KNARR MILESTONE BG Group’s FPSO making its way to Norway from South Korea. Page 4 CALL FOR CCS TAX HIKE Norwegian government challenged to increase carbon dioxide emissions levy for offshore projects. Page 5 DATE FOR PEREGRINO Statoil aims to make final investment decision for heavy oil field off Brazil later this year. Page 6 AASTA HANSTEEN HOPE Statoil aims to find tie-back prospects for marginal field in drilling programme next year. Page 8 GAZPROM CHALLENGE Russian gas monopoly’s plans to double Arctic reserves by 2024 call for at least 30 rigs and major building programme. Page 10 STATOIL is set to launch as soon as next month the first major topsides tender for the giant Johan Sverdrup oilfield development in the Norwegian sector of the North Sea — as home-grown contractor Kvaerner, meanwhile, says it believes it is favourably positioned to secure coveted topsides work on the project. Pages 2&3 Visit us at ONS 2014 - Booth #513 in Hall E Monitor. Maintain. Maximize. www.fmctechnologies.com/ons Come & visit us at stand J980/7 Statoil fires up Johan Sverdrup WEDNESDAY 27 AUGUST 2014 upstreamonline.com OFFICIAL SHOW DAILY PRODUCED BY UPSTREAM INSIDE TODAY IN THIS ISSUE ONS brings ‘the fox’ to Stavanger Page 14 Prize-winning innovators Page 15 Conference and Centre Court programmes Page 15 ‘Cost cuts require co-operation’ Pages 16&17 Request for Norway to resume lead role in CCS Page 18 Change in action at ONS Page 19 Get up to speed with the latest news from the world of oil and gas. Visit us at Hall M, Stand 1266 or log on to www.upstreamonline.com
Transcript
KNARR MILESTONEBG Group’s FPSO making its way to Norway from South Korea. Page 4
CALL FOR CCS TAX HIKENorwegian government challenged to increase carbon dioxide emissions levy for offshore projects. Page 5
DATE FOR PEREGRINOStatoil aims to make final investment decision for heavy oil field off Brazil later this year. Page 6
AASTA HANSTEEN HOPEStatoil aims to find tie-back prospects for marginal field in drilling programme next year. Page 8
GAZPROM CHALLENGERussian gas monopoly’s plans to double Arctic reserves by 2024 call for at least 30 rigs and major building programme. Page 10
STATOIL is set to launch as soon as next month the first
major topsides tender for the giant Johan Sverdrup
oilfield development in the Norwegian sector of the North
Sea — as home-grown contractor Kvaerner, meanwhile,
says it believes it is favourably positioned to secure
coveted topsides work on the project. Pages 2&3
Visit us at ONS 2014 - Booth #513 in Hall E
Monitor.Maintain.Maximize.
www.fmctechnologies.com/ons
Come & visit us at stand J980/7
Statoil fires up Johan Sverdrup
WEDNESDAY 27 AUGUST 2014 upstreamonline.com
OFFICIAL SHOW DAILY PRODUCED BY UPSTREAM
INSIDE
TODAYIN THIS ISSUEONS brings ‘the fox’ to Stavanger Page 14
Prize-winning innovators Page 15
Conference and Centre Court programmes Page 15
‘Cost cuts require co-operation’ Pages 16&17
Request for Norway to resume lead role in CCS Page 18
Change in action at ONS Page 19
Get up to speed with the latest news from the world of oil and gas. Visit us at Hall M, Stand 1266 or log on to www.upstreamonline.com
2 Show Daily Wednesday 27 August 2014
NORWAY
STATOIL is set to launch as soon as next month the first major top-sides tender for the giant Johan Sverdrup oilfield development in the Norwegian sector of the North Sea.
Project manager Kjetel Digre told Upstream that Statoil has al-ready started the screening proc-ess covering the 15,000-tonne top-sides for the field’s drilling platform.
“This phase will take at least three
weeks, then we will formally send out the tender documents to the con-tractors the partnership agrees to go forward with,” he added.
The tender process could then head into the award phase around the end of the year, leading on to a contract being placed early in 2015.
The contract for the drilling plat-form topsides will be followed by tenders for another three platform topsides and two more jackets. Two initial jackets were awarded
to Norwegian contractor Kvaerner Verdal earlier this summer.
Digre said Statoil aims to have all these platform engineering, procurement and construction contracts awarded by the end of the first half of 2015.
Digre, who has recently re-turned from meetings with con-tractors in South Korea where he discussed the upcoming tenders, said that potential bidders for the large projects would have to be
experienced with large deliveries and Norwegian standards.
