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Barents discovery boosts Norway's oil prospects
April 5, 2011 / 1:44 PM / 7 years ago

Barents discovery boosts Norway's oil prospects

HAMMERFEST, Norway (Reuters) - Norway’s half-a-billion barrel oil find in the Barents Sea will help keep up exploration and development activities over the next decade, a senior official said, as it seeks to reverse a long-term production decline.

Bente Nyland, who heads the state agency tasked with overseeing Norway’s oil and gas activities, said Statoil’s Skrugard discovery could help drive investment for the next 10-20 years offshore Norway.

“Skrugard is not a giant discovery that will turn upside down the (country‘s) overall production decline,” Norwegian Petroleum Directorate (NPD) director Nyland told Reuters on the sidelines of an energy seminar in Northern Norway on Tuesday.

“But Skrugard will be important because it will maintain the level of activity,” she said.

The non-OPEC country’s oil production, already down some 40 percent from its 2001 peak to around 2 million barrels per day, is set to decline significantly after 2020 unless new deposits are found and tapped.

Skrugard is located 200 km (120 miles) from the Norwegian coast, well north of the Snoehvit and Goliat fields in the Norwegian Barents, which could make it a potential production hub for other discoveries should they be found nearby.

Nyland expected more oil firms to seek exploration work in the Barents Sea after Skrugard, especially with current oil prices.

Seven exploration wells are due to be drilled in the Norwegian part of the Barents Sea in 2011 and seven more wells after 2011. “I don’t remember such high activity since the 80s,” she said.

Last month the NPD forecast oil and gas investments of around $25 billion in 2011, which would be a record high as companies invest more and more to maintain output from maturing fields in the easy-to-access North Sea basin.

NEW DIMENSION

The Barents find last week added a new dimension for Norway’s exploration prospects after years of mostly disappointing wildcat wells drilled in its Arctic waters.

Asked whether Skrugard made Norway more attractive to oil majors that have by large turned elsewhere for growth, Nyland said: “I guess so. When someone makes a discovery, everybody asks ‘What did we miss and are there any other opportunities?'”

Nyland also said, “Skrugard means there will be a production facility running there, and that may be interesting in terms of looking at other discoveries in the neighboring areas.”

Oil and Energy Minister Ola Borten Moe told the seminar that Skrugard was a “huge lift for the Norwegian oil industry” and promised a speedy opening of a newly delineated Barents Sea border area with Russia that may be rich with oil and gas.

“As soon as all the formalities are completed with the ratification process, we will start the work to do an impact assessment study in the new zone in the Barents Sea. I want things to happen fast,” Moe told Reuters, declining to say precisely when the process could be initiated.

According to the latest NPD estimates, the Norwegian part of the Barents Sea could hold undiscovered resources of up to 6 billion barrels of oil equivalent -- a number that excludes what could lie in the no-longer disputed zone.

Communist-era studies of the delineated zone, now split between Norway and Russia, suggested it could hold as much as 10 billion barrels but those estimates need to be updated.

“When you make a discovery like Skrugard, it raises the potential for all the nearby (geological) structures and prospects. The probability of making a discovery will rise, definitely but we have to explore,” said Sissel Eriksen, the NPD’s head of exploration. “We do share the optimism.”

Editing by Jane Baird

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