Exploration on the NCS

Resrapp2016engelsk-ingress
04.05.2016
Exploration activity is essential if undiscovered resources are to contribute to production and create value both for the industry and for society.

Through its exploration policy, the government gives companies access to exploration acreage in both mature and frontier areas. A high level of exploration activity on the NCS since 2005 has resulted in a number of profitable discoveries.

 

The NCS covers about 2 040 000 square kilometres and is six times larger than mainland Norway. Two-thirds of this area could contain sedimentary rocks with a potential for petroleum.

 

The areas currently opened for exploration amount to 570 000 sq.km, with some 130 000 sq.km awarded as production licences – in other words, six per cent of the whole NCS and 10 per cent of the area with sedimentary rocks (figures 2.1 and 2.2).

 

Figure 2.1 Status of NCS.

Figure 2.1 Status of NCS.

 

Figure 2.2 Area status in per cent.

Figure 2.2 Area status in per cent.

 

With certain exceptions, the North and Norwegian Seas and Barents Sea South have been opened for petroleum activities. The unopened sections are parts of Skagerrak and areas off Trøndelag, Nordland, Lofoten, Vesterålen, Senja and Jan Mayen, as well as Barents Sea North and the Arctic Ocean.

The NCS has been opened for petroleum activities gradually. Oil companies were invited to apply for a total of 278 North Sea blocks in the first offshore licensing round during 1965. Seventy-eight blocks were licensed, the largest single set of awards on the NCS (figure 2.3).

 

Figure 2.3 NCS acreage put on offer and awarded at 1 March 2016.

Figure 2.3 NCS acreage put on offer and awarded at 1 March 2016.

 

Information about and knowledge of geological conditions in the North Sea were used when awarding the first blocks in the Norwegian and Barents Seas during 1980. Between 1981 and 1989, more areas in these two regions were made available for petroleum operations through step-by-step announcements and awards.

Deepwater areas in the Norwegian Sea and parts of the Nordland VI area off Lofoten were opened for petroleum activities in 1994. Two decades then passed before Barents Sea South- East was opened in 2013.

In the areas opened to the petroleum industry, oil companies can gain access to acreage either by applying for production licences in licensing rounds or by buying or swapping interests in such licences.

An extensive set of policy instruments has been developed on the NCS to take account of other industries and the environment in all phases, from the opening of new areas, through awards, exploration, development and production, to decommissioning.

 

Licensing rounds

Two types of licensing round with equal status are conducted on the NCS. Awards in predefined areas (APA) cover mature areas, while numbered rounds concentrate on frontier areas. Mature areas are characterised by known geology and well-developed or planned infrastructure. They usually offer a greater probability of making discoveries than frontier areas, where geological knowledge is more limited and infrastructure lacking. Frontier areas are likelier to yield large discoveries than mature ones.

Increased availability of acreage has led to more licence awards (figure 2.4). Over the past 15 years, the government has strengthened the predictability of the allocation system by holding APA rounds annually, while the numbered rounds generally take place every other year. In addition, the companies know in advance which principles govern the kind of acreage included and the general work commitments for production licences in the APA rounds compared with the numbered ones.

 

Figure 2.4 Awards since 2000 by licensing round. North Sea awards (NSA) were introduced in 1999 as a predecessor of the APA.

Figure 2.4 Awards since 2000 by licensing round. North Sea awards (NSA) were introduced in 1999 as a predecessor of the APA.

 

As figure 2.4 shows, the largest number of awards has been made in the APA rounds. Since these cover areas with known geology and well-developed infrastructure, they generate more applications than the numbered rounds. Opportunities to develop smaller discoveries through tie-ins to existing infrastructure have made the APA rounds especially attractive to new players on the NCS, particularly the smaller companies.

Frontier areas are investigated gradually through sequential exploration. New licence awards in the numbered rounds are generally limited to a small number of key blocks.

Many applications have been received and a lot of licences awarded since 2000. The APA 2013 round generated the greatest number of awards during this period, with 65 production licences allocated, closely followed by the APA 2011 and 2006 rounds with 60 and 58 awards respectively (figure 2.4).

