3 Exploration

12/01/2017

Many, but small discoveries

After several years of high exploration activity, 36 exploration wells were drilled in 2016, 20 fewer than the preceding year. This is mainly due to a lower oil price and cost cuts.

When the oil companies have to improve cash flow, exploration investments are usually impacted first. This is because exploration expenses can more easily be suspended or adjusted along the way than expenses that are linked to fields in operation and approved development projects. This development is not unique to Norway, but is rather part of an international trend that follows from the companies' adaptations to a situation with lower oil prices.

Historically, in times such as these, oil companies are more cautious and prioritise exploration in familiar/mature areas where discoveries are more likely – but often small discoveries – where the resource potential is high, but the probability of discovery is lower. 2016 has therefore seen considerable exploration in areas near existing fields, and many, but smaller discoveries have been made.

Of the 36 spudded exploration wells, 28 are wildcat wells and eight are appraisal wells. With 12 spudded exploration wells, Statoil has drilled the most in 2016, followed by Wintershall with seven and Det norske oljeselskap (now Aker BP) with five.

Eighteen discoveries were made on the Norwegian shelf in 2016, one more than in 2015. Exploration activity is greatest in the North Sea, where a total of 14 discoveries have been made. Two discoveries were made in both the Norwegian Sea and the Barents Sea. See Figure 3‑1.

Figure 3‑1: Spudded exploration wells

Most discoveries are located near existing infrastructure and can quickly become profitable developments if they are tied into fields and facilities in operation. Resources in the new discoveries amount to between 18 and 44 million standard cubic meters (Sm³) of recoverable oil and between 12 and 33 billion Sm³ of recoverable gas.

The largest discoveries were Faroe's oil and gas discovery in wildcat well 31/7-1 (Brasse), Det norske's (now Aker BP) oil discovery in wildcat well 25/2-18 S (Langfjellet) and Engie's oil and gas discovery in wildcat well 36/7-4 (Cara). They are located in the central and northern North Sea.

Around 30 wells are expected to be drilled in 2017, a relatively high number in a historical perspective. However, the decline in the number of exploration wells is cause for concern. In order to maintain oil and gas production beyond 2025, new profitable resources must be proven. See Figure 3-2. High exploration activity is therefore important.

Figure 3‑2: Resource growth and production

Good access to data, consistent access to attractive acreage and stable framework conditions are the authorities' contribution toward maintaining a high level of exploration activity.

Although a decline in the number of exploration wells is expected in 2017, the number of applications and awards in the most recent licensing rounds shows that there is still considerable interest in the Norwegian shelf. In addition, several of the planned wells in 2017 have high potential and substantial geological information value.

There has been a stable, high level of awards of new production licenses in recent years, including in APA 2015 and the 23^rd licensing round. The interest in APA 2016 was on a par with previous years.

The authorities have started work on the 24^th licensing round. The deadline for nominating blocks for the licensing round was 30 November 2016, and the authorities expect the schedule to be the same as for previous numbered rounds.

The North Sea

2016 was the 50^th anniversary of the first wildcat well being drilled in the North Sea. After such a long time and many wells, it is gratifying to see that discoveries are still made in the area.

The oil company Det norske (now Aker BP) proved oil in wildcat well 25/2-18 S (Langfjellet). The discovery was delineated with wells 25/2-18 A and 25/2-18 B. The preliminary estimate of the size of the discovery is between 3.8 and 12 million Sm³ of recoverable oil. This makes the discovery one of the year's largest.

Northeast of the Martin Linge field, Total has proven gas and condensate in wildcat well 30/4-3 S (Herja). The discovery has been estimated at 2.0-12 million Sm³ of recoverable oil equivalents. The resources will be produced from Martin Linge when the field starts up.

West of Oseberg, Statoil made a minor gas discovery in wildcat well 30/9-28 S (B-Vest). The discovery is estimated to contain between 1.2 and 1.7 million Sm³ of recoverable oil equivalents.

