Statoil ASA, Norway’s biggest energy company, made a second natural-gas discovery near the Barents Sea’s Johan Castberg oilfields, failing to boost crude reserves at a project delayed by rising costs and taxes.
The Iskrystall find may hold as much as 25 million barrels of oil equivalent in gas, Statoil said today in a statement. After the Nunatak gas discovery, which wasn’t commercially viable, it’s the second of four wells to be drilled around Johan Castberg’s twin fields in an attempt to add to the 400 million to 600 million barrels of crude in estimated reserves.
“Our main goal was to find oil in Iskrystall, but unfortunately it did not materialize,” Gro Haatvedt, Statoil’s senior vice president for exploration in Norway, said in the statement. “We still believe we can prove more oil resources in the Johan Castberg area and will continue our exploration effort with two more wells in the Skavl and Kramsnoe prospects.”
Statoil fell 0.5 percent to 134.5 kroner by 12:11 p.m. in Oslo, bringing its loss from the year’s high to 9 percent.
The company in June delayed an investment decision at Castberg, putting a planned pipeline and terminal at the North Cape on hold, after costs escalated and Norway unexpectedly imposed higher taxes on oil producers. The company and partners Eni SpA and Petoro AS are studying cheaper solutions to develop Castberg, which comprises the Skrugard and Havis finds.
“It is necessary to conclude the remaining exploration wells and ongoing work on field development plans until the partners are ready to make an investment decision,” Haatvedt said today. Stavanger-based Statoil will move the West Hercules rig to the Skavl prospect, 5 kilometers (3 miles) south of Skrugard.
While the “very small” Iskrystall gas discovery was “disappointing,” the Castberg development is probably commercially viable even without new oil resources, Arctic Securities ASA analyst Trond Omdal said by phone from Oslo.
Norway’s oil industry is expanding into the Arctic waters of the Barents Sea to counter dwindling crude output from aging North Sea fields, set to fall for a 13th straight year in 2013.