Ownership interests on Norwegian continental shelf offered in APA 2016

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Ownership interests on Norwegian continental shelf offered in APA 2016


Category: Business News

Today, Jan. 17, offers for 56 new production licences on the Norwegian continental shelf (NCS) will be sent to 29 companies.

The offers are made following the authorities’ assessment of applications from 33 companies in the Awards in Predefined Areas (APA) 2016.

Of the 56 production licences, 36 are in the North Sea, 17 in the Norwegian Sea, and three are in the Barents Sea. Twelve of the production licences are additional acreage to existing production licences. Three of the new licences are stratigraphically divided and only apply to levels below/above a defined stratigraphic limit.

“It is very positive that the oil companies still see potential on the Norwegian shelf, and that interest to invest in exploration in mature areas is significant,” says Sissel Eriksen, exploration director in the Norwegian Petroleum Directorate (NPD).

“This year, interest has been particularly high for areas in the North Sea. The APA scheme demonstrates that exploration in mature areas provides further geological understanding and improved data, which creates exciting, new exploration possibilities,” says Eriksen.

A total of 16 out of 18 discoveries in 2016 were made in areas comprised by the APA scheme.

“It is an advantage that the geology is quite familiar, though surprises still occur. There are both shut down fields and existing fields that are approaching the end of their production in the APA areas, with infrastructure that can be exploited. It is therefore important that we fully explore the surrounding acreage, to ensure potential resources are not lost.”

This year, there has been a lot of interest in the areas around the shut down Frigg field, where new discoveries have been made in recent years.

Considerable interest has also been shown in areas near earlier discoveries in the Barents Sea and Norwegian Sea.

“The companies’ applications show a consistently high-quality, and some have presented very interesting exploration concepts. Most companies will be rewarded for their hard work with awards in APA 2016,” says Sissel Eriksen.

The players in this year’s APA awards range from several small, new companies to the international majors.

Of the companies that applied, 29 will receive an offer of ownership interests in at least one production licence. Petoro will participate as a licensee and administrator of the State Direct Financial Interest (SDFI) in 13 production licences.

The offers have terms and conditions attached. The authorities require the acquisition of new seismic in one area, and a firm well must be drilled. The other production licences are subject to drill or drop requirements. This means that the licensees have between one and three years to decide whether to drill an exploration well. If they decide not to drill an exploration well, the production licence becomes void.

Since the first APA round in 2003, the APA acreage has been expanded several times and comprised a total of 240,653 km2in APA 2016, which is an expansion of 20,018 km2 since APA 2015. APA 2016 was announced on March 17, 2016. At the application deadline of Sept. 6, 2016, companies could apply for 148,014 km2 of the total acreage.

Exploration director Sissel Eriksen believes that the APA scheme is very successful and works as intended. The industry has a predictable framework, and the authorities achieve their goal of faster turnover of acreage and stable exploration activity.