Statoil has carried out a drilling campaign in the North Sea in the area where the 30/11-8 S (Krafla) discovery was proven in 2011. Several discoveries were made, starting with a minor gas discovery in 30/11-11 S (Madam Felle) with 0.9-1.6 million Sm³ of recoverable oil equivalents. The next discovery was 30/11-12 S (Askja SE), which proved 0.8-1.7 million Sm³ of recoverable oil. Appraisal well 30/11-12 A was dry. 30/11-13 (Beerenberg) proved gas and condensate, and the discovery was between 1.8-3.2 million Sm³ of recoverable oil equivalents. The last wells in the drilling campaign were 30/11-14 (Slemmestad) and 30/11-14 B (Haraldsplass). They proved gas-condensate and oil, respectively, with 1.4-2.5 million Sm³ of oil equivalents in 30/11-14 and 1.8-3.1 million Sm³ of oil equivalents in 30/11-14 B.

South of the Brage field, Faroe made an oil and gas discovery in wildcat well 31/7-1 (Brasse), which was delineated by 31/7-1 A. So far, the discovery is estimated to contain between 8.1 and 15 million Sm³ of recoverable oil equivalents and the reservoir quality is good. 31/7-1 was thus among last year’s largest discoveries. The licensees will consider tie-in to existing infrastructure on the Brage field.

Wintershall has proven oil in wildcat wells 35/11-20 S (Orion) and 35/11-20 B (Mira). These wells are located near the Vega field. Appraisal wells 35/11-20 A and 35/11-20 B were also drilled in the area. Overall, the discoveries are estimated at between 0.6 and 4.5 million Sm³ of recoverable oil. Wintershall also encountered oil in wildcat well 35/8-6 A (Robbins) just northwest of the Vega field. The size of this is estimated at 0.7-0.8 million Sm³ of recoverable oil.

The oil and gas discovery in wildcat well 36/7-4 (Cara) was also one of the largest last year, and is estimated at between 4.5 and 12 million Sm³ of recoverable oil equivalents. The discovery was made by Engie, and has good reservoir properties.

The Norwegian Sea

The Norwegian Sea has seen little exploration in 2016, but an increase is expected in 2017. Among other things, a wildcat well will be drilled in deep water, which may provide additional resources for the Aasta Hansteen discovery.

In the Norwegian Sea, just north of the Njord field, Statoil proved petroleum deposits in two wells.  Wildcat well 6407/7-9 S (Nordflanken 2) proved oil and gas/condensate. 6407/7-9 A (Nordflanken 3) proved gas in the Tilje formation and Åre formation. The size of the discoveries is 0.2-2.0 million Sm³ of oil equivalents in 6407/7-9 S and 0.2-1.0 million Sm³ of recoverable oil equivalents in 6407/7-9 A.

The Barents Sea

The Barents Sea has also seen relatively few exploration wells drilled in 2016 with few and small discoveries. Several appraisal wells were drilled on the Alta discovery and Wisting discovery, which have significance for further activity in the area. The appraisal well on Wisting was a successful test of how it is possible to drill horizontally in very shallow reservoirs. This is important knowledge as some exploration wells in the Barents Sea explore shallow exploration targets.

Lundin proved gas in the Barents Sea in wildcat well 7130/4-1 (Ørnen), and the size is estimated at 0.4-1.5 million Sm³ of recoverable oil equivalents.

Lundin has also proved oil and gas in wildcat well 7220/6-2 R (Neiden) east of the Johan Castberg discovery. The discovery has so far been estimated at 4-9 million Sm³ of recoverable oil equivalents.

A number of exploration wells will be drilled in the Barents Sea in 2017, where one of the most interesting is planned to be drilled in the newly opened area in the Norwegian part of the Southeastern Barents Sea. This is one of the major structures in this area, and the well will contribute important new knowledge about the area.

Outlook

The NPD has not carried out new analyses for undiscovered resources in 2016. The estimate has been reduced by the volume discovered in 2016 and is around 3 billion Sm³ of oil equivalents. However, the volume is uncertain – if the high estimate is correct, there could be as much as 5.5 billion Sm³ of oil equivalents.

More than half of the undiscovered resources are in the Barents Sea, which is also where the most exciting exploration wells in 2017 can be found. It is gratifying that the companies that will be drilling exploration wells in 2017 have high expectations for the prospects.

Cooperation agreement with Russia

In order to increase geological understanding on both sides of the demarcation line in the Barents Sea, a cooperation agreement was signed last summer with Russia concerning exchange of seismic data. This is important for further exploration of the Barents Sea.

Table  3‑1: Recoverable resources in new discoveries in 2016

The Shelf in 2016

• Prepared for the future >>
• 1. Investment and cost forecasts >>
• 2. Petroleum production >>
• 3. Exploration
• 4. Field developments >>

Updated: 25/01/2017

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