 

APA rounds

The APA scheme is intended to secure efficient exploration of mature areas and to prove time-critical resources close to existing and planned infrastructure. It is also important that known areas are re-examined with fresh eyes and that new idea are tested. The Johan Sverdrup discovery in a previously well-explored area provides an example of this. Most of the discoveries in mature areas are otherwise expected to be small. To make them worth developing, they will usually need to be tied back to an existing field. Infrastructure has a limited lifespan, which makes it important to prove nearby resources in good time before existing fields shut down.

Acreage covered by the APA has been extended every year since the scheme began in 2003 (figure 2.5).

The area put on offer in the APA rounds is still attractive to the oil companies. That was demonstrated by the 2014 and 2015 rounds, when applications were received from 47 and 43 companies respectively.

 

Figure 2.5 Expansion of acreage included in the APA.

Figure 2.5 Expansion of acreage included in the APA.

 

Numbered rounds

Numbered rounds are generally announced every other year. A sequential approach forms an important part of the exploration strategy for licensing rounds in frontier areas. This means that the results obtained from wells in one locality should be evaluated before further drilling is conducted in the same area. That ensures available information is applied in further exploration.

The number of awards has varied since 2000, from six in the 17th round to 24 in the 22nd (figure 2.4).

Parts of Barents Sea South-East, which was opened for exploration in 2013, are included in the 23rd round. The latter covers 57 full or part blocks, including 34 in Barents Sea South-East, 20 in the rest of the Barents Sea and three in the Norwegian Sea. At the deadline of 2 December 2015, applications had been received from 26 companies. The government aims to award new production licences before the summer of 2016.

Total resource growth from discoveries in numbered and annual APA rounds has been roughly the same since 2000 (figure 2.6).

Figure 2.6 Accumulated resource growth by licensing rounds (2000-15).

Figure 2.6 Accumulated resource growth by licensing rounds (2000-15).

 

 

Exploration activity


Exploration wells

The level of exploration activity measured by the number of wells drilled has varied considerably since 1966 (figure 2.7). It was high in the 1980s, with up to 50 wells per year, while only 12 were drilled in 2005. But activity recovered from 2006 and reached a record 65 wells spudded in 2009. The level has been high since then, with more than 40 wells drilled per annum in 2009-15. Fifty-seven and 56 wells were spudded in 2014 and 2015 respectively. Exploration activity has always been highest in the North Sea (figure 2.8). About 30 wells are planned across the NCS in 2016, partly reflecting the decline in oil prices.

Figure 2.7 Exploration wells spudded per year (1966-2015).

Figure 2.7 Exploration wells spudded per year (1966-2015).

 

Figure 2.8 Exploration wells spudded per year by NCS region (1966-2015).

Figure 2.8 Exploration wells spudded per year by NCS region (1966-2015).

 

Various definitions
Exploration well is the collective term for wildcats and appraisal wells.
Wildcat is the first well drilled on a new, clearly defined geological structure (prospect).
Appraisal well is a well drilled to determine the extent and size of a discovery.
Discovery. One or more deposits identified collectively in the same well which, through testing, sampling or logging, are established as likely to contain mobile petroleum. This definition covers both commercial and technical deposits. A discovery acquires the status of a field or becomes incorporated in an existing field when a plan for development and operation (PDO) is approved by the government.
Technical finding rate. The relationship between technical discoveries made and wildcats drilled.
Commercial finding rate. The relationship between discoveries currently under development or declared commercial and wildcats drilled.

 

Discoveries

The high level of exploration activity has yielded many discoveries. Viewed overall, the greatest proportion of these are in the North Sea. For the first time, however, the Barents Sea accounted for the largest number of finds and the biggest resources proven in 2014. Nine discoveries were made that year in this region, eight in the North Sea and five in the Norwegian Sea. Nothing was found in the Barents Sea during 2015, but 10 discoveries were made in the North Sea and six in the Norwegian Sea (figure 2.9).

