What's Ahead in 2005

Norwegian energy still offers plenty

Terje Overvik, Executive Vice President, E&P Norway, Statoil, Stavanger

After 25 years of Statfjord production, this Norwegian Continental Shelf (NCS) field has exceeded all expectations. When it went onstream, we thought that just under half the 6 billion bbl of stock tank oil originally in place (STOOIP) could be recovered, and that output would cease in the mid-1990s. However, we have recovered 63% of STOOIP, and Statfjord is still online.

We are now planning the field's late-life phase. What recovery factor can be achieved remains uncertain, but we believe it is possible to produce 70% of STOOIP from these prolific Jurassic sands. A long time has passed since the field's best daily production figure of 850,204 bbl came from three platforms. Oil output has declined steadily, while water cut rises sharply. But Statfjord remains one of Norway's biggest producers. It has been a good school for gaining knowledge of, and experience in, improved recovery.

I am personally familiar with Statfjord from my time as its platform manager, as well as operations vice president for the whole field, and now head of Statoil's NCS activities. In my view, the secret behind this field's results is a combination of knowledge and technology development.

We have committed to securing an overall understanding of the reservoir and the changes caused by drainage. This know-how is crucial for selecting the right solution to yield more oil. In this reservoir, that solution primarily involves injecting gas and water. Producing at a lower pressure could also be appropriate at an even later stage.

Recovering Statfjord's residual assets will be very demanding. However, we are ready to push recovery limits as far as possible within our absolute standards for profitability and safety.

More fields to follow. Significant activity extends beyond Statfjord. We have equally ambitious plans for improving all fields' recovery, as they enter late life. For instance, we are pursuing plans to extend Gullfaks field's producing life. The aim is to keep the big reservoirs onstream for 10 to 15 years beyond the shutdown date considered realistic when these fields were developed. After more than 30 years of output, much of the NCS is mature. Yet, activity remains high, and new developments constantly take place.

HP-HT production. This autumn, we brought Kvitebjørn field in the northern North Sea onstream. This high-pressure, high-temperature (HPHT) project illustrates the challenges set by the current generation of developments. Kvitebjørn is smaller than the giant, first-generation NCS fields. Given its reservoir conditions, we faced a very difficult task. At slightly more than 4,000 m beneath the seabed, the formation is heavily faulted, with a pressure of 780 bar and a temperature of 150°C. Kvitebjørn has been important, particularly for gaining experience with extreme pressures and temperatures.

Meanwhile, Kristin field in the Norwegian Sea is under development, to go onstream in 2005. The pressure in this reservoir is 911 bar, with a temperature of 160°C.

We produce a million boe from the NCS. Our goal is to maintain this rate for as long as possible. That will challenge us in many areas and demand new organizational models, as well as bold use of new technology. The pattern of NCS development shows that the largest fields were discovered first. That gave us a good start, both financially and technologically. Today, future output must come from a large number of smaller finds. Many will lie in deep water and be complex, with high pressures and temperatures.

We have talked for years about optimizing use of established NCS infrastructure, particularly in the North Sea. Now is the time to act on this good infrastructure, including transportation.

Kvitebjørn exemplifies a field that has been elegantly integrated with existing infrastructure and incorporated in our value chain. A separate gas pipeline has been laid from this site to a gas processing plant at Kollsnes, near Bergen. Its original 26-in. diameter was increased to 30 in. to boost capacity, thereby permitting the possible transport of gas from other nearby fields.

Gas from our Visund find in the North Sea will land, accordingly, at Kollsnes via Kvitebjørn. And a future development of Valemon gas field, which straddles the Gullfaks and Kvitebjørn licenses, could also be based on the same transportation.

Another pipeline from Kvitebjørn to Troll is for multiphase transport of gas, condensate and water. NGLs in Kvitebjørn's rich gas are separated out in a new plant at Kollsnes and piped through the Vestprosess line, to the fractionation plant at Mongstad. That process reduces the energy value of Kvitebjørn gas, but the loss is made good with dry gas from Troll to meet customer specifications. This swap deal is possible because: 1) we have the necessary facilities; and 2) Troll's huge gas reserves allow it to serve as a volume guarantor and swing producer for other fields, yielding substantial synergies and enhancing value creation.

The NGL separation plant at Kollsnes was budgeted at NOK 3 billion ($480.2 million), but it has been brought in at just NOK 2.3 billion ($368.2 million). Kvitebjørn condensate is piped to Troll and enters the oil transport system from that field to Mongstad. Since Kvitebjørn oil has a higher quality than Troll's output, blending these two crudes in the pipeline provides overall improvement.

A key NCS feature is the growing dominance of gas output. Much as Norway will change from an oil producer to a gas nation, so is Statoil set to become more of a gas company.

Our Snøhvit development, now underway in the Barents Sea, marks our first step toward the Arctic. Through bold use of technology, we will begin producing LNG in 2006 from the world's northernmost liquefaction plant, outside the town of Hammerfest. Snøhvit's facilities are entirely subsea. The unprocessed wellstream will travel through a 143-km pipeline to land, creating the world's longest, underwater, multiphase flow transport system.

We have secured a 10.4-Bcm annual capacity for LNG delivery and regasification at Dominion's Cove Point terminal in Maryland, USA. This doorway to the world's largest energy market, combined with our large gas resources in Norway, the Caspian area and Algeria, conveys a clear message – we are becoming a global gas player.

THE AUTHOR
	Terje Overvik was appointed executive vice president, Exploration & Production Norway, for Statoil on Aug. 31, 2004. Previously, he served for two years as Statoil's executive vice president, Technology & Projects. From 1983 to 2002, Mr Overvik held a number of key positions in the company's Exploration & Production Norway business area, including platform manager for Statfjord A and vice president for Statfjord operations. Before joining Statoil in 1983, he worked as an associate professor and researcher at the Norwegian University of Science and Technology (NTNU) in Trondheim. Mr Overvik holds a PhD in engineering from NTNU.