NPD: Discovery Rate Below Average in the First Six Months 2013 (Norway)

The Norwegian Petroleum Directorate has announced that far this year, 28 exploration wells have been spudded on the Norwegian shelf. Of these, 19 were wildcat wells and nine were appraisal wells. Eight discoveries were made; six in the North Sea and two in the Norwegian Sea.

“The past six months have been busy for the Norwegian Petroleum Directorate (NPD). We’ve processed several plans for development and operation of fields, and the level of activity and exploration on the Norwegian shelf has been high,” says Director General Bente Nyland.

“So far this year, the discovery rate has been somewhat below average, but a number of interesting wells remain. I am somewhat disappointed by the result from the “Nunatak” well, but am excited about the results from the other wells to be drilled in the Johan Castberg ares. I’m also excited to see the test results from the ‘Norvarg’ discovery”.

At the time of writing (28 June), nine exploration wells are being drilled on the Norwegian shelf. 28 exploration wells have been spudded, and 27 have been terminated. This is an increase from last year, when 19 exploration wells had been spudded by the last half of June.

The NPD’s prognosis for 2013 of about 50 spudded exploration wells thus appears to be sound.

Exploration activity has been greatest in the North Sea, and has primarily been associated with delineation of the Johan Sverdrup discovery. Six new discoveries have also been made in the North Sea, as well as two in the Norwegian Sea. Apart from a few exceptions, these are minor discoveries.

Dong has made a minor gas/condensate discovery in exploration well 3/7-8 S, south of the Trym field in the southern tip of the North Sea. The preliminary size of the discovery has been calculated at between one and two million standard cubic metres (Sm3) of recoverable oil equivalents (o.e.).

Further north, in the Sleipner area, Statoil has proven oil in observation well 15/9-11 A, in a segment northwest of the Volve field. The discovery will increase the field’s resources by between 0.6 to 0.7 million Sm3 of recoverable oil.

In the central part of the North Sea, Lundin has proven oil in well 16/4-6 S, just south of the Edvard Grieg field, which is also operated by Lundin. The discovery is considered to be commercially interesting, and preliminary resource figures are between 4-19 million Sm3 of recoverable oil. Additional wells will be needed to delineate the discovery.

In the same area, Ivar Aasen, operated by Det norske, has been delineated with wells 16/1-16 and 16/1-16 A. The wells were drilled in the neighbouring licence, production licence 457, which is operated by Wintershall Norge. These wells proved 3-6 million Sm3 of recoverable oil, and the volumes provide increased resources in the Ivar Aasen field, which is scheduled for development.

East of Grane, Statoil has proven oil in well 25/11-27. The discovery has been estimated to contain between 2.8-5.2 million Sm3 of recoverable oil.

Statoil has made two new discoveries near the Gullfaks field. In production well 34/10-A-8, which was drilled in 1987, a formation was tested above the producing reservoir. The test proved oil reservoirs with good flow properties. The discovery is estimated to contain between 6-24 million Sm3 of recoverable o.e. It may be more, which would help extend the lifetime of Gullfaks.

Northeast of Visund in the same area, a minor gas discovery was made in exploration well 34/8-15 S. Preliminary calculations indicate that the discovery contains between 0.7-1.6 million Sm3 of recoverable o.e.

Between the Vigdis and Snorre fields, in observation well 34/7-H-2, a 24-metre oil column was proven in the Cook formation in Jurassic rocks. There are no resource figures for the discovery at this time.

In the Gjøa area in the northern North Sea, the 35/9-7 “Skarfjell” discovery, which was proven in 2012 by Wintershall, was delineated by well 35/9-8. The discovery was formation-tested, and after this well is projected to contain between 10-25 million Sm3 of recoverable oil.

Two minor discoveries were made south of Åsgard in the Norwegian Sea, both by Wintershall. Gas/condensate was proven in well 6407/1-6 S. Preliminary calculations indicate that the discovery contains between 3-10 million Sm3 of recoverable o.e. The extent of the discovery is highly uncertain. A minor gas discovery was made in the recently completed well 6406/6-3, with resources just below one billion Sm3 of recoverable gas. Five wells are currently being drilled in the Norwegian Sea.

