Aug. 17 (Bloomberg) -- Norway may slow a decade-long slump in oil production after a series of discoveries from the Arctic to the North Sea.
Statoil ASA has made two offshore finds of more than 250 million barrels of oil equivalent in Norway this year. The country’s biggest oil and gas producer yesterday said Aldous Major South and Avaldsnes in the North Sea are part of one “giant” oil field, and among Norway’s top 10 discoveries. The discovery is less than 10 feet away from where Total SA, then Elf Aquitaine, drilled a dry well in 1971, according to Statoil.
“This shows Norway still has the capacity to deliver world-class discoveries,” Tim Dodson, Statoil’s exploration chief, said in Oslo yesterday. “It’s probably the largest offshore oil discovery anywhere in the world this year. It has given the entire oil industry renewed optimism.”
Norway, the seventh-biggest oil exporter, is facing dwindling production due to maturing fields. Output peaked in 2000 and may drop 6 percent this year to about 1.7 million barrels a day, according to the Norwegian Petroleum Directorate. Statoil, which operates 80 percent of Norway’s production, missed its 2010 target and may produce less this year than last.
The Aldous and Avaldsnes oil discoveries located on the Utsira High may hold 500 million to 1.2 billion barrels of recoverable oil, according to the Stavanger-based company. The company is scheduled to drill a well next week at the Aldous Major North prospect, which has a 50 percent chance of striking oil and may add as much as 300 million barrels of recoverable oil, Dodson said.
More than 40 percent of the 24 wildcat wells drilled off Norway this year were classified as commercially interesting, of which more than half were in North Sea, according to Petroleum Directorate data.
That’s a far cry from how the industry looked in March, when four wells drilled in the Barents and Norwegian seas had failed to find oil or gas, adding to two dry wells in the North Sea. It marked the biggest number of failures to start a year since the country first tapped oil in 1966, according to government data.
“To discover an elephant in Norway is in our view remarkable, especially given that it’s in the North Sea,” said Trond Omdal, an analyst at Arctic Securities ASA in Oslo. “Production could be 250,000 to 300,000 barrels a day, and given that Norway’s production last year was 2.1 million and this year has been below 2 million, that shows the impact.”
Statoil in April announced a find at the Skrugard prospect that may hold as much as 500 million barrels of recoverable gas, eclipsing Eni SpA’s nearby Goliat find, which had been the largest off Norway since 2000 with 240 million barrels of oil equivalent.
Total SA and Lundin Petroleum AB subsequently struck natural gas at the Norvarg and Skalle prospects in the Barents Sea, further boosting prospects that the region could become Norway’s new petroleum province.
Oil producers including Eni, Statoil, GDF Suez SA and Dong Energy A/S are drilling seven wells in the Barents Sea this year and another seven in 2012, amid a push to make discoveries in a region that has yielded two developments after 30 years of exploration.
Skrugard and other prospects indicate that Norway’s oil era is not nearing the end, Petroleum and Energy Minister Ola Borten Moe said last week, citing Winston Churchill’s speech from November 1942: “It is not even the beginning of the end, but it is, perhaps, the end of the beginning.”
An estimated 60 percent of Norway’s petroleum resources are still underground. The country had an estimated 10 to 16 billion standard cubic meters of oil equivalent in recoverable resources by the end of 2010, according to a report published in September by the Ministry of Petroleum and Energy.
“These are enormous areas, with enormous potential, where we can witness incredible things and we already are,” Borten Moe said in an Aug. 9 interview. “The activity level in general is high and the discoveries that are being made are raising the level of interest, creating a virtuous circle.”
DNO International ASA, the first foreign company to pump oil in Iraq since the 1970s, may return to Norway after its departure as an operator about four years ago, lured by the prospect of more finds in the North Sea.
“We have good knowledge and experience from Norway,” Chief Executive Officer Helge Eide said in an Oslo interview today. “The North Sea is an area we consider to be interesting, so there are a lot of good industrial arguments.”
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