Profits on the shelf

According to Norwegian Minister of Petroleum and Energy Odd Roger Enoksen, continued high activity on the Norwegian continental shelf (NCS) is an incentive for the oil and gas industry to seize opportunities that arise from current and projected oil prices.

Norwegian oil production has averaged three million barrels a day since 1995, and the country is currently the seventh-largest oil producer and third-largest oil exporter in the world. Gas exploration is booming as well, with sales of 87 billion cubic metres (BCM) expected in 2006 and 94 BCM in 2007, and future gas sales will continue to escalate – with production of approximately 130 BCM estimated in 2013. This provides the basis for an impressive portfolio for the Norwegian state-owned company Petoro, whose main objective is to maximize economic value of the country’s oil and gas assets.

 

NCS-related investments saw a record year in 2006 with an estimated total investment of NOK 102.3 billion, or about $17 billion. The development of the Ormen Lange and Snøhvit fields represent the largest individual contributions to this increasing investment level. Still, this record will not stand long – only until 2007 when new investments of over NOK 105 billion is expected, and then investments are projected to increase to NOK 108 billion in 2008.

 

 

 Statoil’s Troll A on the Norwegian continental shelf (NCS) is the tallest structure ever moved by humans over the surfce of the Earth.
© Dag Myrestrand/Bitmap

 

The Rush is On
At the deadline for application to the NCS Awards in Predefined Areas (APA) 2006, the Ministry of Petroleum and Energy had received applications from 43 companies. The range of applicants is wide and the response impressive, with a decision pending in December 2006 as this issue went to press. Minister Enoksen was quoted regarding the APA process, “I am pleased to note the extensive interest for acreage in the mature areas of the NCS, and that a total of 43 companies have applied. Even though most of these areas have been available for exploration for several years, the industry sees good opportunities in the APA areas. This shows that the NCS is competitive.” 

 

Competitive indeed. Historically, there have never been more production licenses or more available exploration acreage on the NCS than today. In total there are 294 active production licenses on the Norwegian shelf, with 42 licensees and 27 operators currently active. Together with the extensive interest for APA 2006, this is a good basis for future activity on the NCS.

 

Search & You Will Find
Norwegian expertise uses extensive pump technology to harvest more oil out of the NCS. In June 2006, Aker Kværner and Statoil signed an intention agreement for Aker’s delivery of a new-generation underwater pump and injection system. The agreement is worth NOK 200 million, an excellent investment given that Statoil could realize an additional income of NOK 3 to 4 billion at an oil price of only $30 per barrel – a conservative estimate. Output from Tyrihans in the Norwegian Sea alone is expected to increase by 10% when new pump technology comes online in 2009/10.

 

The use of seismic technology is important on the NCS, and with focus on reservoir management and improved oil recovery, seismic data acquisition has nearly doubled over the past 2 years. Statoil’s high level of seismic exploration reflects the company’s focus on these areas, a perspective shared by many on the shelf.

 

The Northern Frontier
The Barents Sea represents new opportunity for the oil and gas industry, and despite its northern location, experience shows that some of the drilling aspects are no more complicated there than in other parts of the NCS. In fact, Petroleum Safety Authority Norway director Øyvind Tuntland observes, “On the contrary, reservoir pressure is low compared with some areas of the North and Norwegian Seas. That cuts the risk of uncontrolled blowouts.” 

 

High activity on the NCS in the Barents is typified by the Snøhvit developmental area – this includes the Snøhvit, Albatross and Askeladd fields being developed by Statoil in cooperation with a number of international partners. Snøhvit begins production in 2007 and will continue until at least 2035. This development also presents a wealth of opportunities for suppliers, including Fantoft Process Technologies, a subsidiary of Kongsberg Maritime, which is supplying D-SPICE (Dynamic Simulator for Process Implementation and Control Engineering) dynamic simulation software that is proving invaluable to the project so far.
 

