Norway’s offshore operators are heading into the unknown with a recently announced 24th Licencing Round reinforcing operators’ intentions to move towards frontier regions after 93 of the 102 blocks nominated were located in the Barents Sea. The licensing round has attracted some controversy for its focus. After provisionally announcing the nominated blocks and entering a public consultation period, the Norwegian Environment Agency recommended that the 65km protection belt around Bear Island nature reserve be extended to 100km. This would have resulted in the removal of 20 blocks from the licensing round. However, these blocks remain, with the Norwegian government acknowledging the concerns but insisting that the country’s stringent regulatory framework is enough to protect the environment.
The move has been spurred by a significant improvement in oil prices since January 2016 and recent successes at Fillicudi, Johan Castberg, Neiden and Wisting. Two operators, Lundin Petroleum and Statoil, have extensive exploration programs underway but success has been mixed.
Statoil is nearing the end of a five well exploration campaign and of the four wells drilled so far, only one (Kayak) is considered commercial with a second (Blåmann) considered viable as a tieback to the Snohvit field. The industry took a particular interest in the Korpfjell probe. Norway’s most northerly well was spud in August with potential resources of over 250 million boe. It was seen as a high risk, high reward prospect but has failed to live up to the hype. The well was plugged and abandoned as a non-commercial discovery of 45 – 70 million boe. The final well of the campaign will be completed during September at the Koigen Central prospect.
Lundin have had more success with a discovery at Filicudi at the start of the year and expect to make an upward revision to Alta’s reserves after successful appraisal wells on the eastern flank of the prospect. Lundin have a further three wildcat prospects scheduled for the remainder of 2017.
Drilling activity is likely to remain steady through 2017 with as the Barents Sea is on track to see a record number of exploration wells (14) this year. Development drilling opportunities remain centred around the mature North Sea but a push in exploration and appraisal drilling in the years ahead should in turn spur an increase in development drilling for the Norwegian and Barents Sea as discoveries are made and projects are sanctioned.
In the near-term, investments in developments scheduled to come onstream over the next four years is expected to total $36 billion predominantly in the North Sea on the Johan Sverdrup development ($11.6 billion). However, from 2021 there is likely to be a shift in investment with the Barents Sea seeing the majority of the $24 billion expected to be sanctioned from 2021. The investments from 2021 are set to increase as the large scale exploration programs have so far proved rewarding and the developments head towards sanction.
Read more in our full length special report.