“Due to the size and demanding delivery schedule, several con-tractors see the advantage of es-tablishing consortia for these ten-ders,” he said.
He declined to name the likely bidders but said that the designs of the drilling platform and the riser platform are both particularly de-manding and will favour experi-enced yards. In total, the first-phase
Progress: Statoil chief executive Helge Lund
Photo: KAIA MEANS
Sverdrup out of the start gateOperator Statoil eyes launch of giant Norwegian project’s first major topsides tenders as early as next month
AKER Solutions will not compete for the engineering, procurement and construction contracts being tendered for the four platforms destined for the Johan Sverdrup project off Norway.
Valborg Lundegaard, Aker Solutions’ head of engineering, told Upstream that the company is satisfied with its current Johan Sverdrup contract. “The framework contract we were
awarded in December 2013 is probably the most comprehensive and important contract in the company’s history,” she said. “We will provide engineering services, procurement and management assistance for as many as 10 years.”
According to Lundegaard, the front-end engineering design work on the first phase of Johan Sverdrup is two-thirds completed.
“We have put together our biggest-ever front-end engineering design team for this project,” she said.
According to the engineering company, many contracts need to be in place next year for the field to start production as planned in 2019.
The final FEED report is scheduled for delivery before the end of the year.
Aker Solutions steps back from project’s platform EPC jobs
investments, from 2014 to 2019, will be between Nkr100 billion and Nkr120 billion (between $16.6 bil-lion and $20 billion).
These include a field centre and four platforms, wells, export solu-tions for oil and gas, plus power supply.
The estimate also includes un-foreseen costs and provisions for market adjustments.
Preparations will also be made for increased oil recovery during the first phase.
At plateau, Sverdrup will pro-vide annual income of about Nkr40 billion, whereas operating costs during phase one are pro-jected to come in at Nkr3 billion to Nkr5 billion per year.
Wednesday 27 August 2014 Show Daily 3
NORWAY
THE boss of Norwegian contractor Kvaerner believes the company is favourably positioned to secure coveted topsides work on the gi-ant Johan Sverdrup project off Norway after cutting costs and fine-tuning its delivery model.
The engineering and construc-tion player is now looking to lever-age its fruitful working relation-ship developed with operator Lundin Petroleum on the Edvard Grieg project to gain a share of the spoils on Sverdrup, in which Lun-din is a partner.
Kvaerner has forged an alliance with US player KBR to target upcoming topsides awards on Johan Sverdrup — with working operator Statoil aiming to dish out engineering, procurement and construction contracts before Christmas — having already picked up work on a pair of plat-form jackets for the project worth Nkr3 billion ($492 million).
Kvaerner chief executive Jan Arve Haugan told Upstream at the ONS conference in Stavanger he believes the contractor would “have an edge for EPC contracts” on the giant scheme and is optimistic over its chances of suc-cess, despite likely fierce price competition from low-cost Asian rivals.
Kvaerner is now looking to turn the tables on competitors after losing out to foreign yards in the previous round of fabrication awards off Norway after stream-lining its delivery model to include more global procurement on the fabrication side as it works towards a 15% cost reduc-tion goal.
“We are now using several international sub-contractors and are able to pre-fabricate platform modules overseas, although final assembly will be carried out in Norway to ensure regulatory compliance and deliver a complete facility to avoid carry-over costs in the form of offshore completion work,” Haugan said.
He added that the contractor is strongly focused on minimising costs related to rectifying errors on quality at an early stage to make it more competitive in the global arena as well as reducing the number of man hours on engineering, which has been a
key factor in cost increases in Nor-way.
In addition, the contractor is seeking to adopt more standardi-sation by using “copy-and-paste” solutions rather than more costly customised fabrication elements, he added.
Kvaerner was selected by Lun-din to build both the topsides and jacket for the Edvard Grieg plat-form, with the jacket already de-livered and construction of the topsides at the Stord yard on track for scheduled field start-up in late 2015.
Haugan hopes timely execution to date of the reference project for the Swedish operator puts it in good stead for potential further awards on Sverdrup, although this will be contingent on the pro-curement strategy to be adopted on the latter project.
Haugan believes the industry has seen that low tender bids do not necessarily equate to lower final project costs.
“We know there will be a tough competition for Sverdrup but it is high on our radar screen and we will be fighting for contracts,” he said.
Lundin Norway managing di-rector Torstein Sanness said the company’s procurement strategy on the Nkr25 billion Edvard Grieg project was based on balanc-ing the key considerations of cost, quality and timely delivery, mindful of the fact that field start-up delays can lead to major losses in net present value for op-erators.
He has estimated the company has saved around Nkr1 billion on Edvard Grieg by building the entire platform in Norway.
