OFFSHORE EUROPE Valuation of Mid-Norway oil and gas prospectivity rising

Critical to determining the response of deepwater risers to current and wave conditions is analysis and tank testing conducted by Marintek. Shown is a dynamic analysis of a steep wave flexible riser configuration.

Enough is known of the geology in undrilled parts of the Mid-Norway region to indicate an encouraging prospectivity.

Undiscovered resources in Mid-Norway are estimated by the Norwegian Petroleum Directorate (NPD) at some 8.5 billion boe, but the wide range of estimates - 2.1-21.0 billion boe - indicates the high degree of uncertainty in these figures.

Between one third and one half of the undiscovered resources - some 3.6 billion boe - are thought to lie within the 170,000 sq km in the Voering and Moere basins which are currently on offer in the 15th licensing round, in which awards are due late this year.

Although to date, only 2D seismic has been shot over these areas, this has been sufficiently dense to identify the presence of large, potentially hydrocarbon-bearing sturctures, according to Erling Kvadsheim, principal engineer for exploration analyses at the Norwegian Petroleum Directorate (NPD).

These structures have been well-enough mapped to direct initial drilling, Kvadsheim says. However, in some areas successful licence applicants are expected to shoot a mixture of 2D and 3D seismic before embarking on drilling.

Voering, Moere basins

Geologically the Voering and Moere basins differ from the explored parts of Mid-Norway, which are centered on the Halten Bank. All the major accumulations found so far, such as Heidrun, Smoerbukk, Midgard, Norne and Njord, belong to the Early to Middle Jurassic plays, except for Draugen, which is Late Jurassic.

All Voering and Moere plays are unconfiremed and chiefly comprise sediments of Cretaceous and Tertiary age, together with a single Jurassic play.

Encouraging signs for Mid-Norway have also been found in exposed source rocks in Greenland. Though any hydrocarbons would have migrated from these rocks long ago, they are on trend with Mid-Norway, where they would be expected to be found at a depth at which hydrocarbons would still be retained.

A cautionary note has been sounded by those who remember that there were similarly encouraging indications of the Barents Sea, where drilling has so far thrown up only gas reserves of any significant volume.

But Kvadsheim points out that seismic technology has come much further since it was first deployed in the Barents, and more confidence can be put in the information it yields.

The seismic indicators generally show the likely presence of gas, he says. The geological model for the source rocks also indicated that gas is more likely to be present than oil, though this evidence is uncertain, he says.

The NPD's resource estimate for the Voering and Moere basins comprises 500 million bbl of oil and 430 bcm of gas. Given that it is oil which is the principal target, the oil companies' enthusiasm to drill in these areas suggests they believe there is a large potential upside for oil reserves. According to Kvadsheim, many of them are optimistic that there is oil underlying the gas which mapping to date has not shown up.

First wells

The first wells on the new licences could be spudded next summer, though given the tight state of the rig market, operators may decide to hold back. In cost terms, drilling on Voering and Moere would be a daunting prospect even if the market were softer. Under current conditions, a fourth generation anchored unit could cost $100,000-110,000 a day, and a dynamcially positioned unit even more.

What is different about Voering and Moere is the water depth. This goes as deep as 2,500 meters, though most of the acreage up for licencing is in waters of 500 -1,500 meters.

Drilling in such depths is not of itself novel in other parts of the world. What sets these areas of Mid-Norway apart are the height and force of the waves and the strong sea currents.

However, the NPD has not established any special regulations for drilling in these areas. According to Oyvind Tuntland, head of the technical division, operators will, as usual, have to show that the rig they have contracted is equipped to operate in the prevailing conditions.

The NPD has, in conjunction with operators and some drilling contractors, carried out a comprehensive study of the conditions which will have to be endured and the standard of equipment required to meet them.

High-cost drilling

Well control problems stemming from the length of the riser have been identified as an area of potential concern, Tuntland said. This has been tackled by planning in detail how different eventualities can be met and identifying the equipment which would be needed.

Even the most modern units will require an expensive upgrade. According to Kjell Bjerker, vice president for operations at Transocean, the cost of upgrading the company's most advanced semisubs, Transocean 8 and Ross Rig, for drilling in 1,500 meters of water would be some $20 million each.

Most of the money would go on adaptations to the mooring system, the tensioning system and the BOP control system, and on lengthening the rigs' risers, Bjorker said. The two rigs already have an ample variable deck load of some 4,000 tons.

Concerned that the cost of drilling in the Voering and Moere Basins could prove prohibitively high, Saga Petroleum has developed the EfEx (Efficient Exploration) project, which plans to use an upgraded second generation rig. It has just awarded a long-term contract to Odfjell/Dolphin, too. Its intention is to sub-let the rig to other operators.

Even though Statoil has become Saga's partner in the EfEx project, and several contractors pre-qualified for the drilling contract, not all operators or contractors are convinced that this is the right road to follow.

Which side is right will probably only become clear when operators and contractors start next negotiating day-rates for Voering wells, perhaps early next year. Maybe there is room for both concepts.