Mixed response to Norway’s Barents Sea initiative

Licenses awarded, some acreage still off-limits

Nick Terdre, Contributing Editor

With the award of new licenses and the introduction of an integrated management plan, the Norwegian government hopes to have created the conditions to boost exploration and production in the Barents Sea.

Progress has been muted in recent years, not least due to the moratorium on activity which meant no exploration or appraisal wells were drilled between November 2001 and December 2004. Even when the ban was lifted and exploration resumed in January 2005, the future for production remained unclear while the government investigated whether it was compatible with the sensitive environment and other marine activities such as fishing.

The conclusion, as set forth in the integrated management plan published in March, is that it is compatible, with some provisos.

While opportunities to explore in the Norwegian Barents have been limited in recent years, interest in the region as a whole has been growing fast. One reason is the US Geological Survey’s claim that 25% of undiscovered hydrocarbon resources are located in Arctic waters. Another is the tantalizing prospect of the hydrocarbon wealth waiting to be developed in the Russian Barents, leading Statoil and Hydro, along with other international oil companies, to bid high for a stake in Gazprom’s Shtokman development.

The Norwegian government, along with the country’s oil industry, is not immune to Barents fever. “We believe the Barents Sea could represent a new petroleum province for Europe,” Oil and Energy Minister Odd Roger Enoksen says. “The Norwegian government has an active policy for further exploration of the Norwegian part of the Barents Sea.”

“The High North [as the Barents is often referred to in Norway] is Europe’s new energy region,” says foreign affairs minister Jonas Gahr Støre. “Now we are looking at openings for petroleum development in the near future in both the Norwegian and the Russian part of the Barents Sea.”

How realistic the optimism concerning the Norwegian Barents’ hydrocarbon potential remains to be seen. The Norwegian Petroleum Directorate (NPD) estimates that the area holds 990 MMcm of oil equivalent (6.2 Bboe) in undiscovered resources, of which 60% is gas. But knowledge of the area is limited, so there is a great degree of uncertainty around this estimate. Moreover, many of the play models have yet to be confirmed, so exploration is still in a relatively early phase.

Activity so far has yielded relatively little. From 63 exploration and appraisal wells drilled since the first licenses were awarded in 1981, the only commercial finds have been the Snøhvit/Albatross/Askeladd cluster of gas fields which Statoil is now developing, and the Goliat oil field which Eni will continue appraising later this year.

Three exploration wells have been drilled since the moratorium was lifted - Statoil’s Guovca and Uranus, and Hydro’s Obelix. All were either dry or found only hydrocarbon traces.