Sanness said that ostensibly lower construction costs at South Korean yards are offset by a higher risk of delays, less Norsok expertise, increased transport requirements and a need for more personnel to monitor project progress.
However, he would not be drawn on whether Lundin would be extending its fabrication part-nership with Kvaerner to future development projects — such as Gohta in the Barents Sea — and said “the best competitor will win contracts”.
In discussion: Lundin Norway managing director Torstein Sanness (left) and Kvaerner chief executive Jan Arve Haugan at ONS Photo: SVEND THURMER/KVAERNER
Kvaerner flexes topsides muscleNorwegian contractor believes it is well positioned to secure work on Johan Sverdrup projectSTEVE MARSHALLOslo
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4 Show Daily Wednesday 27 August 2014
NORWAY
UK PLAYER BG Group is approach-ing a new milestone for its Knarr development as the floating pro-duction, storage and offloading facility is making its way from South Korea to Norway.
The Teekay-owned Knarr FPSO left the Samsung Heavy Indus-tries yard in July and is currently sailing up along Africa’s west coast in good weather, Marianne Eide, BG vice president in charge of offshore field development and delivery in Europe, told Upstream.
Expected to arrive in Norway in a month’s time, the vessel will make a short quayside stop before sailing to the field for hook-up and commissioning.
Because this process requires calm seas, production could start in December at the earliest, or slip as far as into the second quarter of next year, depending on the weather, Eide said.
Knarr is BG’s first major oper-ated development in Norway since the company arrived in the coun-try 10 years ago.
It also operates the subsea Gaupe field, which is tied back to BG-operated facilities in the UK sector of the North Sea.
Knarr lies in the northern part of the Tampen area of the North Sea, north of the Visund and Gjoa
fields. Discovered in 2008, the field is estimated to hold about 70 million barrels of oil.
After drilling the production wells for Knarr, BG later this year plans to drill one or two addition-al exploration wells in the area, hoping to find extra resources for the field, Eide said.
The company is also open to tying in other discoveries to Knarr, such as the Total-operated Garantiana discovery farther south.
The FPSO agreement with Teekay is flexible, allowing BG to keep the vessel for up to 20 years if more resources are found.
The company’s Norwegian strategy was initially to look for small discoveries within tie-back distance of its UK facilities, but after the success with Knarr the company is now looking prima-rily for more greenfield opportu-nities, Eide said.
In addition to the North Sea, the company is also active in the Barents Sea, drawing on BG’s experience from other parts of the world when looking at new plays.
The Norwegian Sea is no longer a priority after the deep-water Gullris prospect in 2011 turned up dry, said Eide.
On course: the Knarr FPSOPhoto: BG GROUP
BG closing in on new milestone at KnarrFPSO unit making its way to Norway from South Korea
The World Petroleum Council (WPC) is bringing together key experts and decision makers for the
first WPC Leadership Conference on Responsibility, Cooperation and Sustainability
NORWAY’S record-high offshore carbon dioxide emissions tax fac-es the prospect of being increased further as politicians seek ways to ensure that future offshore projects will be powered by elec-tricity from shore.
Ola Elvestuen, the leader of the Norwegian parliament’s Energy Committee and spokesman for en-ergy issues in the Liberal party, told Upstream that a CO2 tax will be a central point in this autumn’s discussion covering next year’s national Budget.
The budget is due to be present-ed by the government on 8 Octo-ber, after which there is likely to be a period of debate in which mi-nority parties seek to influence the final version.
The Conservative minority gov-ernment will depend on support from the Liberal party and the Christian People’s party to get a national Budget approved in par-liament.
Both of these parties have said that offshore emissions on the Norwegian continental shelf must
be reduced. “The offshore sector represents 25% of Norway’s total CO2 emissions. It is necessary that these emissions are reduced. Power from shore is an important measure to achieve this,” Elves-tuen said.
He added that it was unfortu-nate that parliament this spring had to instruct companies to use power from shore for the Utsira High area, which includes the Johan Sverdrup, Gina Krogh, Edvard Grieg and Ivar Aasen fields.
“We want to prevent future processes from ending up the same way,” he said.
“Therefore, we need to look at what is necessary to make sure that partners in future field devel-opments go for power from shore. One option is an increase in the CO2 tax, another is to establish a fund to support these projects financially,” he said.
Elvestuen explained that land-based industry in Norway has for years had a fund supporting efforts to reduce emissions. “We
Tax talks: the Norwegian parliament’s Energy Committee
leader Ola ElvestuenPhoto: IDA VON HANNO BAST
CO2 tax hike on Norway agendaGovernment may further increase levy on offshore projects in bid to get Budget approved
OLE KETIL HELGESENStavanger
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The Norwegian parliament has committed to reducing Norway’s CO2 emissions from 52 million tonnes to 47 million tonnes by 2020.