 

Figure 2.9 Discoveries per year by NCS region (1967-2015).

Figure 2.9 Discoveries per year by NCS region (1967-2015).

 

With few exceptions, the largest discoveries were made early in the exploration of the NCS (figure 2.10). A substantial one was again made in 2010, when Johan Sverdrup ranked among the world’s biggest finds that year. Two considerable oil discoveries were made during 2011 and 2012 in an area north-west of Snøhvit in the Barents Sea. Designated 7220/8-1 (Skrugard) and 7220/7-1 (Havis), these now form part of Johan Castberg.

 

Figure 2.10 Accumulated resource growth by NCS region (1967- 2015).

Figure 2.10 Accumulated resource growth by NCS region (1967- 2015).

 

 

North Sea

 

Exploration since 2000

Norway’s North Sea sector is the best-explored part of the NCS, and the largest proportion of its resources have been proven there. After more than 50 years of activity and over 1 140 completed exploration wells at 31 December 2015, many discoveries are still being made.

Proving resources close to existing and planned infrastructure represents one of the main challenges in the North Sea. Finding additional resources while the big facilities are still on stream is important. Even very small discoveries can be profitable if existing infrastructure can be utilised effectively. Phasing discoveries into fields on stream also helps to extend the producing life of the latter, and thereby maintains their profitable production and improves recovery from them.

Relatively few wells were drilled in the North Sea from 2000 to 2005 (figure 2.11). However, their number rose substantially from 2005 and peaked in 2009 at 47. Exploration activity has remained high since 2010, with an annual average of 34 wells.

Figure 2.11 Exploration wells spudded per year in the North Sea (2000-15).

Figure 2.11 Exploration wells spudded per year in the North Sea (2000-15).

 

A total of 127 discoveries have been made since 2000 (figure 2.12).

 

Figure 2.12 Discoveries per year in the North Sea (2000-15).

Figure 2.12 Discoveries per year in the North Sea (2000-15).

 

The finding rate in the North Sea has been relatively high over the same period, averaging 0.2-0.7 per annum (figure 2.13).

 

Figure 2.13 Completed wildcats and finding rate in the North Sea (2000-15).

Figure 2.13 Completed wildcats and finding rate in the North Sea (2000-15).

 

Resource growth since 2000 has been highest in the North Sea, but most of the discoveries are small (figure 2.14). It peaked in 2008-11 at about 600 million scm oe, largely thanks to the discovery of Johan Sverdrup.

 

Figure 2.14 Resources in discoveries by discovery size in four-year periods, North Sea (2000-15). Number of finds specified in the columns.

Figure 2.14 Resources in discoveries by discovery size in four-year periods, North Sea (2000-15). Number of finds specified in the columns.

 

Exploration for the past three years

Since the NPD’s previous resource report in 2013, 114 exploration wells have been spudded and 25 discoveries made. All the latter are small and close to fields, and many of these are commercial.

Exploration activity in 2013 was at its highest around the southern end of the Utsira High. Most of the wells were drilled to delineate Johan Sverdrup. An oil discovery – 16/4/6 S (Luno II) – was also made in this area.

Four discoveries were made about 25 kilometres south-west of Oseberg South in 2013 and 2014 – 30/11-8 A, 30/11-10 (Krafla North), 30/11-9 S (Askja) and 30/11-9 A (Askja East). During 2011, 30/11-8 S (Krafla) was found in the same area. Collectively, these discoveries proved over 30 million scm oe, and further prospects are due to be drilled in the area during 2016. Results so far show that the well-explored section of the North Sea continues to provide good opportunities for value creation.

The biggest discovery on the NCS in 2015 was made by well 2/4-23 S (Julius), where about seven million scm oe of gas and condensate were proven. This well also delineated the 2/4-21 (King Lear) gas and condensate discovery made in 2012.

Plans call for 15-20 exploration wells in the North Sea during 2016. About 170 production licences were awarded in the APA rounds during 2013-15. That could help to maintain exploration activity in the years to come.

