NCS abuzz – strong start for 2019

By Michael Rogers

The reserves in Duva are estimated at 14 million standard cubic metres of oil equivalents (88 million barrels) and will be developed with a subsea facility, tied back to Gjøa for processing and export
The reserves in Duva are estimated at 14 million standard cubic metres of oil equivalents (88 million barrels) and will be developed with a subsea facility, tied back to Gjøa for processing and export (illustration: Neptune Energy)

Despite a year-end drop in oil prices, overall 2018 gave good reason to be optimistic for oil and gas activities on the Norwegian Continental Shelf (NCS).

Among the 2018 highlights are the 53 exploration wells spudded, versus 36 for all of 2017. New production licences awarded in 2018 totalled 87 – 12 from 24th licencing round of new blocks and 75 from the Awards in Predefined Areas (APA) 2017 made up of acreage within mature blocks.

Moreover, 2018 saw plans for development and operation (PDOs) submitted to the authorities for three new projects – Johan Sverdrup construction phase 2, Nova and Troll Phase 3. Of those three, Nova and Troll were approved during the year, along with seven PDOs submitted earlier.

Equinor’s Aasta Hansteen came on stream 16 December 2018, and Snefrid North, which will be tied back to Aasta Hansteen is expected to begin production in late 2019. The combined reserves of these two fields are estimated to be 55.6 billion standard cubic metres (Sm3) and 0.6 million Smof condensate – a total of 353 million barrels of oil equivalent. Including Aasta Hansteen, 2018 ended with 83 active fields on the NCS.

“The activity level on the Norwegian Shelf is high. Production forecasts for the next few years are promising and lay a foundation for substantial revenues, both for the companies and the Norwegian society. There is considerable interest in exploring for oil and gas,” said Bente Nyland, Director General of the Norwegian Petroleum Directorate in her introduction to the NPDs review of 2018 that included forecasts through 2023.

Kick-starting 2019
If the first two months of 2019, are any indication, this year’s activity will continue to garner optimism.

By the beginning of March last year, three exploration well results had been reported. This year to date, the results from 11 wells have been announced – two to delineate existing fields and three resulted in modest discoveries.

APA 2018
In mid-January, a record total of 83 production licences on the NCS were announced for the Awards in Predefined Areas 2018. Altogether, the awards spanned the entire Shelf, with highest number the North Sea with 37, followed by the Norwegian Sea with 32 and the remaining 14 in the Barents Sea.

Exploration director Torgeir Stordal in the NPD speculated that, “One reason why the companies still find it attractive to explore in mature areas could be that large parts of the Shelf are now covered by new and improved seismic data, which together with new technology enable the companies to identify new exploration targets.” Existing infrastructure in mature areas makes even smaller finds more attractive.

It also doesn’t hurt to remember that the giant Johan Sverdrup field was discovered in a mature block.

According to plan
A new, amended plan for development and operation (PDO) of the Gullfaks field in the North Sea was submitted in January. The new phase of production aims to tap additional reserves, an estimated 2.8 million Sm(nearly 18 million barrels) of oil equivalents. Gullfaks operator Equinor plans to invest NOK 2.23 billion to increase production via water injection to increase reservoir pressure.

In February, Neptune Energy submitted its PDO for the Duva field in the North Sea. With recoverable reserves estimated at 14 million Smof oil equivalents, Duva will be developed as a tie back to Gjøa, also operated by Neptune. The development includes two oil wells and one gas well, with an estimated investment of NOK 5.5 billion.

Production makes perfect
On the production side, Equinor has been given the nod to extend the Åsgard A facility technical lifespan, ensuring production for 12 years longer than originally planned. Gas injection from Åsgard A will ensure production of the remaining liquid reserves at the Smørbukk and Smørbukk Sør fields. Åsgard A will also contribute to development of Trestakk and the “Blåbjørn” discovery.

Spirit Energy, operator of the North Sea Oda field expects to see production start within the coming weeks. A subsea development, Oda’s wellstream will be processed at the Ula platform, and the produced gas will be used as injection gas for alternating water and gas injection on the Ula field. Oda oil will be exported from Ula via the Ekofisk field to the UK’s Teesside terminal.

Half full
The NPD’s forecast is based on the premise that slightly more than 50% of oil and gas reserves on the NCS remain to be tapped, although the cost of extraction will continue to be a challenge.

“Good exploitation of infrastructure and cooperation across production licences mean lower development costs and make it possible to develop small and medium-sized discoveries in a way that is profitable. This is becoming increasingly important as the Shelf matures,” NPD Director General Bente Nyland emphasised.

All in all, continued optimism appears to be a sensible course for 2019.