Elvestuen said his party will enter talks on the national Budget
with the clear aim of putting one of these options in place.
In 2012, the Norwegian govern-ment doubled the carbon tax paid by the petroleum industry to Nkr410 ($68) per tonne of CO2 emitted.
A recent study by consultants at IHS for industry body Norwegian
Oil & Gas concluded that Norway has the world’s most stringent cli-mate policy framework in place today.
“The increased CO2 tax, com-bined with the government’s recent reduction of uplift in allow-ances, are a concern for the indus-try,” the report concluded.
6 Show Daily Wednesday 27 August 2014
BRAZIL
STATOIL is working towards a po-tential final investment decision towards the end of this year cov-ering the phase two development of its Peregrino heavy oil field in Brazil.
Emil Volckmar, Statoil’s project manager for the phase two devel-opment told an Intsok-organised seminar at ONS 2014 that if all goes well the project could start produc-ing oil for the Norwegian operator late in 2019 or early in 2020.
Currently, Volckmar said, Peregrino is producing about 100,000 barrels per day via the first-phase project that involves oil from two wellhead platforms being processed on the develop-ment’s floating production, stor-age and offloading vessel.
The FPSO is now owned by Stat-oil and operated by floater giant BW Offshore and Volckmar said that its capacity will be increased slightly in the years ahead. The
Peregrino phase two development will centre on the the installation of a new wellhead platform with 60,000 bpd of oil capacity that will feed that output through to the FPSO where it will be proc-essed.
The new project will make use of capacity that becomes available on the FPSO as output from the first phase development starts to decline.
Volckmar said reserves in the range of 150 million to 250 million barrels of oil are estimated to be available for the second-phase de-velopment, adding that the tally will “probably be towards the high side” of that range.
The wellhead platform to access these second-phase reserves will include a 16,000-tonne deck atop a 9000-tonne jacket with 25 well slots, 120-person living quarters and power facilities.
Tendering for construction of
the platform and associated facilities has not yet been started by Statoil.
However, Volckmar said that process will take place in time for contract awards in late 2015 or early 2016.
In the meantime, Statoil will “very soon” finalise its contract-ing strategy, including whether to pursue an engineering, procure-ment and construction approach or separate out engineering and fabrication of the platform.
The subsea pipeline and riser packages are likely to be contract-ed via an EPC approach, he added.
Peregrino lies 95 kilometres off Brazil in about 100 metres of water in a large area that was formerly known as blocks BM-C-7 and BM-C-47.
Statoil operates the field with a 60% stake, and with Chinese play-er Sinochem holding the remain-ing 40%.
Major asset: Statoil’s Peregrino FPSO Photos: OYVIND HAGEN/STATOIL
Statoil eyes Peregrino decisionNorwegian player aims to make final investment decision on second phase of heavy oil field development off Brazil later this year
MARK HILLIERStavanger
In action: the Peregrino FPSO
for an oil and gas company to become part of the climate solution. By
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8 Show Daily Wednesday 27 August 2014
NORWAY
STATOIL is hoping that an explor-ation programme in the Nor-wegian Sea next year will find tie-back prospects that can improve the field economics of the pioneer-ing but marginal Aasta Hansteen project.
Aasta Hansteen project man-ager Torolf Christensen, speaking to the press at the ONS conference in Stavanger, said the Norwegian state oil company will drill two wells on the field licence in 2015.
He said the prospects offer “some good potential and a good supplement, if we make a discov-ery, to the volumes and reserves that we have”.
Statoil hopes to enhance the overall return on the Nkr57 billion ($9.2 billion) that the licence part-ners plan to spend on developing Hansteen.
Christensen said the project, so far, is on time and within budget, but he confessed that the field eco-nomics on the frontier scheme are “fairly marginal”.
Hansteen and the associated Polarled gas export pipeline rep-resent “the largest industrial project in Norway at the moment” and enable the country to extend its gas pipeline network beyond the Arctic Circle for the first time.
“We have designed a solution that will serve as a hub in the area,” he said.
The spar production platform be-ing built for the field by Hyundai Heavy Industries in South Korea will be the world’s largest spar, and Hansteen’s 1300-metre water depths make it Norway’s deepest development to date.
Christensen said the dry weight of the spar hull will be about 46,000 tonnes, and including the topsides that figure climbs to 70,000 tonnes.
It will feature Norway’s first steel catenary risers, and also the first use in the country of polyes-ter mooring lines, 17 in all.
