OMV sees potential for Shetland area hub

OMV is set to strengthen its frontier acreage position west of Shetland by acquiring Hess' interests in four licenses.

BeckmanJeremy Beckman • London

OMV is set to strengthen its frontier acreage position west of Shetland by acquiring Hess' interests in four licenses. The transaction, pending UK government and partner approval, will net OMV 60 MMboe of recoverable hydrocarbons. Hess will receive $50 million initially, although this could rise to over $80 million, depending on future field development.

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OMV's west of Shetlands interests. (Map courtesy OMV)

Most of the reserves are in the undeveloped Cambo field in licenses P.1028 and P.1189 – here OMV will increase its existing stakes from 15% to 47.6%. Cambo is close to the OMV-operated Tornado discovery and the Suilven field. These and other prospects could tie-in to a potential hub on Cambo. Another of the licenses, P.1830, includes the Blackrock exploration prospect between Cambo and the Chevron-operated Rosebank field, where OMV is also a partner. A first well could be drilled on Blackrock in 2015.

Faroe Petroleum expects operator DONG Energy to submit a development plan by the end of this year for the west of Shetland Glenlivet gas field. Faroe says the partners have secured capacity in new gas infrastructure that Total is installing in the area for its Laggan/Tormore development. In the same region, Nexen has succeeded BP as operator of a license containing last year's deepwater North Uist gas discovery. Although the structure is unlikely to be commercial on a standalone basis, Faroe claims, the partners are pursuing other exploration opportunities.

Potential reserves boost for Johan Sverdrup

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Statoil's latestNorth Sea gas discovery could warrant a tie-in to the Visund platform. (Photo by Kjetil Alsvik, Statoil)

Statoil's latest appraisal well in theJohan Sverdrup area has proven oil, according to partner Det norske oljeselskap. Well 16/2-19 was drilled on the Geitungen structure on the northern margin of the Johan Sverdrup field in license PL265 in the central Norwegian North Sea. It encountered a 4.5-m (14.7-ft) gross oil column thought to represent the Statfjord formation.

Lundin Petroleum found an oil reservoir with its latest appraisal well on the same field in adjoining license PL501. The targeted Late Jurassic sandstones in the central Avaldsnes High area delivered 4,900 b/d during a drillstem test, with no flow restrictions within a 3 to 4-km (1.8 to 2.5-mi) radius. CEO Ashley Heppenstall claimed the test results were as good as any previously encountered on the Norwegian continental shelf. The positive outcome from both wells could strengthen the economics of the planned multi-platform development of Johan Sverdrup.

In the northern Norwegian North Sea, Statoil's latest near-hub exploration well has found gas on the northeast flank of the Visund field. The well, drilled by the semisubCOSL Pioneer in 378 m (1,240 ft) of water, encountered gas in three mid-Jurassic formations. The PL120 license partners will consider a tie-in to the Visund infrastructure.

Chancellor unveils HP/HT allowance

Britain's Chancellor George Osborne has proposed a new allowance to stimulate investment in ultra-high-pressure/high-temperature (HP/HT) fields in the UK North Sea. A consultation process will follow, but industry associationOil & Gas UK has welcomed the move, the latest in a series of fiscal incentives designed to help the sector sustain or develop new fields.

Two projects that could benefit are in the HP/HT gas-condensate corridor of the central North Sea. One is BG's 2005 60-179 MMboe Jackdaw discovery in blocks 30/2a and 30/2c, thought to be under review for development via a fixed platform with production exported 25 km (15.5 mi) to ConocoPhillips' Judy complex. The other is Culzean, discovered in 2008 via a technically complex well in block 22/25a that took six months to drill. Operator Maersk Oil & Gas may also opt for a platform development.

Oil & Gas UK was less impressed with another of the Chancellor's decisions that would alter the basis for taxation of drilling rigs and accommodation vessels in UK waters employed on bareboat charter arrangements. The association claimed this could negatively impact exploration and development. Exploration across the UK sector has slumped over the past three years, chief executive Malcolm Webb pointed out, with only 15 wells drilled offshore in 2013. At the same time, operating costs have risen sharply, reaching a record $14.67 billion across the sector last year.

Broder Tuck studies move forward

PA Resources (PAR) expects to complete farm-out transactions soon with Dana Petroleum for two licenses in the Danish and German North Sea. The Swedish company has commissioned select-stage development studies for the Broder Tuck field in the Danish sector. These should be completed in mid-year, and could lead to more appraisal drilling or a decision to take the project forward to development sanction.

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