 

Norwegian Sea

 

Exploration since 2000

The level of exploration activity has varied a great deal since 2000 (figure 2.15). It was relatively high during the first two years of this period, with nine and 13 wells respectively, and low for the next four. Only three wells were drilled in 2005. But activity rose from 2006 and set a record in 2009 with 18 spudded wells. It then slowed, averaging 10 wells a year. Exploration was high again in 2015, with 16 wildcats spudded – the largest number since 2000. Most wells are drilled in the mature areas on the Halten and Dønn Terrace. Priority has been given to drilling prospects close to existing infrastructure.

Figure 2.15 Exploration wells spudded per year in the Norwegian Sea (2000-15).

Figure 2.15 Exploration wells spudded per year in the Norwegian Sea (2000-15).

 

Figure 2.16 Discoveries per year in the Norwegian Sea (2000-15).

Figure 2.16 Discoveries per year in the Norwegian Sea (2000-15).

 

Seventy-four discoveries have been made since 2000 (figure 2.16). As in the North Sea, the finding rate in the Norwegian Sea has been high over the past 15 years, with an annual rate of 0.25-1.00 (figure 2.17). Resource growth in this region has varied (figure 2.18), and was greatest in 2008-11 at roughly 160 million scm oe. That increase related primarily to Maria and the 6506/9-2 S (Fogelberg), 6507/7-14 S (Zidane) and 6705/10-1 (Asterix) discoveries.

 

Figure 2.17 Completed wildcats and finding rate in the Norwegian Sea (2000-15).

Figure 2.17 Completed wildcats and finding rate in the Norwegian Sea (2000-15).

 

Exploration for the past three years

Since the NPD’s previous resource report in 2013, 42 exploration wells have been spudded and 18 discoveries made. The most interesting lies south-west of Njord, where oil and gas were proven by well 6406/12-3 S (Pil) in the Jurassic Rogn and Melke formations.

Exploration activity in deep water has been low over the past three-four years, with all the wells drilled in the Vøring Basin. Three wildcats were completed in 2015 close to the Aasta Hansteen field to prove more gas. Gas and a four-metre oil column were proven in 6706/12-2 (Snefrid North), while 6706/12-3 (Roald Rygg) and 6706/11-2 (Gymir) yielded small gas discoveries. These finds are being assessed for tie-back to Aasta Hansteen, together with others in the area. Further discoveries in the Norwegian Sea during this period are small, with a number of them close to fields.

One-two exploration wells are planned in the Norwegian Sea during 2016.

 

Figure 2.18 Resources in discoveries by discovery size in four-year periods, Norwegian Sea (2000-15). Number of finds specified in the columns.

Figure 2.18 Resources in discoveries by discovery size in four-year periods, Norwegian Sea (2000-15). Number of finds specified in the columns.

 

 

Barents Sea

 

Exploration since 2000

A total of 71 exploration wells have been spudded since 2000, including 55 wildcats, with 30 discoveries made (figures 2.19 and 2.20).

Figure 2.19 Exploration wells spudded per year in the Barents Sea (2000-15).

Figure 2.19 Exploration wells spudded per year in the Barents Sea (2000-15).

 

Figure 2.20 Discoveries per year in the Barents Sea (2000-15).

Figure 2.20 Discoveries per year in the Barents Sea (2000-15).

 

Although petroleum operations have been pursued in the Barents Sea for more than 30 years, only two fields are on stream – the Snøhvit gas development from 2007 and the Goliat oil field since March 2016.

Both oil and gas were found during 2000 in 7122/7-1 (Goliat), which lies in the boundary zone between the Hammerfest Basin and the Finnmark Platform. The government suspended petroleum activities in the Barents Sea in 2001 to await the impact assessment for year-round petroleum activities off Lofoten and in the Barents Sea. In December 2003, the government resolved to continue petroleum operations in those parts of the Barents Sea already opened for such activities. Following this resumption, oil was proven in the Triassic by 7122/7-3 (Goliat) and interest in the Barents Sea increased. Before this discovery, the Upper Jurassic (Hekkingen formation) was the only confirmed source rock in the Barents Sea. The Goliat well also revealed that Lower and Middle Triassic organic shales are effective source rocks, which opens opportunities for making further commercial discoveries.