Production is scheduled to start in the third quarter of 2017, and output capacity is listed at 23 mil-lion cubic feet per day.
A 600-day development drilling campaign, is due to get under way in 2016, with North Atlantic Drill-ing’s semi-submersible West Her-cules lined up to drill seven wells.
“Aasta Hansteen is a pioneering project with regard to local ripple effects. The development has so far realised more than Nkr400 million in spin-off effects in northern Norway,” Christensen said.
Programme: Statoil’s Aasta Hansteen project manager Torolf Christensen at ONS
Photo: ERIK MEANS
New hopes for Aasta HansteenOperator Statoil aiming to find tie-back prospects for marginal field in drilling programme next year
ERIK MEANSStavanger
In demand: the semisub West Hercules
Photo: OLE
JORGEN
BRATLAND/
STATOIL
Wednesday 27 August 2014 Show Daily 9
EUROPE
UK AND Norway-focused explora-tion newcomer Origo Exploration has scooped $525 million in start-up funding from investors River-stone, Barclays and Temasek.
Riverstone and Barclays Natural Resource Investments are to sink $200 million each into the new Norwegian-registered company, while Singapore-based Temasek will contribute $125 million.
The founding management team for the new Stavanger-based exploration company includes former Agora Oil & Gas chairman Andrew Armour, chief executive Svein Ilebekk and subsurface ad-visor Timothy Sullivan.
Norwegian junior Agora Oil & Gas was acquired by UK independ-ent Cairn Energy under a $453 mil-lion deal in 2012.
Armour, Sullivan and Ilebekk also previously founded Revus En-ergy in 2003 before selling it on to Germany’s Wintershall in 2008.
Origo Exploration said that the two previous companies had been involved in the UK’s Catcher dis-covery and Norway’s Skarfjell, Luno (now Edvard Grieg), Maria and Jordbaer (now Knarr) finds.
Ilebekk said the new company would use the cash to chase the many high-quality exploration opportunities he believes are still left in Norway and the UK.
“Origo will seek governmental approvals as licensee in Norway and the UK immediately, and will steadily build up its exploration portfolio in parallel. Our target is to spud the first well during the first half of 2015,” he said.
Origo’s co-founders also include exploration manager Kent Hogseth, formerly exploration vice president at Statoil, and Orjan Gjerde, who departed as chief fi-nancial officer of Noreco in June.
Riverstone’s commitment com-prises $133 million from River-stone Global Energy and Power Fund V and $67 million from Riv-erstone Energy.
The energy-focused private eq-uity player said that the invest-ment in Origo matched its proven strategy of “creating value by uti-lising management teams with proven knowledge and expertise in the energy and power industry”.
Riverstone co-founders Pierre Lapeyre and David Leuschen said that the equity commitment “re-flects the confidence that we have in Andrew, Svein, Tim and the rest of the team, as well as our be-lief in the potential for significant new discoveries in the Norwegian and UK continental shelves”.
Origo plans to acquire explora-tion licences in the Norwegian and UK continental shelves through farm-ins, licence rounds and focused mergers and acquisi-tion activity.
The newcomer aims to partici-pate in 25 exploration wells over the next five years and bring any resultant discoveries towards de-velopment and production.
Origo scoops start-up fundingNew Stavanger-based exploration company aims to acquire licences off Norway and UK through farm-ins, mergers and acquisitions
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10 Show Daily Wednesday 27 August 2014
RUSSIA
RUSSIA’S Gazprom is eyeing the creation of a hub in its western Arctic region as a company off-shoot focuses its Arctic explora-tion efforts on the Pechora and Barents seas.
However, Gazprom Neft is also keen to secure contracts and enter joint ventures as it pushes for am-bitious production targets to the middle of the next decade.
Gazprom Neft Sakhalin director general Alexander Korobkov told delegates at ONS on Tuesday that the Pechora Sea is the company’s main exploration focus in the Russian Arctic, followed by the Barents Sea and, together, the Kara and Chukchi seas.
In the Pechora Sea, the compa-ny began production late last year at the controversial Prirazlom-naya platform on the Prirazlom-noye field, which was beset by a Greenpeace protest.
Nearby, the Dolginskoye field is currently in an exploration phase. Although these plays are chal-lenging, given weather condi-tions, they are seen as safer bets for the creation of a hub alongside Barents Sea fields than the remote eastern Arctic, where the compa-ny was recently awarded 100% of the Severo-Vrangelevskiy licence in the Chukchi Sea.
The last tract, covering 117,620 square kilometres, has had 37,000 line kilometres of 2D seismic shot, but is a long way off getting any wildcats, Korobkov said, due to the harsh ice-clad environment.
