In April or May, the Norwegian Oil and Energy Ministry is due to award licenses under the so-called Barents Sea Project. Altogether some 45 blocks are expected to be awarded, grouped in a series of larger tranches.
Ten companies - Agip, Amerada Hess, Elf, Enterprise, Norsk Hydro, Neste, Mobil, Phillips, Saga, and Statoil - have applied for acreage, either individually or in groups. "We've got a good spread of companies," says Finn Roar Åmodt, head of exploration at the Norwegian Petroleum Directorate (NPD). "We hope to see seismic acquisition start this year, and the first wells drilled next year."
The potential prize is a substantial volume of hydrocarbons - undiscovered resources in the Barents are estimated by the NPD at a total of 825 MMcm of oil equivalent, of which oil accounts for some 1.5 billion bbl (30%) and gas for 585 bcm (70%).
The problem is that after 15 years of exploration, the industry has little to show for its outlay. So far 53 exploration wells have been drilled, yielding 16 discoveries containing an estimated 160 Mmbbl of oil and 263 bcm of gas. No viable means of developing these reserves has yet been found.
Two wells planned to be drilled this year on existing licenses - Statoil's 7228/7-1 and Saga's 7219/8-2 - have now been postponed until next year because of problems with rig availability and the shortened drilling season. For environmental reasons drilling is not permitted between April and August.
"These are two real wildcats," says Åmodt. "One is in the Nordkapp Basin, which has only been drilled once, and the other is also in an area which has hardly been drilled. Both are also targeting subsalt prospects, which haven't been drilled before in the Barents. Even if they don't make discoveries, they are important from the data acquisition point of view, and could advance our understanding of how hydrocarbon accumulations build in the area."
The Nordkapp Basin lies to the north-east of the Hammerfest Basin, in which most discoveries have so far been made. There has been erosion over much of the Barents, Åmodt says, which has allowed the hydrocarbons to migrate. They have escaped to the west where the geology is much younger, and been deposited in Tertiary formations.
The NPD estimates that some 60% of undiscovered resources lie in unconfirmed Tertiary, Cretaceus/Jurassic, Triassic and Permian/Carbonate plays, and the remainder in confirmed Cretaceous/Jurassic, Triassic and Permian plays.
The oil companies will return to the Barents under somewhat different circumstances than before. They are now allowed to apply for licenses in groups of their own choosing, and have no area fee to pay. Their first phase of activity involves seismic work without any drilling commitment.
They also come armed with the exploration technology advances of recent years. "Today's seismic and subsurface mapping technologies enable you to see much more," Åmodt says. "The Barents Sea Project is concerned with mapping large areas using new technology to try to identify areas of low exploration risk."
Today's drilling is also more cost-efficient, an important consideration in an area where exploration costs per resource unit discovered are historically about three times as high as the average for the whole Norwegian shelf.
There may be grounds for greater optimism on the development side too. After abortive attempts in the past to find a viable development scheme for Snoehvit, the largest Barents Sea find to date, Statoil is again looking at possible solutions for both the gas and the oil contained in thin layers. Here again, significant advances in production technology could help to crack the problem.
As the Barents lies far from any market, the estimated 83.0 bcm of Snoehvit's gas reserves would have to be exported as LNG. Oil reserves are estimated at some 120 Mmbbl. If they were developed on their own, a production ship would be the most likely solution. But the preferred outcome is obviously the development of both oil and gas, in which case subsea facilities tied back to shore might be the choice.
Once one field comes into production, bringing with it infrastructure, development prospects for other finds could improve.
Little is still known about large parts of the Barents. Exploration so far, including the licences now awarded, has been restricted to the southern Barents, but even here only eight per cent of the area had been licensed out prior to the current round.
In the northern Barents, the only activity so far has been a number of shallow stratigraphic wells drilled by the NPD. It is believed there are no plans to open up this area at present.
There is also believed to be good prospectivity to the east, though any activity in this area will depend on the resolution of the border line dispute with Russia.
Even though much of the Barents remains out of bounds, there is plenty to occupy the industry in the available areas. The prospects for unlocking the region's hydrocarbon - preferably oil - riches are better than before. As Åmodt says hopefully, "One successful well could change the whole picture."
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