Norway encourages incremental activityMature, low-risk acreage in abundance has been made available to bidders by the Norwegian government. All the blocks on offer lie close to the powerhouses of Norwegian offshore production, the aim being to encourage swift development of any discoveries via the subsea or extended reach route.
The principle may appeal to the owners of the in-place platforms and pipelines, who are best placed to afford their own high export tariffs. Non-monopolists may prefer to hold out until remoter areas of the Norwegian North Sea come up for auction.
This is the first of a series of annual rounds in the North Sea, designed to divert the industry from the higher reward but riskier plays of mid-Norway northwards. The government seems unconcerned about the re-channeling of exploration budgets to Angola and Brazil - it sees its duty as nurturing activity around existing Norwegian infrastructure, as a way of preventing Norway's economy from overheating.
Thirty-two blocks and partial blocks have been offered, with applications due in by February 25. Awards should be issued in April. Only two companies with no upstream presence in Norway nominated blocks - one of these, Denmark's DONG, will fancy its chances in the acreage north of Statoil's Siri oilfield, just inside the Danish sector. The recently installed Siri platform provides development infrastructure in this area. According to analysts Wood Mackenzie, there is potential for the Siri oil play to extend northwards, although recent exploration drilling in this area has come up dry.
Hefty response to UK licensingIn the UK, 78 out of 82 blocks offered under the 18th offshore licensing round have just been awarded. This high uptake reflects the fact that most are close to existing production complexes, making the costs easier to manage than awards from earlier frontier rounds in the UK Atlantic.
The picture might have been different had the government pursued its threatened petroleum tax overhaul. Instead, Energy Minister John Battle felt able to praise respondents for their "creative and innovative proposals," with several applications, he claimed, relating to structures "with previously unrecognized potential." Battle also singled out Fina's Otter Field as a swift development candidate, following award of the adjacent block 210/20c to the license partners. This block is thought to contain an extension to Otter.
While southern North Sea awards were shared out among the existing main players, several new contenders were successful in the revitalized central North Sea, including EDC, Murphy, and PanCanadian - all now designated operators.
The response from the UK Offshore Operators Association was both welcoming and cautious. "The key issue for the industry and government will be the reduction of cost to make these licenses viable in the current oil price climate," said director-general James May.
Kristin development tied to ÅsgardSaga Petroleum has pledged to deliver first gas from the Kristin Field in the southern Haltenbanken off mid-Norway by 2004. The offer is being considered by the Norwegian authorities as they determine their next allocation of gas sales contracts, due to be issued this spring.
Kristin is a high pressure, high temperature field which may militate against use of a floating unit with subsea wells. The current base case development envisages a TLP gas center with condensate from the field piped to the ?sgard A complex for stabilization and onward export. Saga expects to submit a full PDO this fall.
Through using excess capacity in the ?sgard system, Saga claims that NKr3 billion can be knocked off the development compared with a standalone scheme. Other gas discoveries in the area could also be tied in, Saga claimed.
Elsewhere in the Norwegian sector, Statoil is striving to squeeze an extra 9% out of Veslefrikk. According to petroleum technology manager Gro Aksnes, an extra 65 million bbl have been targeted on top of the base case of 343 million bbl recoverable. These could be drained through a combination of sidetracked wells from existing producers, but other drive mechanisms are also being studied, such as simultaneous injection of water and gas and low-pressure production through multiphase pumps.
Elf's Lille Frigg's subsea facilities, however, could be shut down early - even this year, perhaps, due to falling reservoir pressure and increasing water cut. This has cut recoverable gas estimates from the field by two-thirds to an estimated 2.4 Bcm.
Saga's Varg Field FPSO may only just have come onstream, but already the licensees are looking to sell the ship, in view of uncertainty over the field's production potential. Options range from leasing or selling the vessel following depletion of the field, or selling it now to a contractor or financial institution while leasing it back for the duration of the field's production. Ongoing drilling results may influence the timing of any transaction.
Fabrication vacuum post-CaptainUKOOA's caution derives from the imminent slowdown of UK field development. Although most UK yards are busy at present, limbo looms once current contracts are out of the way. Returns from prospects such as Busby, Jade, Suilven, and Tornado may prove too moderate for their operators, given the gloomy outlook for oil prices.
Texaco's Captain Field extension was the one sizeable prize outstanding, and that has just gone to Kv?rner Oil and Gas on Teesside, which is building the new £100 million process and utilities platform that will be bridge linked to the existing Area A wellhead protector platform. The new installation in the eastern part of the field (Area B) will raise current output of 60,000 b/d to 85,000 b/d, after it comes onstream late 2000.
Odebrecht Oil and Gas Services still managed to clinch a small unmanned platform for Conoco's 90 Bcf Vampire Field in the southern sector. This latest V-field development will also entail modifications to the processing platform at the heart of Conoco's LOGGS area gas export system. In the central North Sea, Shell has announced a sixth subsea development on its Gannet complex. Oil from the 15 million bbl Gannet G field will be tied back as a satellite to the Gannet A platform 5 km away, with the 5 Bcf of sales gas exported to St Fergus via the Fulmar line.
Rotterdam environs opened to explorationThe Dutch Ministry of Economic Affairs is opening up acreage offshore Rotterdam Harbor, previously set aside for shipping maneuvers in and out of the Europort. However, activity on this acreage, named block S/3, will remain restricted with no permanent platforms permitted. Applications are due in by February 25.
In Dutch block F/2, Veba Oil Nederland, the new operator of the Hanze oil field, has issued studies for a platform and subsea pipelines, with a view to initiating production late in 2000. Gas would reportedly be exported to the Nogat F/3 platform via the new pipeline from Wintershall's A/6-B-4 development in the German North Sea.
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