April 6 (Bloomberg) -- Norway expects more drilling in its Arctic waters after Statoil ASA’s announcement last week of the first commercial find in the Barents Sea in more than 10 years.
“After Statoil’s discovery, we’ll be going through those maps again to see whether there are any opportunities we might have missed,” Bente Nyland, head of Norway’s Petroleum Directorate, said yesterday in an interview in Hammerfest, a town on country’s northern tip. “You’ll see more companies who’ve had a wait-and-see attitude coming in.”
Norway, western Europe’s largest oil and gas producer, is encouraging explorers to drill in its northern waters as older fields decline. Statoil last week struck a deposit some 200 kilometers (310 miles) offshore that may hold 250 million to 500 million barrels, potentially the country’s biggest find in Norway in a decade. Norway estimates the Barents Sea may have 5.9 billion barrels of undiscovered oil and gas.
Statoil and partner Eni SpA may revamp their drilling schedule to faster determine the size of the Skrugard find, targeting a record development time of less than six years. The other two finds in the Barents Sea are Eni’s Goliat field, set to start pumping in 2013, 13 years after discovery, and the Snohvit gas field started in 2007, 23 years after discovery.
Statoil’s push may add to near-record drilling this year, with four more exploration wells slated in the Barents Sea by Total SA, GDF Suez SA, Dong Energy A/S and Lundin Petroleum AB, as well as seven planned for next year, including two by Eni.
Rocksource ASA, a partner in GDF’s Heilo prospect that will be drilled in August, estimates a more than 50 percent chance of a find and sees recoverable resources at 200 million barrels of oil equivalent, it said on its website.
“This opens up a new oil province with enormous potential,” said Gro Gunleiksrud Haatvedt, Statoil’s head of Norway exploration, during a presentation in Hammerfest. “Our exploration model works in this province. It will be very interesting to drill wells in the nearby area.”
The find was a welcome reprieve for the industry after a record dry spell to start the year, which in the first two months saw four dry wells in the Barents and Norwegian seas and two dry wells in the North Sea. That was the biggest number of failures to start the year since Norway’s oil era began in 1966, according to government data.
“I don’t think we yet know if it’s a game changer,” Soeren Gath Hansen, head of exploration at Danish explorer Dong, said in Hammerfest. “We would like to share the optimism that it’s a sign of more to come, but we don’t have the basis for making that evaluation at this point in time.”
‘Cracking the Code’
Helge Lund, chief executive officer at Statoil, had said the industry had been unable to “crack the code” of the Barents Sea after the company had participated in more than 80 wells there since 1980. Norway, where energy production makes up about 25 percent of the economy, is pushing into the Arctic and relying more on gas because oil output has slumped 50 percent since peaking in 2000 as North Sea fields mature.
“We were starting to become a little pessimistic,” Trond Omdal, an analyst at Arctic Securities ASA, said by telephone. “It had been quite a while since we’d made such a big discovery. The finds we made over 10 years ago might have been a lot bigger, but oil was also at $20 a barrel then.”
Oil prices have gained 28 percent this year amid unrest in the Middle East and North Africa, trading at $122 a barrel in London yesterday.
Skrugard may also hold oil that is light and easy to produce, according to Statoil. A standalone installation is likely for the field, which would be the northernmost such facility, said Gunleiksrud Haatvedt.
“It hasn’t been a disadvantage that it’s oil we’ve found,” Morten Loktu, Statoil’s chief of northern operations, said in a Hammerfest interview. “It’s easier to find a solution for oil infrastructure-wise, given that it doesn’t matter how far away it is from land and that the market is global.”
Norway is opening more areas in the Barents Sea and authorities are scheduled to announce the results of the 21st licensing round “this spring,” in which it is offering 51 whole and partial blacks in the Barents Sea and 43 in the Norwegian Sea.
“The Barents Sea will become a very important area in Norway,” said Alessandro Puliti, a managing director at Eni, yesterday in an interview in Hammerfest. “It’s an area where I expect we’ll be doing exploration activity in the next years.”
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