Arctic Oil Promise Keeps Norway’s Disappointed Wildcatters Going

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Arctic Oil Promise Keeps Norway’s Disappointed Wildcatters Going


Category: Energy

It’s been a bad year for oil explorers in Norway’s Arctic: a record campaign in the Barents Sea yielded little; the most exciting well in years proved to be a flop; and Norwegians grew increasingly skeptical about the industry that made them rich.

But companies led by Norway’s state-controlled Statoil ASA and Sweden’s Lundin Petroleum AB aren’t about to give up.
The Barents is thought to hold the bulk of the country’s undiscovered oil and gas resources, and is seen as key to maintaining production 10 years from now as older fields decline. The area has scarcely been explored, with just 1/10th as many wells as the North Sea — and vast swaths of it aren’t even open to drilling yet.
 “The Barents in particular is still a very long-term game,” Neivan Boroujerdi, an analyst at consultant Wood Mackenzie Ltd., said this month. “We’re not ready to write its obituary just yet.”
 Successive governments have pushed for more activity, offering tax incentives, opening new acreage and offering blocks farther and farther north as Norway seeks to prolong the oil age that made it one of the richest countries on Earth. Crude output has fallen by half since a 2000 peak, and despite a surge in natural gas, total petroleum production is forecast to take another dive in the middle of the next decade.

Explorers drilled 15 wells in the Barents this year, two more than the previous record in 2014, according to the Norwegian Petroleum Directorate.

In five wells, Statoil made only one oil discovery worth pursuing, and even that — with at most 50 million barrels — would only be developed as part of the upcoming Johan Castberg project.

More disappointingly, Statoil found only an uncommercial amount of gas at Korpfjell. The first well drilled in the virgin Barents’ southeast on the largest untested structure on the Norwegian continental shelf, it was the most eagerly anticipated prospect of the year.

Source: Bloomberg