Arctic oil discovery heralds more finds in Barents sea
BY MIKAEL HOLTER
STOCKHOLM (Bloomberg) -- Norway may see a series of Arctic oil finds after a well produced crude from a previously unproductive layer of rock, explorer Lundin Petroleum said.
The Gohta discovery in the Barents Sea posted by Lundin last month was Norway’s first in Permian rocks, formed more than 250 million years ago, the company’s Norway head Torstein Sanness said in an interview. Holding as much as 145 MMbbl of of oil, Gohta opens as many as 10 possible drilling targets in the surrounding area, he said.
“We’re hoping for a string of pearls,” said Sanness, whose company made Norway’s biggest oil find in decades in 2010. “We plan to build resources aggressively over the next years, so there’s little doubt we’ll reach the commercial threshold” for developing Gohta.
After a decade of falling oil production, drilling in the Barents Sea is helping to revive interest in Norwegian exploration. OMV also posted a discovery last month in the area, north of Norway’s traditional oil-producing region in the North Sea. Statoil made the commercial oil discoveries in 2011 and 2012 and further successes will make developing oil infrastructure in the remote Arctic region viable.
“Several players are currently increasing their focus on the Barents Sea,” Teodor Sveen Nilsen, an analyst at Swedbank First Securities, said in a note to clients. “The volumes will probably be commercial” at Gohta, he said.
Lundin, has led a resurgence in Norwegian exploration, drilling the first well in what became the Johan Sverdrup field, possibly the country’s biggest find since 1974 with as much as 3.6 Bbbl of oil.
Like Johan Sverdrup, located only 10 ft from where Total, then Elf Aquitaine, drilled a dry well in 1971, the Gohta reservoir was found 1.9 km from an unsuccessful try by Royal Dutch Shell in 1986, Lundin’s Norwegian exploration chief Hans Christian Roennevik said in the same interview.
“There’s a short distance from heaven to hell,” Sanness said. The Permian accumulations “have been hidden in the shadow of the big Jurassic reservoirs.”
Lundin found help in new 3D seismic imagery and in studying comparable rock formations on the Arctic island of Svalbard, some 700 km north of the Norwegian mainland.
The Loppa High, where Gohta was found, was an area that rose as an island above sea level about 200 million years ago. It was big enough to hold freshwater, which dissolved the limestone, creating the pores necessary to hold the oil.
“If we hadn’t been out to see the nature and touch the rocks on Svalbard, we would never have been able to create this context,” Roennevik said.
Lundin plans to drill one of two or three Gohta appraisal wells next year and “a couple of wells a year” in the Loppa area, where it’s the operator on five other licenses, for the next five to eight years, Sanness said. The company plans to maintain a $400 million to $500 million exploration budget for Norway next year and keep drilling at this year’s pace, which will see Lundin sink as many 18 wells, including 10 exploration wells.
The Gohta find was announced days after OMV said it had discovered as much as 160 MMbbl of oil at the Wisting prospect in another part of the Barents Sea. The discoveries, and especially the new play proved by Gohta, could revive interest in Norway’s Arctic after Statoil decided to delay the development of its Johan Castberg twin finds 65 km from Gohta because of rising costs, tax increases and lower resource estimates.
Norway’s Barents Sea is thought to hold as much as 7.9 Bboe in undiscovered resources, an estimate that will now be raised, Inger-Helene Madland, a geologist at the Norwegian Petroleum Directorate said in an October 2 interview. It’s not certain the implications of Lundin’s find will be reflected in an update next year, she said, declining to estimate how big the upgrade could be.
A joint development of Gohta and Castberg could boost the commercial viability of both projects, Sanness said. “It’s one of the scenarios that have to be discussed,” he said. “It’s not impossible that we would sit down for a talk with Statoil at some point.”
Statoil has yet to drill two of four wells in a 30 km radius of Castberg in a bid to boost resources currently estimated at between 400 and 600 MMbbl of oil, and said it was too early to speak of joining up with Lundin.
“This isn’t very realistic at the moment,” spokesman Oerjan Heradstveit said in an October 1 interview. “But you can never know.”