The 7220/8-1 (Skrugard) and 7220/7-1 (Havis) discoveries were made in 2011-12. The first of these proved oil and gas in Middle and Lower Jurassic reservoir rocks and represented the biggest discovery in the Barents Sea since Goliat in 2000. Also proving oil and gas, the 7220/7-1 (Havis) well was drilled about seven kilometres to the south-west of 7220/8-1 (Skrugard) and 100 kilometres north of Snøhvit. Now included in Johan Castberg, these two discoveries opened a new oil province in the Barents Sea. The success continued with 7324/8-1 (Wisting) in the Hoop area on the Bjarmeland Platform to the north-west, which proved oil in a very shallow Jurassic reservoir only 250-300 metres beneath the seabed.

Wells drilled during 2013-14 in previously explored areas on the Loppa High led to the 7120/1-3 (Gohta) and 7220/11-1 (Alta) discoveries. Resource growth has increased substantially since 2008, with the biggest rise in 2012-15 (figure 2.21). During this four-year period, the 7120/1-3 (Gohta), 7220/11-1 (Alta), 7220/7-1 Johan Castberg and 7324/8-1 (Wisting) discoveries made the biggest contributions to resource growth.

 

Figure 2.21 Resources in discoveries by discovery size in four-year periods, Barents Sea (2000-15). Number of finds specified in the columns.

Figure 2.21 Resources in discoveries by discovery size in four-year periods, Barents Sea (2000-15). Number of finds specified in the columns.

 

Figur 2.22 Completed wildcats and finding rate in the Barents Sea (2000-15).

Figur 2.22 Completed wildcats and finding rate in the Barents Sea (2000-15).

 

The finding rate has varied over the past 15 years (figure 2.22). It has been relatively high for the past five years. Exploration for the past three years Since the NPD’s previous resource report in 2013, 30 exploration wells have been spudded and 14 discoveries made. Drilled in 2013, the 7120/1-3 (Gohta) well proved oil in Permian carbonate rocks. Mobile oil had not previously been found in such rocks in Norway’s Barents Sea sector. The find was delineated in 2014, and further appraisal is planned.

The 7220/11-1 (Alta) discovery (figure 2.23) was the largest on the NCS in 2014, and one of the biggest in the world that year. It lies north of the Snøhvit area and contains oil in rocks which include carbonates in the Permian Gipsdalen group. Formation tests show a reservoir with good flow properties. Estimated to contain roughly 36 million scm oe, the discovery was appraised by four wells in 2015. Results from these are important for further exploration.

Six wildcats have been drilled in the Hoop area, yielding four discoveries. The first well, 7324/8-1 (Wisting), proved an oil column 50-60 metres thick in 2013 at a very shallow reservoir level in the Jurassic Realgrunnen sub-group. Well 7324/7-2 (Hanssen) was drilled in 2014 just north of “Wisting” and proved oil in the Jurassic Stø formation.

Made in 2014, the northernmost discovery on the NCS is 7325/1-1 (Atlantis). This small gas deposit in Upper Triassic rocks lies about 360 kilometres north of Hammerfest. Northwest of the Johan Castberg area, 7319/12-1 (Pingvin) proved gas in a 15-metre column in the Palaeocene Torsk formation. The discovery was made in a less explored area in a previously unconfirmed play.

The good drilling results in recent years have boosted interest in Barents Sea exploration. Ten and 13 wells were drilled in 2013 and 2014 respectively – the largest numbers on an annual basis in this region. The figure for 2015 was seven, with four of these being appraisal wells on the “Alta” discovery.

Eight to 10 exploration wells are planned in the Barents Sea during 2016.

 

Figure 2.23 Discoveries in the Barents Sea.

Figure 2.23 Discoveries in the Barents Sea.