Valery Golubev, deputy chair-man of the management commit-tee of parent company Gazprom, highlighted the importance of safety practices in such condi-tions, telling delegates through an interpreter: “Our work is very similar to that of minesweepers — we cannot afford failure, espe-cially when we are talking about Arctic regions.”
Gazprom preparing for next decade’s challengeState player’s plan to drill 50 offshore wells and double Arctic reserves by 2024 calls for at least 30 rigs and major building programme
GAZPROM faces a significant chal-lenge to secure sufficient rigs as it plans to drill dozens of explora-tion wells off Russia in the next decade, writes Eoin O’Cinneide.
The Russian state-owned gas giant is also pushing to build
about 80 units — whether they be rigs, platforms or vessels — as it aims to double Arctic reserves to 2024.
Gazprom will drill about 50 off-shore wildcats in the next 10 years, with the Kara Sea and sur-
Pechora focus for offshoot
EOIN O’CINNEIDEStavanger
rounding areas set for special at-tention, Valery Golubev, deputy chairman of the company’s man-agement committee, told dele-gates at ONS on Tuesday.
Between one and four explora-tion wells a year are planned up to 2019, before around 10 in 2020, 15 in 2021 and five in 2022, slides from Golubev’s presentation showed.
Gazprom will aim for further wells in the event of discoveries, meaning 2021 — when the planned drilling programme peaks — could see 17 wells drilled.
The Kara Sea and surrounding areas will see one well this year and one next year, before a break for two years, then four more over the following two years and a spike to eight in both 2020 and 2021.
The Barents Sea will see two wells in each of 2019 and 2020, before Gazprom goes for six in 2021, taking a break the year after and coming back for at least four in 2023.
The Sea of Okhotsk, by compar-ison, is set for a relatively light drilling programme, with about eight firm wells between 2015 and 2018.
To handle such a drilling pro-gramme, Gazprom will need between 30 and 35 rigs.
“It is not just Gazprom — we
know Rosneft is facing the same challenges,” Golubev, speaking through an interpreter, said of the need to secure rigs.
The ambitious exploration plan is set to be matched by an exten-sive newbuilding campaign, with around 80 units to be built, said Golubev.
This would include platforms, rigs, ice-class tankers, offshore support vessels and crew boats.
“Ten years is just a tiny period of time to build up such a large fleet, but we realise we don’t have any other option,” he said.
Set to aid this newbuilding programme is the gradual move of the company’s headquarters to St Petersburg, the traditional cen-tre of Russia’s shipbuilding and marine technology industry.
However, Golubev also chal-lenged delegates at ONS and the Norwegian industry to come up with technological solutions to tackle the harsh Arctic environ-ment, saying the industry needs to collaborate in order to “mobilise the right minds”.
Without such co-operation, Arctic players will struggle to un-lock resources in places like Russia, Norway and Greenland, needed to boost reserves bases.
“In Russia we have a saying: you shouldn’t show off the skin of a dead bear before you have shot him,” he said.
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Gazprom
Wednesday 27 August 2014 Show Daily 11
NORWAY
NORWEGIAN state oil company Statoil — amidst widespread con-cern in its home market about falling investment levels in the oil and gas sector — has pointed out that its project portfolio has never been bigger.
Statoil senior vice president for projects Anders Opedal said on Tuesday that the total capital ex-penditure on facilities, counting projects that are operated by the company and are currently in the implementation phase, amounts to Nkr205 billion ($33.2 billion).
Opedal, speaking to the press at the ONS conference in Stavanger, said these numbers stem from more than 100 active projects, 61 of which are in the execution phase.
He added that about 80% of these investments are earmarked for the Norwegian continental shelf.
This figure does not include drilling costs, nor does it include the huge investment planned for Statoil’s challenging Johan Sver-drup field off Norway.
The Sverdrup capex would push the tally close to Nkr300 billion. In
comparison, Statoil’s equivalent portfolio in 2010 totalled “only” Nkr124 billion, 71% of which was earmarked for Norway, signalling a major escalation in activity over the past four years.
Opedal pointed out that Statoil-operated projects have tallied up 39 million man-hours over the past 12 months alone.
Statoil senior vice president for field development Ivar Aasheim said the company has high hopes with regard to several enhanced recovery projects on producing fields.
“We have a high focus on low pressure,” Aasheim said, pointing to more than 1.2 billion barrels of oil equivalent from six ongoing EOR schemes in Norway.
Statoil expects these projects will recover an additional 522 mil-lion boe from Troll, 280 million boe from Aasgard, 220 million boe from Kvitebjorn, 160 million boe from Kristin, 22 million boe from Gullfaks, and 7.5 million boe from Heidrun.