Renovation & Renewal
It makes good bottom-line business sense to use Norwegian technology to maximize NCS oil and gas production. Working in close cooperation with Aker Kværner Offshore Partner, Statoil has realized savings of NOK 400 million in the Tampen area as a result of a comprehensive M&M (Maintenance and Modification) programme. All operations in this part of the North Sea have been allocated to Aker, encompassing nine platforms on the Statfjord, Gullfaks, Snorre and Visund fields. Modernization is also key as Statoil has awarded a NOK 125 million contract to Leirvik Module Technology for the enhancement of Snorra A, thus extending the production life of the platform.
 

Rebuilding also means more oil from oil producer Hydro’s perspective. As part of the Oseberg East project a 960-tonne mud treatment module will be towed from the coast of Norway – then lifting the barge onto the Oseberg East platform – with the goal of drilling new wells. This is designed to extend the life of the platform until 2024 and to make possible the production of 40 million additional barrels of oil.

 

Below the Surface
There is a great deal of action – and profits – to be found beneath the surface of the NCS. A major subsea installation agreement awarded by Statoil to Subsea 7 covers all installation work in 2007 and 2008, with three contracts signed thus far worth nearly $50 million total. The three projects cover subsea installation work at Tyrihans, oil recovery at Tordis in the North Sea, and an Yttergryta template installation.

 

Kongsberg Maritime’s HUGIN redefines subsea exploration on the NCS and beyond as a truly unique autonomous underwater vehicle. With an ability to survey the seabed at depths up to 4,500 metres, HUGIN has already surveyed a distance of over 120,000 kilometres of deep seabed for offshore companies.

 

Aker Kværner’s contract with Statoil for a semi-submersible platform on the Gjøa oilfield was finalized in October 2006. The dimensions of this platform are impressive, measuring topside 110 metres long and 85 metres wide, weighing 20,000 tonnes, with a hull that weighs 14,000 tonnes. At peak activity, there will be 500 Aker engineers working on this project. Gas from this platform will be exported to Scotland, while the oil will go to Norway.

 

 

Far north on the NCS lies some of the richest oil and gas fields, such as Statoil’s Snøhvit.
© Statoil

 

Making Connections
Nexans and BP are also making history with the redevelopment of the Valhall oil field – making it the first offshore oil field to receive all of its electricity from land. Valued at !98 million, this contract encompasses Nexan’s manufacture, delivery and installation of 292 km of HVDC (High Voltage Direct Current)-IRC maritime cable, separate fibre-optic submarine cable, as well as associated equipment both at the land station and on the platform.

 

Gas exports from Norway to Europe are on the rise, increasing noticeably as a result of the Kristin field startup and the expansion of the Karstø plant north of Stavanger. Over the past year, 7,800 kilometres of pipeline have transported 80 BCM of gas between Norway and Europe.

 

Keeping the Neighbours Warm
Statoil is well positioned to supply the UK with gas in future years with the Langeled pipeline coming online. This is also helping to lay the groundwork for increased gas export to Europe, and just in time. Europe’s demand for fossils fuels is expected to increase by 50% by 2030, with gas demand increasing the most. 

 

The North Sea’s Ormen Lange will be the second-largest gas field on the NCS and a major new gas source for Europe when production starts – now scheduled for October 2007. Gas processing from Ormen Lange will take place at Nyhamna and will be supplied to the UK through Langeled – the world’s longest subsea pipeline. Hydro’s development of this $11 billion project at a water depth of around 1,000 metres is truly an epic undertaking. (For more information regarding these developments, see the following article.)

 

Expanding Opportunities
And the NCS may even be expanding – this is to be decided in 2007 by the UN Convention on Law of the Sea. In 1996, the Norwegian Ministry of Foreign Affairs assigned the Norwegian Petroleum Directorate the task of collecting data and mapping areas in the Norwegian Sea and Barents Sea to find out how far the Norwegian shelf extends beyond the 200-mile limit.

 

Should Norway win acceptance for its position, the Norwegian shelf will grow by approximately 250,000 square kilometres. This would add to the already impressive numbers coming from the Norwegian Petroleum Directorate indicating that, in addition to the large finds on the shelf, there are a great number of smaller finds with an estimated value of $130 billion at today’s oil prices.

 

 

At depths of 4,500 metres, HUGIN can locate small objects where no other technology has a chance.
© Kongsberg Maritime

 

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