Licence to assess
17/12/2007 Expectations are high ahead of the imminent conclusion to the awards in predefined areas (APA) process for 2007. For the NPD, three considerations are crucial in allocating licence interests among a record number of applicants: quality, quality and quality.
Text: Bjørn Rasen, Photo: Emile Ashley
A lot of blocks are due to be allocated in the APA 2007 (TFO 2007) round. The results will be announced early in the New Year.
Interest in the APA 2007 is record high, with a steady rise in the number of new players seeking licence holdings. APA 2007 has attracted applications from 46 companies. The acreage on offer may be fairly small, but much work is devoted to assessing the relevant areas and who will receive what.
Roughly 30 NPD staffers with various geoscience backgrounds have been involved in the job of assessing applications by Abryl Ramirez, the APA 2007 coordinator.
“Companies were given from February to September to prepare their applications,” she explains. “Then we take from 28 September to 31 December to assess all the material which comes in.
“That work has top priority for everyone concerned during this hectic period. We know it means a lot for the companies, after all.”
All applications are treated in confidence, and cannot be found on any assessor’s desk. Nor are they a subject for discussion over lunch in the canteen.
According to Ms Ramirez, securing acreage on the NCS should not be an easy process even though an APA application requires less documentation than a normal licensing round.
“This process is and must be resource-intensive,” she says. “That’s the be all and end all.”
An applicant company must have financial muscle, a good grasp of the geology, and experience from the NCS or areas with similar conditions.
This year’s applications include six newcomers to the APA: Bayerngas, Concedo, Dana Petroleum, Exel Expro, Skagen 44, Skeie Energy and Sagex Petroleum. But some of the biggest companies are absent, such as BP and Chevron.
The NPD exploits its big database and makes overall assessments – which does not necessarily mean that success goes to the companies offering the biggest seismic and drilling programmes.
Ms Ramirez gives weight to an application’s realism. The work programme should appear sensible in relation to known problems in the relevant area.
The NPD looks only at what is documented in the application, and assesses its technical quality. Each application is read by at least two people.
After that, personnel from the Ministry of Petroleum and Energy (MPE) and the NPD meet to draw conclusions. The MPE then awards the licences.
Once the recommendations are clear, the MPE calls in each company for a final negotiating meeting, which is also attended by the NPD.
The authorities must assure themselves, for instance, that conditions relating to the environment and fishing interests are fulfilled.
In the Barents Sea, moreover, the considerations in the integrated management plan for these northern waters must be taken fully into account.
Ms Ramirez explains that an extensive process precedes the receipt of applications, with the NPD assessing the potential of acreage on offer as revealed by available data.
Based on information about prospects, discoveries, plays and economics, this evaluation is submitted to the MPE by the deadline for applications.
“The applications show that views about the acreage put on offer can differ, both between the companies and between them and the NPD,” Ms Ramirez notes. “That’s highly interesting.”
She adds that all the information gathered about the NCS is getting more and more important as the region becomes increasingly mature.
Director Sissel Eriksen at the NPD takes a positive view of the many new players who are submitting applications, and sees this as confirmation that the NCS remains attractive.
“More players mean a greater variety of ideas, which in turn promotes competition,” says Ms Eriksen who is responsible for APA 2007.
The predicted production curve for the NCS indicates a stable rate of decline. No major development projects are in the offing after the completion of Snøhvit and Ormen Lange.
Calls have been made by the NPD for a stronger commitment to improved recovery, new technology, cost-cutting and other measures.
Predictable provision of new acreage through the APA rounds also makes an important contribution in this respect, Ms Eriksen believes.
“We must explore in order to find additional resources and maintain output. The APA also embraces time-critical infrastructure, so we’re urging more exploration.”
APA rounds since 2003
The APA system replaced the earlier North Sea rounds in 2003.
Each production licence has a work programme which the licensees undertake to complete. The 2006 programme included the drilling of 11 wells.
A total of 58 new production licences were awarded in 2006, a relatively high figure given that almost 450 such licences have been issued on the NCS.
The 2007 round covers acreage in the North, Norwegian and Barents Seas.
More than 30 NPD staff have been involved in reading the big pile of applications for APA 2007 (TFO in Norwegian). Coordinator Abryl Ramirez is in the centre of the F. With her are (rear, from left) Inger Helene Madland, Wenche Tjelta Johansen, Stig Pedersen, Elisabeth Sværen, Morten Sand, Bernt Egeland (front, from left) Kjetil Kaada, Nils Rune Sandstå, Anne Jørpeland and Ine T Gjeldvik.