“There is a lot of promise in the old fields,” he remarked.
Expenditure: Anders Opedal at ONS 2014 in Stavanger Photo: KAIA MEANS
Hopes: Statoil senior vice president for field development Ivar Aasheim Photo: KAIA MEANS
Portfolio has never been bigger says StatoilState company counters fears of falling investment levels at home
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Centre of the storm: BP’s Atlantis unit Photo: GVA
US court rejects safety fears over BP’s Atlantis
Judge said plaintiffs had no evidence to support allegations against player
Examining the offshore food chain
Drawing together business leaders from the entire offshore supportvessel sector – users, owners, brokers, builders and financiers. Join us for fresh thinking and hard business talk.
US RIG contractor Rowan has signed a contract for a jack-up unit in the Gulf of Mexico at an im-proved dayrate and has taken de-livery of its latest deep-water drillship.
The jack-up Rowan Gorilla IV won a 60-day contract with Exxon Mobil for work in the US Gulf that will start at the begin-ning of November.
The dayrate is $200,000, up from a previous rate of $125,000.
Analysts at Cowen & Company said the dayrate was “ahead of our expectations for a rate (in the mid-$100,000’s) but we had been assum-ing the company would look to sign the rig to longer-term work”.
The rig had been working for Fieldwood Energy on a contract that concluded this month.
It is expected to receive a stand-by dayrate of $110,000 during the month of October 2014. It will be off rate for planned inspections in the first quarter of next year.
The jack-up Cecil Provine also increased its dayrate on a 60-day extension with Fieldwood in the US Gulf starting in early Septem-ber. The rate is $130,000, up from $125,000 per day previously.
The jack-up Joe Douglas got a 120-day contract extension with Freeport-McMoRan in the US Gulf at the current dayrate of $165,000.
Meanwhile, classification soci-ety ABS finished up certification of Rowan’s newbuild ultra-deep-water drillship Rowan Resolute, the sister vessel to the Rowan Renaissance.
The contractor confirmed in its fleet status report that the rig had left the Hyundai Heavy Industries yard in Ulsan, South Korea, in late July.
Dayrates boost for Rowan
ANTHONY GUEGELHouston
A US district court in Houston has dismissed a $256 billion lawsuit against BP which alleged, among other things, that the design of the Atlantis floating production semi-submersible in the deep-water Gulf of Mexico was unsafe.
Judge Lynn Hughes said the plaintiffs had no evidence to sup-port their allegations.
The lawsuit was originally filed in 2009 by Kenneth Abbott, who worked at one time as a safety consultant.
Environmentalist group Food & Water Watch was also a plaintiff.
US regulator BOEMRE, the pred-ecessor for the Bureau of Ocean Energy Management & Bureau of Safety and Environment Enforce-ment, carried out its own investi-gation into the allegations that safety was at risk aboard Atlantis, concluding in March 2011 that they were unfounded.
However, the agency did agree there were “problems with the way that BP organised, stored, and labelled engineering draw-ings and documents”.
Abbott alleged that BP did not properly maintain the engineer-approved “as built” drawings of systems and structures aboard the Atlantis facility and that the ab-sence of the documentation cre-ated increased safety risks for the facility and to its personnel.
After interviews with 29 indi-viduals, analysis of more than 3400 engineering drawings and related documents, and reviews of hundreds of additional docu-ments, BOEMRE said that it found “no evidence that these documen-tation deficiencies created specific unsafe conditions on the Atlantis production platform” and that charges of safety violations were “without merit”.
At the time, BOEMRE also found that BP failed to file with the fed-eral agency certain required drawings depicting changes to some production safety system components and issued an Inci-dent of Non-Compliance for the infraction.
BP later provided the required drawings to BOEMRE, adding that the infraction “did not pose an im-mediate safety risk for the plat-form”.
BOEMRE did not refer the viola-tion for civil penalties at the time.
Search the archive:
Atlantis
WEDNESDAY 27 AUGUST 2014
Under the spotlight at ONS
TODAYINSIDEONS brings ‘the fox’ to
Stavanger Page 14
Prize-winning
innovators Page 15
Conference programme
Page 15
Centre Court
programme Page 15
‘Cost cuts require
co-operation’
Pages 16&17
‘Norway needs to boost
flows’ Pages 16&17
Lambert paints rosy
picture Pages 16&17
Landro lands IOR award
in Stavanger
Pages 16&17
Request for Norway to
resume lead role in CCS
Page 18
Nation could become
key hydrogen player
Page 18
Change in action at ONS
Page 19
In the picture Page 20
ONS TODAY is published for free distribution by ONS. PO BOx 175, N-4001, Stavanger, Norway.
