OFFSHORE EUROPE
Jeremy Beckman - London
APA bidders sustain exploration momentum
Exploration spending on the Norwegian shelf could surge to NOK 31.4 billion ($4.76 billion) in 2009, according to Statistics Norway. This is more than NOK 6 billion ($910 million) up on the analysts’ estimated figure for 2008, and also their highest predicted total (based on current prices) since forecasts started in 1985.
Investments in fields onstream or under development should rise by NOK 7.9 billion ($1.99 billion) next year to a total of NOK 95.6 billion ($14.5 billion), they add. However, spending on pipeline transportation is set to decline from an estimated NOK 2 billion ($303 million) this year to NOK 500 million in 2009 ($75.85 million).
The mid-term future remains bright, with a preliminary count identifying 47 applicants for acreage under Norway’s Awards in Pre-defined Areas for 2008 licensing round, one more than in 2007. On offer were 114 blocks and part-blocks in the North Sea, 62 in the Norwegian Sea, and 39 in the Barents Sea.
Among the bidders were all the established major players on the shelf bar BP Norge; a large contingent of Norwegian and European independents already active as operators or license participants; and a couple of newcomers, notable among them Repsol. The Ministry of Petroleum and Energy should issue the new production licenses early next year.
Snøhvit faces further overhaul
Development costs for the first phase of the Snøhvit project have risen to NOK 48.1 billion ($7.3 billion), up by NOK 3 billion ($455 million) from the previous estimate issued in September 2005. Snøhvit field, in the Barents Sea, provides gas for Norway’s first LNG plant which is on Melkoya Island. This came onstream in September 2007 having exceeded its budget, and technical problems have since interrupted operations.
Operator StatoilHydro is evaluating measures to ensure the plant functions safely and at its planned capacity. Following further operational experience, it will decide on a solution next year, expected to cost NOK 2.5-5.5 billion ($380-835 million) to implement.
Gas cluster emerges in Norwegian Sea
There is better news for StatoilHydro in exploration. It has confirmed a third gas accumulation, Haklang, on the edges of the undeveloped Luva and Snefrid South fields in production license PL 218 in the Norwegian Sea. The location is 280 km (174 mi) west of Sandnessjoen, in 1,248 m (4,094 ft) of water.
The semisubmersibleTransocean Leader, drilling through Late Cretaceous reservoir rocks, encountered a 127-m (417-ft) long gas column with good production qualities. The rig has since drilled a sidetrack into a deeper-lying prospect. Haklang is just south of Snefrid Sor, discovered earlier this summer, and Luva, originally proven by BP in 1997. StatoilHydro estimates the combined resources of the three fields at 40-60 bcm (1.4-2.1 tcf) recoverable.
The company also has upgraded oil and gas reserves from its Dagny and Ermintrude finds northwest of the Sleipner complex in the North Sea to 180-240 MMboe. It recently drilled a sidetrack on Dagny to establish the oil/water contact. This well also confirmed a prognosis that the two fields have identical pressures and actually are connected.
A similar sidetrack exercise in PL 373, northeast of the Snorre field, has proven an extension of BG Norge’s recent Jordbaer Central oil discovery. Partner Revus Energy estimates recoverable reserves at 57-100 MMboe, not including volumes from an undrilled segment of the field. It claims there could be much greater potential in the adjacent exploration prospects Blaabaer, Jordbaer East, and Plomme. Revus CEO Harald Vabo said the favorable reservoir conditions indicate potentially high production rates for a development.
Shell prepares for Inde removal
Shell UK has contracted Seaway Heavy Lifting for preparatory work related to decommissioning of six platforms on the Indefatigable field in the southern gas basin. Subject to contract negotiations and a final investment decision, Seaway’s new heavy-lift crane vesselOleg Strashnov will remove the installations.
According to London-based analysts BritBoss, the topsides for the four smaller platforms each will be removed via single lifts, while multiple lifts will be performed for the two larger platforms.
Recently, Shell signed an interim agreement concerning offshore lift preparations and onshore dismantling with Norway’s AF Gruppen for the same project. AF Decom Offshore will perform these activities, also recycling around 13,000 metric tons (14,330 tons) of steel and equipment from the platforms. The three-year decommissioning program should start early next year. Halliburton was due to P&A the remaining 16 wells on the field this winter using rigless techniques, supported by the jackup accommodation platformSeafox.
In the far north of the UK sector, Danish company Ramboll Oil & Gas is studying remediation options for the gravity-based structures supporting Shell’s Brent Bravo and Delta platforms, both of which house oil storage cells. They are investigating how to access and deal with materials left in the cells following cessation of operations on Brent.
NAM, ProNed in asset swap
Shell’s Dutch E&P subsidiary NAM has agreed to sell exploration and production interests along the route of the Nogat gas trunkline in the southern North Sea to GDF Suez for €1.075 billion ($1.444 billion). The package includes 30-60% stakes in five producing Dutch fields; further potential volumes in existing fields and discoveries; participation in the A6-F3 trunkline taking gas from German fields into Nogat; and 30% of Nogat BV, which operates the gas transportation system. GDF Suez’s Netherlands subsidiary ProNed already operates the NGT gas trunkline in the same sector.
Total production from these interests is around 3.3 MMboe, and they should lift GDF Suez’s mid-term resources in the Dutch North Sea by 30%, according to executive vice president, Jean-Marie Dauger. Fourteen NAM staff supporting the offshore operational activities likely will transfer to the new owner.
Two of the more active newcomers in the sector, Cirrus Energy and Taqa Offshore, have agreed on farm-in arrangements whereby Taqa will co-fund two planned exploration wells in Q quadrant blocks, and an appraisal well on the L8-D field, which could be deviated from the L11-B platform. Cirrus recently acquired Chevron’s operating interest in L8-D. The Calgary-based company currently has the jackupNoble Lynda Bossler contracted for up to eight wells between now and next July.