Statoil ASA, the Norwegian energy company preparing to develop the Barents Sea’s biggest oil finds, plans to spend 80 billion kroner ($14.5 billion) to bring the crude ashore by pipeline.
Output will be piped from the twin Skrugard and Havis discoveries to a terminal in Veidnes near Norway’s North Cape, Oeystein Michelsen, Statoil’s head of development and production, said today in an interview in the town.
Skrugard and Havis, which together may hold as much as 600 million barrels of oil, are located 200 kilometers (124 miles) from land and 7 kilometers apart. Stavanger-based Statoil, which expects to start output from the deposits in 2018, presented a development concept for the license area today.
Described as a “breakthrough” by Statoil, Skrugard was the first commercial discovery in the Arctic Barents Sea in more than 10 years when made in early 2011. Together with Havis, found less than a year later, it renewed interest in Norway’s northernmost waters, which hold 72 of the 86 new permits to be awarded by the country in its current licensing round.
The Barents Sea probably holds more than 6 billion barrels of oil equivalent in undiscovered resources, the Norwegian Petroleum Directorate said in January.
The oil-shipment plan means further finds in the region can be handled by the same pipeline, according to Statoil’s head of exploration in the Skrugard area, Knut Harald Nygaard.
“This is the best choice to create the most value from the additional potential we see” at prospects near Skrugard-Havis, Nygaard said in an interview in Veidnes. There may be similar-sized deposits in the Barents Sea, he said.
Skrugard and Havis, as well as the Johan Sverdrup discovery in the North Sea, have also helped rekindle appetite for exploration in Norway as a whole, where oil production has dropped by half since 2000. Investments in the nation’s oil industry may reach a record 208 billion kroner this year, according to the state statistics bureau.
Statoil, Norway’s largest energy company, has said it will drill as many as nine exploration wells in the Barents Sea in 2013 and 2014. Four will be at two licenses in the Skrugard-Havis area, operated by Statoil with a 50 percent share. Eni SpA holds 30 percent and Petoro AS 20 percent. Statoil will also drill in the Hoop area, the northernmost region to be explored in Norway.
Skrugard-Havis is located about 100 kilometers north of Statoil’s Snohvit gas field, the only field in production in the Norwegian Barents Sea, and 150 kilometers north of Eni’s Goliat oil and gas deposit, slated to start producing in the third quarter of 2014.
With 174 million barrels of recoverable oil, Goliat is among new fields that may help Norway raise oil production in 2014 after 13 years of declines, according to the petroleum directorate.
Statoil last year shelved plans to expand production of liquefied natural gas from the Snohvit field because of a lack of resources. Smaller companies such as Det Norske Oljeselskap ASA and Lundin Petroleum AB have said a southbound export pipeline is necessary to make gas finds in the Barents Sea profitable.
A final decision to invest in the pipeline and terminal is expected in mid-2014, Michelsen said.