So far this year, no new discoveries have been made in the Barents Sea. Two wells are currently being drilled in the area. Statoil is drilling wildcat well 7720/5-2 (“Nunatak”) near the 7220/8-1 Johan Castberg discovery. The results from the well were newly made available. Further north in the Barents Sea, Total is delineating the 7225/3-1 (“Norvarg”) discovery, which was proven in 2011. This discovery contains proven hydrocarbons in the Kobbe formation in Triassic rocks. A formation test is scheduled for this formation, so the final drilling results will not be immediately available.

Multiple wells are planned in the Barents Sea in the time ahead. Statoil will be drilling three additional successive wells in the drilling campaign that started with the Johan Castberg discovery. Several exploration wells are also scheduled in the near future in the Barents Sea. The first is exploration well 7120/1-3, operated by Lundin, which will be drilled just north of Snøhvit.

Production

Four new fields have come on stream so far this year; Skarv, Hyme and Skuld in the Norwegian Sea, as well as Jette in the North Sea.

Glitne in the North Sea completed its final production day on 25 February.

Oil production during the first five months of the year, i.e. from 1 January to 31 May, totalled 35.4 million Sm3. This corresponds to an average daily production of 1 474 000 bbls. Oil production is 1.2 per cent below the NPD’s forecast for this period.

Approximately eleven per cent less oil was produced during the first five months of this year, compared with the same period last year.

A total of 46.8 billion Sm3 of gas and 9 million Sm3 of NGL (natural gas liquids) and condensate was produced during the period from 1 January to 31 May.

A total of 91.2 million Sm3 of oil equivalents was produced on the Norwegian shelf during the first five months of the year. This is about ten per cent less than during the same period last year.

The first six months of the year have been characterised by technical issues on multiple fields. Production on the Snøhvit field in the Barents Sea was shut down for three months due to repairs at the onshore facility Snøhvit LNG outside Hammerfest, while the Valhall field in the North Sea has come back on stream after a six-month shutdown.

Plans for Development and Operation (PDOs) and Plans for Installation and Operation (PIOs)

The PDO for Aasta Hansteen in the Norwegian Sea, which was submitted in December 2012, was recently approved by the Storting, as was the PIO for Polarled, the 480-kilometre pipeline to connect the Aasta Hansteen field to the process facility at Nyhamna in Møre og Romsdal County.

During the first six months of the year, the NPD has processed the PDO for Oseberg Delta phase 2, and submitted its recommendation to the Ministry of Petroleum and Energy (MPE) on 24 June. The MPE will issue its decision this autumn.

Two other PDOs that were submitted in December 2012 have also been processed and approved. This concerns the Ivar Aasen and Gina Krog fields, operated by Det norske and Statoil, respectively.

The PIO for the Varg gas pipeline was submitted and approved during the firth six months of the year, while the PIO for the Edvard Grieg oil pipeline will most likely be submitted in the next few days.

Awards

New production licences in the 22nd licencing round on the Norwegian shelf were awarded on 21 June. 24 new production licences were awarded to 29 companies.

Four of the licences are in the Norwegian Sea and twenty are in the Barents Sea. This licencing round was, without doubt, the most comprehensive ever undertaken in the Barents Sea.

On 8 February, the King in Council formally awarded 51 production licences in the Awards in Pre-defined Areas (APA) 2012.

The 51 production licences are spread between the North Sea (34), Norwegian Sea (14) and the Barents Sea (3). A total of 47 companies applied for production licences in APA 2012.

On 15 February, the MPE announced APA 2013, which encompasses the pre-defined areas with blocks in the North Sea, Norwegian Sea and Barents Sea.

The application deadline is Wednesday, 11 September. Awards are expected to be made during the first quarter of 2014.

Sale of seismic

In 2011 and 2012, the Norwegian Petroleum Directorate acquired 2D seismic data in the southeastern Barents Sea and from Norwegian sea areas around Jan Mayen. The processed seismic data was announced for sale as a single package on 21 June.

The seismic package also contains older, re-processed 2D seismic from the southeastern Barents Sea that was acquired in 1974 and 1976 and re-processed in 1992 (approx. 2160 kilometres).

The price of the seismic package is NOK 12 million, plus VAT.