- Norwegian explorer bullish on deepwater Gulf as rivals flee
- Statoil earns 5 times more on U.S. oil than Norwegian barrels
Statoil ASA plans to double oil production from deepwater wells in the Gulf of Mexico in three years after slashing one in five workers at its U.S. business and installing new managers.
The Norwegian oil giant is bucking the trend among other major explorers who are scaling back or outright canceling deepwater Gulf of Mexico exploration to cope with the worst crude-market collapse in a generation. For Statoil, each barrel of oil pumped in the U.S. is five times more valuable than crude from its Norwegian heartland because of different taxation levels, said Torgrim Reitan, the former Statoil finance chief who took over the company’s U.S. business last year.
Statoil, which is pumping 40,000 to 50,000 barrels of oil daily from the Gulf, continues to cut costs and is aiming to lower the profit threshold for its U.S. wells to $50 a barrel by the end of 2018 from about $90 in 2014, Reitan, a former gas trader, said on the sidelines of the CERAWeek 2016 conference in Houston on Monday.
“The Gulf of Mexico is an important part of our future,” Reitan said. “We think of the Norwegian continental shelf as the backbone of Statoil. The U.S. is the spearhead.”
Reitan was dispatched to the U.S. in July to overhaul a portfolio Statoil began expanding 10 years ago through aggressive investments in shale fields and joint ventures with other drillers. Oversight of the company’s holdings in the Eagle Ford and Marcellus shale regions have been moved out of Houston and consolidated with Statoil’s Bakken shale group in Austin, Texas, he said.
In the Gulf, Statoil has five major deepwater developments on stream and another three in the works, he said. Although the company is taking steps to cope with prices that have fallen 70 percent in 20 months, Reitan said it would be a mistake to assume that market will persist in the long term.
“These days only come along once every 20 years,” he said. “We need to be able to see through this. We must get the business right and prepare for growth when the timing is right.”