Norway gaining momentum
Norway’s latest license awards reflect resurgent international interest in the sector. Twenty-six companies secured interests in 45 production licenses in the North Sea and the Mid-Norwegian Haltenbanken, under the Ministry of Petroleum and Energy’s pre-defined areas (APA 2005) awards. This compares with 28 licenses issued to 21 companies under APA 2004.
Sixteen bidders gained operatorships. The ‘big two’ of Hydro and Statoil hit double figures, but proactive newcomers to the shelf also fared relatively well. Most successful was BG, picking up controlling interests in three Tampen area licenses and one on the Haltenbanken, bringing its total of Norwegian operatorships to eight, since entering the sector in 2003. DONG, Lundin and Petro-Canada took two operatorships each, while Japan’s Idemitsu ended up with one.
The main aim of the rolling APA scheme is to promote exploration in more mature acreage, in part through greater transparency: the industry is informed years in advance of the areas on offer, which should in turn assist long-term planning.
Eighteen of the latest batch of winners also participated in the country’s recently closed 19th licensing round. This focused on the less explored waters to the north, with 30 blocks on offer in the Barents Sea, and 34 in the Norwegian Sea. This round drew in international heavyweights such as Amerada Hess, Chevron and Marathon. Awards should be announced within a couple of months.
Venture in SSP alliance
One of the hordes of small independents revitalizing the UK shelf, and in the process replenishing the Chancellor’s coffers, is Aberdeen-based Venture Production. The company has been in overdrive mode of late. In November, it snapped up the Ensign gasfield in the southern North Sea from Shell and Centrica. Venture plans a well this year to test reservoir deliverability, and thereby gauge the number of wells required for this 300-400 bcf accumulation. Development could then follow in 2007.
Artist's impression of the Sevan Stabilized platform, selected by Venture for the Chestnut field development.
Venture also announced a strategic alliance with Norway’s Sevan Marine, to explore new opportunities for the relocatable, cylinder-shaped SSP (Sevan Stabilized Platform) floating production concept. Earlier, Venture had agreed to deploy a newbuild SSP 300 on its marginal Chestnut oilfield in the UK northen North Sea block 22/2a. Recently, it also built up controlling stakes in the undeveloped Acorn and Beechnut oilfields in the Central sector. It stated that both were under review for floating production solutions, with first oil deliverable by 2010.
Ekofisk still growing
ConocoPhillips’ latest expansion of Ekofisk has started up, with five production wells coming onstream. The centrepiece of the Ekofisk Area Growth scheme, initiated in 2003, is a new platform, with 25 further producer wells to be added. At peak, this latest development of the giant field should bring in 100,000 boe/d.
Under a separate project, Subsea 7 has reportedly been chosen to re-route the Norpipe trunkline taking gas from Ekofisk south to Emden on Germany’s north coast. This line has been in service since 1977, but H7, a compression platform installed along the route to boost throughput, has been redundant since 1999. Gassled, the Norpipe operator, plans to re-route the 440-km line away from H7 during 2007, with the platform itself likely to be removed.
Also in the North Sea, Norway’s government has approved a NOK1 billion project to develop Ringhorne East, an oil discovery close to the Balder field. The operator of both, ExxonMobil, plans to drill at least four producer wells from the existing Ringhorne field platform, with options for two water injectors for pressure support. Production will be transferred to theBalder floating production vessel for processing. Ringhorne East’s reserves are estimated at 7.5 MMcm of oil recoverable, and 0.3 bcm of gas.
Statoil’s NOK4.5 billion plan for Tyrihans in the Norwegian Sea went before Norway’s parliament in December. The scheme encompasses Tyrihans South, an oilfield with a gas cap, and Tyrihans North, a gas-condensate field with a thin oil zone. The two should be exploited with 12 wells gathered via five seabed templates, tied back to theKristin complex 40 km to the northwest.
A new 43-km pipeline will transport the wellstream to the Kristin semisubmersible platform for separation and subsequent export of the stripped out gas via the Aasgard Transport trunkline to Kaarsto. Liquids will be combined with output from Kristin and dispatched to theAasgard C storage ship for offloading to shuttle tankers. Tyrihans’ reserves are estimated at 182 MMbbl of oil and condensate and 35 bcm of gas.
Tax threatens UK revival
Britain’s E&P sector is in good shape - but for how much longer? Rumors of a new windfall tax were borne out when the UK Chancellor reeled off his pre-budget report last month. The main knockout blow was the imposition of a 10% rise in Corporation Tax (CT) on oil and gas producers, pushing their overall CT rate to 50%.
The UK Offshore Operators Association (Ukooa) assessed the cumulative offtake as £6.5 billion over the next three years. It comes on top of an estimated £11 billion in tax revenue from the sector last year, triple the total forecast in 2003. The Chancellor is clearly betting that high oil prices are there for the long haul.
Ukooa’s chief executive Malcolm Webb pointed out that the last tax hit on the UK industry in 2002 “led to a major slump in investor confidence in the North Sea. Exploration and development activity fell to record lows, and investment left the North Sea for other less challenging parts of the globe with lower costs.”
A week earlier, Ukooa had published statistics showing how the sector had finally recovered from the slump of 2002-03. It forecast investments across the UK continental shelf would approach £11 billion in 2005, the highest level for seven years. It added that development well numbers were up for the first time in four years, and the probable total of 82 exploration and appraisal wells would be almost double the tally for 2002.
Early industry reaction to the CT change was generally stunned silence. However, Shell has reportedly reacted by scaling back its UK drilling commitment, releasing one of three rigs on contract in 2006.•
