Gazprom’s Shtokman field in the Barents Sea may be the tip of the iceberg for oil and gas development offshore northern Europe and Russia. When coupled with Statoil’s Snøhvit gas field and Eni’s Goliat oil discoveries, developments are expected to continue in this part of the Arctic Circle. The Russian estimates of hydrocarbon reserves in the Barents, Petchora, and Kara seas, for instance, are expected to warrant further exploration and drilling in this frontier area despite its weather difficulties.
Russia’s Arctic continental shelf is viewed by Gazprom as a promising source of gas and liquid hydrocarbons, both new and prospected. Overall, initial hydrocarbon reserves on the Russian continental shelf amount to about 100 billion tons of fuel equivalent. Some 80% of that volume is gas. The main hydrocarbon resources (about 70%) are concentrated under these Arctic seas. So far, gas and condensate predominant under the Barents and Kara seas, while oil prevails in the Petchora Sea.
Reserves of C1+C2 grade at the Shtokmanovskoe field include 3.66 tcm of gas and 31 million metric tons of gas condensate. The priority in developing the Shtokmanovskoe field is to build facilities to produce LNG gas for long-distance exports, primarily to the US.
On the Norwegian side, the election in October 2005 was important for Norway’s Barents Sea exploration because the largest political coalition members disagreed on whether to pursue activities in the area. In March 2006, the government presented its plan for the Barents Sea. The plan allows new exploration in some areas but also places a moratorium on ecologically sensitive parts of the region until 2010. The plan allows existing exploration activities in the Barents Sea to continue.
Shtokman
Sevmorneftegaz (a wholly owned subsidiary of Gazprom) has begun drilling the seventh exploration well in Shtokman; well No. 7 is 550 km from the Kola Peninsula. The sea depth at the drilling site is 340 m.
The drilling customer is ZAO Sevmorneftegaz, which holds licenses for geological E&P of gas and condensate in the Shtokman field. The general contractor is OOO Gazflot (a wholly owned subsidiary of OAO Gazprom). The well is being drilled with theDeepsea Delta semisubmersible rig on contract from Hydro.
During 2004 and 2005, Gazprom signed memoranda with international energy corporations regarding feasibility studies and commercial offers for joint development of Shtokmanovskoe, the construction of an LNG plant, and shipments of LNG to the Americas. Gazprom analyzed all those offers and made public the short list of companies. This list included Statoil, Total, Chevron, Hydro, and ConocoPhillips. Gazprom said at press time that it still was analyzing the proposals. Gazprom has said it plans to choose two or three partners for the project, and expectations are that the choices will be made before year-end.
The Prirazlomnoe oilfield is viewed as a launch pad for offshore drilling in the southeastern part of the Barents Sea. Prirazlomnoe contains 46 million metric tons of extractable oil reserves. Marine shipments to oil refineries in Western Europe across the Barents, Norwegian and North seas are viewed as options.
Snøhvit
The Snøhvit gas field is the Statoil operation in the Barents Sea off northern Norway. Snøhvit and Goliat in the Norwegian continental shelf are the only other areas of activity in the area. As it stands now, Snøhvit will supply gas to an LNG facility onshore at Hammerfest where it will go into ships for distribution.
There is a new twist to the Snøhvit story, however.
The Snøhvit partners have decided to perform feasibility studies on producing oil from the field. So far, it is a gas producer only, but oil production at Goliat raises the question at Snøhvit. Further field development studies will show whether Snøhvit oil production is commercial, and if so, what development solution to choose.
“The studies are based on new knowledge after the gas wells were drilled in Snøhvit, and expectations for a higher long-term oil price,” says Geir Pettersen, manager of the Tromsø Patch business cluster, which includes Snøhvit operations.
The Snøhvit oil zone is some 14 m thick. Studies performed prior to the approval of the gas development plans in 2002 concluded that production of the oil would not be profitable.
The partners will start planning a possible appraisal well for better identification of the oil zone in Snøhvit. The drilling of the appraisal well may take place in 1Q07. A final decision to drill is due by the end of this year.
The Norwegian Petroleum Directorate (NPD) supports this decision.
“We feel this decision is excellent news. The NPD has been working for oil production from the Snøhvit field for several years. This means that a greater portion of the oil deposits that have been proven in the Barents Sea may be realized,” says Bente Nyland, director in the NPD.
According to earlier calculations by the NPD, there might be 50-100 MMbbl of recoverable oil underneath the Snøhvit gas.
“Time is of the essence in ensuring that as much as possible of the oil on the Snøhvit field will be produced. As the reservoir pressure gradually falls because of gas production, an ever increasing proportion of oil will be lost. And that oil will be lost forever,” says Nyland. She underlines that the oil on the Snøhvit field will only be taken out if the production and deliveries of gas can remain unaffected. That is why it is important to plan for it now.
“New well information, Snøhvit LNG starting up later than in the original plans and higher oil prices have put the production of these oil resources back on the agenda,” says Nyland.
The oil on the Snøhvit field is outside the areas subject to special requirements in the Management Plans for the Northern Areas (Forvaltningsplanen for nordområdene) (Storting White Paper No. 8, 2005-2006), but the stricter requirement of no discharges to sea during normal operations applies. The Plan for Development and Operation adopted by the parliament in 2002 was for development of gas resources in Snøhvit only.
The Snøhvit licensees are Statoil (33.53%), Petoro (30%), Total E&P Norge (18.4%), Gaz de France (12%), Amerada Hess Norge (3.26%), and RWE Dea Norge (2.81%).
Goliat
The other Norwegian Barents Sea success is by Eni at the Goliat field. Goliat was discovered in 2000. Three successful wells have been drilled so far. The last well was on the Goliat South structure and resulted in a significant increase in the reserves estimate. The recoverable oil reserves based on these three wells are estimated to exceed 250 MMbbl. In addition, significant gas volumes should be added.
The Norwegian Petroleum Directorate has granted Eni Norge AS drilling permission for wellbore 7122/7-4 S, PL 229. Wellbore 7122/7-4 S will be drilled by thePolar Pioneer. The drilling program calls for an appraisal well. Goliat is entirety within PL 229 between the Snøhvit field and Hammerfest.
The licensees in the permit are Det Norske Oljeselskap AS (15%), Statoil ASA (20%), and Eni Norge AS (65%). Eni Norge is the operator.
This is one of two new wells Eni wants to drill on Goliat before year-end. This first well is in the Goliat South structure in order to provide data for the reservoir modeling and reserves estimate. The second well will be on the Goliat West structure to prove additional reserves.
Eni Norge has mobilized a project team for the development of the Goliat field. Screening studies are under way and a wide range of concepts will be evaluated in this early phase of the project. Together with the partners, Eni says it will evaluate the various alternatives for development and operation of the field with emphasis on using local sources.
Gene Kliewer, International Editor
Tornerose discovery announced by Statoil
A gas discovery made by Statoil on the Tornerose structure in the Barents Sea is under consideration in connection with an expansion of the Hammerfest LNG plant.
“This discovery is encouraging,” says Tim Dodson, the group’s senior vice president for exploration on the Norwegian continental shelf. “It strengthens opportunities for expanding the Snøhvit gas liquefaction facility at Melkøya, and therefore marks an important stage in efforts to enlarge the resource base in the area.”
Drilled by Transocean’sPolar Pioneer in 408 m of water, exploration well 7122/6-2 in PL 110B proved gas in several sandstone layers from the late Triassic.
It was drilled to a total measured depth of 3,057 m below sea level about 60 km east of Snøhvit field and roughly 100 km northwest of Hammerfest.
Statoil is planning to drill further wells in the area next year and in 2008.
