Eldon Ball • Houston
The US Geological Survey (USGS) estimates that 44 to 157 billion barrels (Bbbl) of oil could be added to proved reserves from new discoveries north of the Arctic Circle and that there is a 50% chance of finding 83 Bbbl of oil. Approximately 73% of this amount, almost 61 Bbbl of oil, is expected to be found offshore.
That is the conclusion of a study that appears for the first time in this issue ofOffshore. The study is summarized in a report by theUS Geological Survey. An earlier paper recognizes that most undiscovered resources probably would be found on the continental shelves, but this publication in Offshore is the first release of the CARA estimate of onshore versus offshore allocation of undiscovered resources.
The offshore arctic is roughly equal parts deep ocean basin and continental shelf covered by less than 500 m (1,640 ft) of water. The geology of the deep basins suggests limited petroleum potential, but the continental shelves include some of the largest untested prospects on Earth, USGS says.
Only a handful of wells have been drilled offshore, but these have found numerous oil and gas accumulations, including Snøvit field in the Norwegian Barents Sea and the supergiant Shtokman field in the Russian Barents Sea.
Read the full report, available for the first time, beginning onpage 46.
Drillship designed for harsh, remote environments
Meanwhile, as the arctic opens to oil and gas exploration and production, StatoilHydro intends to play an active role. As part of its preparations, the company has developed a drillship design for the area.
"Our main purpose is not necessarily to build the ship but to show the feasibility of the design," saysStatoilHydro Vice President Stein Olav Drange, who as R&D program leader headed the project. This was not just a desktop study, he adds. It also included a series of model tank tests at the Hamburg Ship Model Basin in Germany to verify aspects of the design. This resulted in some significant modifications.
An outline specification has been developed for the vessel, with an emphasis on the marine aspects of the design. This will provide important knowledge about requirements in the arctic when the company comes to discuss assignments with drilling contractors.
See the full details, beginning onpage 56.
North Sea drilling interest on par with previous average
Exploration and appraisal (E&A) drilling activity in the UK North Sea is down markedly so far this year compared with 2008. However, energy analystsHannon Westwood’s surveillance of wells planned over the next two to three years suggests that interest remains on a par with the rate of activity of the past four years.
The key issues required to deliver the historic average of around 60 E&A wells per year are oil price, return of investor confidence, and willingness among the shelf’s smaller players which currently derive no income to rationalize before they run out of money, the analysts say. See their full analysis and forecast beginning onpage 26.
UK North Sea capital spending continues to drop
The UK relies on continued capital investment in its mature fields to stave off production decline. The current economic crisis, in conjunction with lower oil prices, is affecting this capital investment, and has shaken confidence in the industry.
In this month’s issue, energy analystsWood Mackenzie examine the affects of current economic drivers on future investment in North Sea development.
Since the end of last year, Wood Mackenzie has reduced its forecast of 2009 UK capital expenditure by 25%. Based on its most recent field analysis and evidence from the last major drop in oil price, the firm estimates the near-term decline rate for liquids will increase from 5% to 10-15%.
Their report begins onpage 30.
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