief, "has prompted global companies and independent businesses alike to take another look at the UK as an investment destination," said the association's chief executive Malcolm Webb. It has also led to more oil and gas reserves becoming commercial for development.

Webb cautioned that reserves moving forward into production are not being fully replaced by discoveries, with an average of only 21 exploratory wells annually on the UK shelf over the past three years. The tide could be about to turn, however, with the association's members expecting to drill 130 UK exploration wells over the next three years, some combined with deployment of more advanced subsurface technology. By early March there had been one confirmed new oil discovery by Fairfield Energy on the Darwin structure in the northern North Sea. This is close to the location of BP's abandoned NW Hutton field, which Fairfield is attempting to redevelop.

Average daily UK production may dip below 1.5 MMboe this year, the association says, but should rebound as the new projects come online to reach 2 MMboe/d by 2017. One of those should be the heavy oil Mariner field in the northern sector. Statoil recently got the nod for the $7-billion-plus development from the government, for a scheme based on a fixed production, drilling and quarters platform with 50 active well slots, and oil transferred to a floating storage unit. Later this year the company expects to take a final investment decision on another nearby heavy oil giant, the Bressay field.

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