Exploration revives off Norway
After three years of steady decline, exploration/appraisal drilling off Norway is set for a comeback - in theory. Edinburgh analyst Wood Mackenzie foresees a possible 25 Norwegian well spuds this year, up 32% on 1994 levels. But that depends on rig availability.
Disillusioned contractors have moved parts of their fleet to other areas of the world where demand has been stronger, and where profits aren't eaten up by outlandish safety specs. Some high performance semis have moved back to the British sector, where demand has picked up. But there may not be enough to meet Norwegian programs: these include eight E&A wells planned by Statoil, and five and four wells respectively by Norsk Hydro and Saga.
Development activity will fall, Wood Mackenzie predicts, as completions are performed on the Heidrun, Statfjord, Tordis and Snorre fields. New work in 1995 is likely to be led by a four-year development program using the West Epsilon jack-up on Statoil's Sleipner West Field, and a possible start to Saga's Vigdis program. Longer-term prospects look healthier, as major field re-developments such as Ekofisk and Valhall pick up pace. The resurgent rig demand could lead to sustained higher day rates.
Stoltenberg ponders costs initiative
Norway's 15th offshore licensing round includes 14 blocks in water depths of 1,000 meters or more. This acreage lies in the Voering Basin in the Norwegian Sea, on the edge of the continental shelf that stretches from Ireland to Svalbard in the far north. Altogether 40 blocks are part blocks have been offered off mid-Norway, some very close to the coast: awards are due to be made late this year.
The success of any subsequent drilling could be critical to Norway's oil future. Several moderate oil finds were reported in the Norwegian North Sea last year, led by Esso's Elli prospect north of Balder, and a Norsk Hydro discovery in the Oseberg block. But these will not cover the projected tail-off from the major fields, which provide up to 70% of the country's oil output.
Exploration activity has been hampered by the high price of operating on the Norwegian shelf. Norway's government and oil industry have introduced the NORSOK cost-cutting initiative: recommendations arising from 18 months of investigations were recently delivered to Industry and Energy Minister Jens Stoltenberg. These concluded that exploration phase times and costs could be halved by 1998, whilst outlay on project management and engineering for field developments could potentially be slashed by 70%.
However, cultural changes are needed for all these good things to happen, the report continued, such as greater supplier co-operation - along the lines of the UK's CRINE program. Petroleum tax cuts were also called for to add incentive to cutting costs.
Outlook healthy for gas exports
But some people would argue that Norway's future lies increasingly in gas. Around NKr33 billion is due to be allocated to Norwegian offshore gas pipelines from 1996-2000. This includes Nkr3.3billion for the Zeepipe phase II line, recently approved by Norway's government, which will stretch from Kollsnes near Bergen to the the 16/11-E riser platform at the hub of Norway's gas gathering network.
Zeepipe II, due onstream in October next year, will boost gas supplies to Germany via the Norpipe system. Statoil hopes to become operator of Norpipe gas transport from 1999, following a recent exchange of interests with Phillips and Fina.
Late in January, Gaz de France signed up with Norway's gas supply committee for a further 40 bcm of gas over a 26-year period starting 2001. A condition of the contract is that gas is carried to Dunkirk in northern France via a new pipeline from the Sleipner 16/11 area.
This 860 km line, 40 or 42 in. in diameter, would probably be operational in October 1998, following a one-season laying operation. A gas terminal would also have to be built in Dunkirk. A consortium of 11 companies which would supply this gas to France will do so under the umbrella name NorFra.
A technical solution is also expected to be issued shortly on a new termination point for the Statpipe gas trunkline, which must bypass the Ekofisk center where a major field redevelopment is planned. This line carries supplies from Statfjord, Gullfaks and Heimdal which will have to be reconnected to the Norpipe line.
The options are a NKr2 billion loop connecting 150 km south of Ekofisk, or a 25 km loop costing NKr500-700 million. But this latter solution would reduce Norpipe's capacity. Norway's authorities must take their pick this fall.
One further incentive for future Norwegian gas developments: the Troll group of producers have negotiated a price rise for all gas sold under the Troll gas sales agreement, following two-and-a-half years of talks with buyers.
West of Shetland agreement in force
BP and Amerada Hess have signed an agreement to jointly develop the Schiehallion Field, 150 km west of the Shetlands in 375 meters water depth. Appraisal work is already under way following spudding of well 204/25a-3 by the semisub Dyvi Stena. A further well and extended test will be drilled by BP.
Amerada has also announced plans for further exploratory drilling in this area, along with appraisals of its Solan and Strathmore discoveries.
The announcements will probably arouse even more excitement from oil companies bidding for new acreage west of the Shetlands under the UK's 16th licensing round, shown below.
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