ONS 2010: Decision time approaches for Luno

Lundin Norway expects to bring three new projects onstream in the Norwegian sector between 2012-14.

Offshore staff

STAVANGER, Norway -- Lundin Norway expects to bring three new
projects onstream in the Norwegian sector between 2012-14.

Torstein Sanness, managing director, speaking at ONS today, said the
company was currently producing 20,000 boe/d from its share of the
Marathon-operated Alvheim and Volund fields, and that figure should
increase during the next few months.

However, the real growth will come from development of Lundin's three
discoveries in the Greater Luno and Nemo/Krabbe areas of the southern
Norwegian North Sea.

Luno is the largest of the three structures with reserves of 95 MMboe.
Lundin discovered this field with its first well on license PL 338 in 2007.

Sanness said several development options are under evaluation, including a
semisubmersible production and living quarters platform, a fixed platform,
and a Sevan Marine cylindrical FPSO. Lundin is also in discussion with
Det Norske Oljeselskap about widening the scheme to take in the Draupne
discovery to the north.

Luno's oil could be exported via a pipeline connecting to the Grane field
infrastructure, or offloaded to shuttle tankers. The gas will probably be
piped to the Sleipner complex 40 km (25 mi) away.

Either way, Lundin expects to settle on a development concept by the end
of this year, followed by detail engineering during the first half of 2011, and
a production start late in 2014.

"Whether we decide on a platform or a floater, there will be a fair amount
of production and water injection wells," Sanness said.

Later this year, Lundin expects to submit a development plan for the 20-25
MMboe Nemo discovery in PL 148. Nemo will be a subsea tieback,
probably to the floater on Shell's Pierce field 37 km to the southwest on the
UK side of the North Sea median line.

"This will be a fairly simple scheme," Sanness claimed, involving three
wells and water injection, with a single flowline and a control umbilical. The
estimated cost is NOK 2-3 billion ($318-477 million), with start-up
scheduled for mid-2012.

Krabbe, another 20-25 MMboe field to the south of Nemo in PL 301, will
likely also be a three-well subsea tieback, to an as yet unnamed host
platform. The investment would cost NOK 2-3 billion also, with the field
due onstream in mid-2013.

Since gaining its first Norwegian licenses in 2004, Lundin Norway has
spent $438 million on exploration, Sanness said, with a finding cost of
$4.8/boe.

Currently the company is drilling the Avaldsnes prospect in Pl 501, east of
Lundin, which potentially holds larger reserves of 127 MMboe. The rig will
then drill Apollo, a prospect north of Luno, which may prove to be an
extension of Draupne.

During 2011-12, Lundin also plans to drill its first operated wells in the
Norwegian Barents Sea, targeting a black oil play on trend with oil
accumulations to the southeast at Snøhvit and Goliat.

08/24/2010

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