PSA Norway: Everyone wants to head for the far north

PSA announced that number of decisions in principle are due to be taken and many conclusions drawn during 2014.

All sides of the industry are involved in these preparations. The importance of the job to be done was reflected in an overview from the Norwegian Petroleum Directorate this January, which underlines the huge interest in the Barents Sea.

It also shows a radical increase in companies with licence holdings there – to no less than 36 at 1 January, including 17 as operators. The corresponding figures in 2006 were 12 and four. A total of 71 new licences were awarded in these waters over the past four years. Both companies and licences were boosted again in January with the 2013 awards in predefined areas (APA). Five Barents Sea discoveries were made last year – the highest annual figure so far. A record number of exploration wells are now set to be drilled in the area, where the potential is described as very large but subject to a number of uncertainties.

The main focus for the forthcoming 23rd licensing round is the south-eastern part of the Barents Sea – a region which calls for special safety-related assessments and preparations.

To sum up – everyone wants to head for the far north. The question is whether all of them are ready to go.

Projects
“Decisions now need to be taken,” says Anne Myhrvold, director-general of the PSA. “Many important projects have been launched to study safe operation. The Norwegian Oil and Gas Association, for instance, has been commissioned by the Safety Forum to assess challenges related to five focus areas.”

These are emergency preparedness, logistics, climate conditions and communications, helicopter logistics and emergency preparedness, and risk management and design. Work in the groups dealing with these topics will primarily take place this spring, Myhrvold reports, followed by a planned summation during September/October.

“It’s important that these efforts are marked not only by debate on the challenges, but also by a concentration on specific recommendations which provide a qualified basis for company applications and our decisions. A number of the oil companies and rig contractors in Norway have experience from far northern and Arctic petroleum operations in other countries. This knowledge must now be mobilised, shared and systematised, including through the work of the Norwegian Oil and Gas groups.”

Phase
Myhrvold notes that the PSA has defined the far north as one of its main priorities for 2014 – not because activity in this region is new, but because it is moving into a very important phase.

“Much of the job for our part will concern requirements for winterisation and consideration of consent applications. More of the latter will be landing on our desks soon. Where consents for exploration drilling are concerned, we’ll take a particularly close look at the robustness of the solutions proposed by the companies. We’ll moreover be subjecting applications from new players and first-time drillers to particularly detailed assessment.”

She also stresses that dialogue between the companies and the PSA in good time before the papers are submitted will be particularly important.

“Consent applications must first and foremost meet the overall requirements in the regulations. Plans must also be solid within the defined drilling season. And the rig to be used must be able to cope with the variations in climate and weather which might occur in the area throughout the planned period of activity.”

The regulations require that a relief rig is available during exploration drilling in the Barents Sea, Myhrvold adds, and says that even stricter standards are set for this unit.

“If a rig is going to handle a blowout or an uncontrolled incident, it must be capable of operating in these waters during the winter. We won’t accept a relief unit which is only designed for summer activity – even if the exploration well itself will be drilled in that season. Should an emergency arise, it’ll be unpredictable and could last a long time. So the relief rig must be robust enough to stay on location and deal with the incident into the winter.”

Being fully successful on the northernmost NCS requires an integrated approach by the companies, she adds. “It’ll be an advantage during exploration drilling to have several rigs in operation simultaneously. That would provide greater resources if anything goes wrong and enhance safety, while the companies could reap cost benefits from such collaboration – a win-win position. Preventing undesirable incidents is also the overall goal for petroleum activities in the Barents Sea. The safety standards must be met. But that’s fully possible. We expect the companies and the industry to accept their responsibility – and to do so in time. Joining forces over solutions is now a matter of urgency. We’d prefer not to have to use the regulations as a means of coercion, but will naturally utilise our formal powers if that becomes necessary.”

Northernmost
“We’re expecting applications from Statoil this spring for exploration drilling on the Apollo and Atlantis prospects,” Myhrvold reports. At 74.5°N, these will be the northernmost wells we’ve seen off Norway. The company must contribute good solutions and the right choice of rig for exploration activity in this area. Statoil will also play a key role, together with other licensees, in coming up with a solution for the Johan Castberg discovery in the Barents Sea. Since this will be the first development in a new region, it’s particularly important that its area role is taken into consideration. Johan Castberg is a long way from land, and any development may need to incorporate shared functions for those coming after – such as a hangar for a search and rescue helicopter.”

Collaboration
Good processes and the right choices for the Barents Sea will not be possible unless the companies collaborate, Myhrvold emphasises.

“Such cooperation involves a number of important areas, particularly in the far north. The oil companies must join forces not least on transport solutions and access to rigs. The rig contractors also need to collaborate in order to optimise the availability of vessels and equipment. The industry associations must work together across boundaries to promote shared solutions. And we must collaborate with them all.”

International cooperation is otherwise a priority for the PSA. It hosted a meeting of national regulators in Stavanger on 31 October – the day before its Arctic Safety conference for top executives. Russia, Canada, Greenland, Iceland and Norway attended this gathering of agencies from countries with activities in the Arctic and far northern regions. The USA was unable to attend.

Their goal was to strengthen regulatory collaboration and to discuss the international approach to safe operation and regulation in far northern petroleum regions.

“It provided a very useful review, which confirmed that the regulators benefit greatly from joint assessments and from exchanging challenges and solutions,” says Myhrvold.

“We’ll continue a dialogue with our counterparts in 2014, and the goal is to formalise this collaboration. I hope we’ll be reaching agreement during the year between the six countries on approaches to the international Arctic.”