June 19 (Bloomberg) -- Royal Dutch Shell Plc, Europe’s largest oil company, made a natural gas discovery at a record depth in the northern Norwegian Sea that may equal the size of Norway’s annual production of the fuel.

The find was made in the Gro prospect 360 kilometers (224 miles) offshore Broennoeysund in Nordland and is estimated to hold 10 to 100 billion standard cubic meters of recoverable gas, the Norwegian Petroleum Directorate said today. The country had net gas output of 99 billion cubic meters last year.

“It’s a significant find for the Norwegian Sea,” Shell spokesman David Williams said by phone from The Hague. “We’ve only got one well, one point of data, so there’s not enough data to be specific. We’ll continue to reassess the data and plan what we’re going to do as quickly as possible.”

The find may the biggest since Ormen Lange in 1997. Norway, the world’s fifth-largest oil exporter and second-biggest gas supplier, is boosting gas output to make up for dwindling crude production after 40 years of pumping oil. The country is opening more of its unexplored northern waters to drilling in areas such as the Norwegian Sea.

Westward Development

Shell, operator of the prospect, made the find in a wildcat well at a depth of 1,376 meters (4,515 feet), the greatest water depth ever in Norway, the directorate said. Wildcat wells are drilled in zones not known to be productive.

“In a Norwegian context, this is a medium-size discovery,” Bente Nyland, head of the directorate, said in an interview on TV2. “It does open up for new opportunities to the west and may be an indication of a petroleum system that continues westwards, where we haven’t conducted any exploration.”

The well hasn’t been formation-tested and delineation drilling is needed to determine the resource potential, including possible additional volume, the directorate said.

Shell holds a 50 percent stake in the field and StatoilHydro ASA 40 percent. GDF Suez SA bought a 10 percent stake from Shell on Dec. 23, in a deal that was approved by the Norwegian authorities late May.

Rig Availability

“The timing of further appraisal is dependent on the availability of seismic vessels and drilling rigs,” Shell’s Williams said.

Drilling on the wildcat well started in March and was finished this week.

Shell is increasing its focus on gas with projects such as the Qatargas-4 liquefied natural gas plant and the Sakhalin-2 LNG venture in Russia. LNG is gas cooled to a liquid for transport by tanker.

StatoilHydro, Norway’s largest oil and gas producer, has struggled to replace reserves as its North Sea fields age. Its reserve replacement ratio fell to 34 percent last year from 86 percent in 2007. It’s tapping unconventional sources, such as shale assets and oil sands, to help production.

The Ormen Lange field had 395 billion cubic meters of recoverable reserves when discovered in 1997 and Troll, Norway’s largest gas field, about 1.3 trillion cubic meters.

Ormen Lange took 10 years to start production, which may be an indication of the timing for the Gro find, Nyland said. An appraisal well is unlikely to start until next year, she said.

“The depth of the discovery isn’t a particular problem, there’s a lot of development at such depths elsewhere in the world,” Nyland said. “The challenge is that it lies far from land, so it will require a significant engineering process with a possible pipeline from the field.”

StatoilHydro shares climbed 1.1 krone, or 0.8 percent, to 134.2 kroner as of 10:32 a.m. in Oslo. Royal Dutch Shell rose 4 pence, or 0.3 percent, to 1,563 pence as of 9:34 a.m. in London.

To contact the reporter on this story: Marianne Stigset in Oslo at mstigset@bloomberg.net

Last Updated: June 19, 2009 06:04 EDT