New oil ‘province’ found off Norway

Extension of Norway’s lucrative oil age was further assured on Monday when state oil company Statoil announced another major oil discovery in the Barents Sea. Now the biggest question seems whether Statoil, its partners and Norwegian industry have the capacity to develop yet another oil and gas project, and other international players are expected to rush to join the Arctic action.

Statoil has struck even more oil off Norway, with the help of the "Aker Barents" drilling rig. PHOTO: Aker

The new oil reserves are described as a twin to another major discovery just last year at the Skrugard field, around 230 kilometers off the northern Norwegian city of Hammerfest. Statoil chief executive Helge Lund claimed the volume and reservoir properties of the new discovery at the so-called “Havis prospect,” part of the Skrugard license, “open up a new petroleum province in the North.”

That’s enough to make environmentalists shudder at the prospect of more oil industry activity in sensitive Arctic areas. Lund, however, continues to claim that Statoil is environmentally responsible and he’s been pushing hard for more exploration and extraction in Arctic areas.

Until fairly recently, politicians and even Statoil officials were worrying that Norway’s oil resources would soon run dry, prompting Statoil to invest heavily outside Norway. Now, after other huge discoveries made much farther south of Skrugard as well, the company is hailing the “revitalization” of the Norwegian continental shelf, and claiming that the new discovery confirms “Statoil’s faith” in  exploration potential off the Norwegian coast.

Statoil is the biggest partner in Skrugard, with a 50 percent ownership stake, and also is the field’s operator. Statoil’s other partners are the Norwegian state’s director oil investment entity Petoro, with 20 percent, and ENI Norge AS, a unit of the major Italian oil firm ENI, with 30 percent.

Wells at the new Skrugard-Havis discovery, drilled by the rig Aker Barents, indicate volumes estimated to amount to between 200 million and 300 million barrels of recoverable oil equivalents. When paired with the discovery made just seven kilometers away at Skrugard last April, the field can yield as many as 600 million barrels of recoverable oil equivalents, according to Statoil.

Huge economic development potential
Skrugard’s location off the northern Norwegian city of Hammerfest and a large neighbouring terminal and plant at Melkøya can help support the infrastructure needed to extract its oil, according to Lund. The oil and gas field itself also lies around 100 kilometers north of the Snow White gas field in the Barents Sea that sends gas to Melkøya.

“The Havis discovery boosts the development of Skrugard as a versatile new center with processing and transport capacity,” said Erik Strand Tellefsen, Statoil’s vice president for Skrugard development. Lund also claimed the Skrugard-Havis discoveries “will be important for industrial development and will further boost activity in the supplier industry, providing new jobs and generating spin-off effects throughout the region.”

That’s music to the ears of Norwegian politicians keen on boosting economic development in outlying areas, especially in the far north. It also sets environmentalists on the defensive, though, and raises concerns over whether Norway, which already has a low unemployment rate and an offshore industry looking at new boom times, has the capacity to extract all the oil and gas it’s finding.

Statoil exploration chief in Norwegian territory, Gro Haatvedt, hasn’t seemed overly concerned, nor does she think access to oil rigs will limit oil production in the coming years. Her colleagues have claimed Statoil has the staffing, competence and means to reach its production goals, but admit the company depends on  support from the entire offshore industry, not least equipment suppliers.

“Our biggest challenge in the short term is acquiring the capacity we need in the supplier markets, so that we manage to carry out all the assignments we face,” Øystein Michelsen, Statoil’s director for activity on the Norwegian continental shelf, said at a press briefing last week.

Views and News from Norway/Nina Berglund

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