Offshore staff
EDINBURGH, UK – Exploration incentives have increased activity offshore Norway, according to analysts Wood Mackenzie.
Malcolm Dickson, North West Europe Upstream analyst for Wood Mackenzie said interest in the country’s exploration potential was higher than ever. “But increased activity levels have not come easily, especially as Norway has had to compete with emerging exploration provinces as an investment destination. The government has been proactive in introducing several catalysts to boost exploration.
“The first key change was the mature acreage licensing round system brought in to ensure that mature areas are fully exploited. This was followed by an exploration tax refund which reimburses 78% of the exploration cost for companies, regardless of their tax-paying position. There has been much debate on the effectiveness of these measures, but our analysis shows they have been very successful.”
Wood Mackenzie’s research shows that the number of companies exploring on the Norwegian continental shelf (NCS) has more than doubled since the introduction of the mature acreage licensing round system, with many attracted by the exploration terms.
This has led to increased drilling, with the mature rounds generating an average of 17 wells per round, compared with an average of 11 wells for Norway’s frontier licensing rounds.
Since their introduction in 1999, mature rounds have accounted for 51% of total commercial reserves, or 3.2 Bboe. They have also delivered discoveries averaging 87 MMboe.
As a result of the mature rounds and the 78% exploration cost refund measure, the analysts add, “niche” explorers have been given a chance to grow via lower cost exploration and easier access to acreage. The majors, meanwhile, have typically developed their hub areas by drilling surrounding prospects on acreage gained in mature rounds.
Statoil has made large discoveries in mature and frontier areas.
Dickson said: “The future looks bright for exploration in Norway. We expect that the mature areas will continue to deliver some sizeable discoveries in the region of 100 MMboe.
“Giant discoveries are more likely to be found in the higher risk frontier areas in northern Norway. There is also potential for prospective new areas to be opened up in the coming years, with most of the interest centered around East Barents and the areas surrounding Lofoten.”
9/4/2012
