Statoil to triple North America oil and gas output
NEW YORK (Reuters) - Norway's Statoil (STL.OL) aims to triple its North American oil and natural gas production by the end of the decade as it increases spending in oil-rich prospects, the company said on Wednesday.
The state-controlled company, which increased its global capital spending to $17 billion this year, expects to produce 500,000 barrels of oil equivalent a day (boepd) in North America by 2020, up from the 149,000 boepd produced in the first quarter of this year, as it moves away from barely profitable natural gas fields to concentrate on more lucrative liquids-based acreage.
The majority of the increases in North America will come from U.S. operations focused in the Marcellus, Eagle Ford and Bakken shale plays, said Bill Maloney, president of Statoil North America. Some 100,000 boepd will be produced from offshore assets in the deep water Gulf of Mexico, double today's output, the company said during a presentation to investors in New York.
"The resource base in North America has grown well above 6 billion boe, representing around 30 percent of Statoil's total resource base," Maloney said. To grow further, the company is also considering further acquisitions in the region.
Statoil also said it found 100 million to 200 million barrels of recoverable oil equivalent in the Mizzen prospect off Canada's East Coast. The company, which has 65 percent interest and operates the asset, plans to drill two more wells at its discovery this year and next.
Meanwhile, it has entered into a partnership with Canada's PetroFrontier Corp (PFC.V) to explore for shale gas in Australia, it also announced on Wednesday.
Statoil already saw a 75 percent year-over-year increase in its North American output in the first quarter and is shifting its focus to liquids-rich plays like the Bakken in North Dakota and Montana, where it secured a key position last year with its $4.4-billion acquisition of exploration outfit Brigham Exploration.
After producing some 26,000 barrels-per-day in the first quarter, Statoil is ramping up its output in the Bakken. It has built some 500 miles of oil and gas gathering lines in the Bakken shale outpost and taken a position on the Enbridge (ENB.TO) pipeline to ship its crude to Guernsey, Wyoming, said Torstein Hole, Statoil's Senior vice president of development and production for onshore North America.
Rail connections will then deliver the crude to the U.S. Gulf Coast refining hub.
Statoil's expansion in the Bakken and in other liquids plays comes at the expense of its natural gas acreage in the Marcellus shale, where it is partnered with Chesapeake Energy (CHK.N), as low natural gas prices erode production profits. Currently Statoil is only drilling in natural gas acreage to hold onto leases that would expire if the land remained fallow.
The company is at present operating about 20 rigs in the Marcellus, down from 36 rigs at the end of 2011.
"We've brought the rig count down and we've taken some of that (capital) and put it in the Bakken," Maloney said.
"We continue to bring on more wells (in the Marcellus) but we don't produce them to the capacity they have," he added. Statoil had previously said it has 400 wells awaiting completion in the Marcellus shale.
GULF OF MEXICO
In a clear sign of Statoil's intent in the Gulf of Mexico, the energy producer submitted the highest bid on Wednesday in the first federal auction for drilling rights in the Gulf's prolific central region since BP Plc's (BP.L) disastrous 2010 oil spill.
Statoil, one of the more active bidders, bid on 32 blocks in the latest Bureau of Ocean Energy Management lease sale, offering $157 million to lease one tract -- the highest ever received, according to regulators.
Statoil's plans to double deep offshore production will involve the addition of about four rigs this year and another twelve next year, the company said.
It is currently operating about 30 rigs in the Gulf, a number not reached by the company since the BP oil spill, which slowed activity as the government weighed the environmental threat of deep water drilling.
One of its latest Gulf of Mexico finds, the Logan discovery in the Paleogene prospect, holds between 1 billion and 2.5 billion barrels in place, though the volumes that can be recovered are so far unclear, a Statoil spokesman said.
(Additional reporting by Victoria Klesty in Oslo, Jeffrey Jones in Calgary and Kristen Hays in Houston; Editing by Alden Bentley, Bob Burgdorfer and Jim Marshall)
- North Korea's 'reign of terror' worries South's leader
- Los Angeles sheriff's officials charged in jail misconduct probe
- RPT-Record low temperature recorded in Antarctica -scientists
- Google bus blocked in San Francisco gentrification protest
- Putin dissolves state news agency, tightens grip on Russia media