 

Those who seek, find

 

Areas around “Alta” and “Gohta”

Many of the areas where exploration is being conducted today have been awarded and relinquished several times. New technology, new and better seismic surveys and innovative thinking and ideas among the oil companies mean that substantial petroleum resources are being proven in acreage explored several times. A series of examples include Johan Sverdrup, 35/9-7 (Skarfjell), 6406/12-3 S (Pil), the Johan Castberg discoveries, 7220/11-1 (Alta) and 7120/1-3 (Gohta).

Exploration of the “Alta” and “Gohta” area (south-western part of the Loppa High) began in 1985, when three production licences were awarded in the ninth licensing round. Drilled in 1985, the first two wells – 7120/1-1 and 7120/2-1 – encountered positive traces of oil in Upper Permian carbonate rocks. These have subsequently proved to lie in the rim zone of the “Alta” and “Gohta” discoveries. Five wells in all were drilled in these licences. While 7120/1-2 proved a small oil discovery, the others encountered only traces of hydrocarbons. The licences were later relinquished.

More than 20 years after the initial awards in the area, three new licences were allocated in the 2006 and 2007 APA rounds. Discoveries were made in production licences (PLs) 438 and 492 – the small 7120/2-3 S (Skalle) gas deposit and the 7120/1-3 (Gohta) oil and gas find respectively. The latter contains gross oil and columns of about 75 and 25 metres respectively in carbonate rocks of the Røye formation. Several new licences were awarded in the area through the 20th and 21st rounds in 2009 and 2011 respectively. Well 7220/10-1 in PL 533 proved a small gas discovery in Cretaceous and Jurassic rocks. Drilled in 2014 in PL 609, the 7220/11-1 (Alta) well encountered a total oil column of about 45 metres and a 10-metre gas cap in carbonate rocks with good reservoir properties. Four appraisal wells were drilled on the “Alta” discovery in 2015, all showing traces of petroleum. The age of the reservoir rock is uncertain, but is assumed to be Triassic and/or Permian.

 

Exploration history around 7220/11-1 (Alta) and 7120/1-3 (Gohta).

Exploration history around 7220/11-1 (Alta) and 7120/1-3 (Gohta).

 

Creaming curve for the NCS 2000-15

Creaming curve for the NCS 2000-15

 

Creaming curve for the NCS 2013-15

Creaming curve for the NCS 2013-15

 

The figures show cumulative resource growth in the North, Norwegian and Barents Seas between 2000 and 2015 and between 2013 and 2015.

The horizontal axis shows the number of wildcats in the order they were drilled. When a new discovery is made, the resources proven are presented as cumulative values along the vertical axis. A steep curve shows that considerable resources have been found with relatively few wells. When the gradient is shallow, the proven discoveries are small or many wells have been dry.

The Barents Sea had the smallest number of wildcats in 2000-15, but these proved relatively substantial resources (the curve is steep). Goliat, Johan Castberg (7220/8-1 and 7220/7-1), 7324/8-1 (Wisting), 7120/1-3 (Gohta) and 7220/11-1 (Alta) were the biggest discoveries in the Barents Sea during this period.

Most of the largest discoveries in the Norwegian Sea in 2000-15 were smaller than in the Barents or North Seas, but the curve nevertheless shows a steady growth in resources. The biggest finds in this period were Maria and 6406/9-1 (Linnorm).

The graph for the North Sea shows limited resource growth for the early wells, followed by several substantial discoveries which produced a steeper curve. It flattens out again before making a big upturn with Johan Sverdrup. After that discovery, the curve shows only moderate resource growth. Edvard Grieg, Ivar Aasen and Johan Sverdrup were the biggest discoveries in this period.

Where 2013-15 is concerned, the Barents Sea clearly has the highest resource growth with the smallest number of wildcats (23). Resources discovered in the Norwegian Sea were roughly half the size of those in the Barents Sea, but more wildcats (32) were drilled. The North Sea was roughly on a par with the Norwegian Sea for resource growth, but more than twice as many wells (71) were drilled there to prove the same quantity.

 

Steinulf Smith-Mayer has long experience as an NPD geologist.

Steinulf Smith-Mayer has long experience as an NPD geologist.