Statements made and opinions expressed do not necessarily represent the views of the ONS Foundation.
Intergraph Process, Power & Marine (PP&M) is the world’s leading provider of enterprise software enablingsmarter design and operation of plants, ships, and offshore facilities.
During ONS 2014 Intergraph will showcase how our software solutions:Improve 3D design effi ciency 30% or more with an integrated, rule-based design solutionFacilitate information management and capture, organize and link documents and dataEnsure data and design accuracy in geographically diverse, complex design projects
VISIT INTERGRAPH AT STAND B-242 Not visiting ONS 2014? - Contact e-mail: [email protected]
Norwegian Energy Minister Tord Lien speaks at ONS
2014 in StavangerPhoto: KAIA MEANS
14 Wednesday, 27 August 2014
Ylvis are a star attraction at this year’s ONS festival Photo: REUTERS/SCANPIX
ONS President Leif Johan SevlandPhoto: ALF OVE HANSEN
ONS 2014 is already midway, and so far it has been two amazing days full of interesting presentations, debates and
discussions addressing the main theme for this years event, changes.
The Exhibition Halls have been teeming with activity and we have see a huge number of visitors at the ONS Exhibition during the first two days.
However, ONS is much more than a conference and an exhibition — it’s also a festival.
The ONS Festival makes ONS an event unlike any other in this industry — and we are proud of it. The festival runs over three days and offers wonderful culinary experiences, music and entertainment.
There are also several pavilions with both Norwegian and international exhibitors.
Our aim is to take good care of our guests by also offering an evening programme. The festival area is right in the heart of Stavanger, in the city’s intimate harbour.
We believe this is the perfect meeting place for mixing business with pleasure.
The festival is free and open to everyone.
Today’s conference speakers will
address the future of the energy industry and changes that needs to be done in the next 40 years.
We need to face the increasing problem of the climate change and meet the world’s future energy needs in a sustainable and responsible manner.
I believe that ONS is the perfect venue for addressing this common challenge and encourage everybody to attend these sessions.
I really look forward to this evening’s ONS concert with Ylvis.
The two charming brothers from Norway became world famous overnight for their song and music video “What does the fox say?”
The song and the music video have reached all corners of the world and have more than 400 million hits on YouTube.
Now all of Stavanger, both visitors at ONS and the public, will get the chance to experience Ylvis live in a spectacular concert in Stavanger town square, right by the harbour and the ONS festival area.
As we are celebrating our 40-year anniversary, Ylvis will be our gift to the region and everyone at ONS — so come and join the party!
Leif Johan SevlandPresident of the ONS Foundation
ONS brings “the fox” to Stavanger
CONFERENCE
09:45
10:00
12:00
12:30
14:00
14:15
16:00
Safety luncheon
Sneak peek into the future: What will happen in the next 40 years?
oderator: Aslak Sira Myhre
Green opportunities for a better world-
Breaking through towards a sustainable energy futureHenrik O. Madsen - CEO, DNV GL
Natural gas: the ideal partner for renewables
Martin Bachmann - BoD, E&P, Wintershall
CCS – Essential echnology for a low CO2 futureTim Bertels - Head of CCS, Shell
Energy-positive buildings by PowerhouseSvein ToTT re Holsether - CEO, SapaGroup
Changes - the name of the gameKjell A. Nordstrom, unconventional Swedish economist and
co-author of the bestseller "Funky Businkk ess"
Financing the energy industry Michael O´Dwyer - Morgan Stanley
Innovation vs. StandardisationSvein Harald Øygard -McKinsey & Company
Re l life storiesKerry Kunz - Atlantica TenderTT
DrillingToTT rger Skillingstad - RESMAN
g
True ValueBob Keiller - WOOD GROUP
Wake up call Renewables – new energy
The big picture - IBM
Reality checkFrank Sivertsen - E.ON
Oil and gas into renewablesSiri Espedal Kindem - Statoil
Saved by the bell - again?Torbjørn Kjus - DnBTT
WEDNESDAY 27 AUGUST
Moderator: Aslak Sira Myhre Moderator:
Building great companiesHitecVision & Statoil
Technology InvestEnergy Finance Symposium
Young technologies
WEDNESDAY 27 AUGUST
Welcome and introductionSustainable solution through innovation, Eirik Newth
10:00 - 10:15
Using offshore experience to develop renewable energyWelcome and introduction
Moderator: Ulf Rosenberg - Head of Communications, GDF Suez E&P Norge AS
Innovating towards a more sustainable oil & gas futureElisabeth Tørstad - CEO, DNV GL Oil & Gas
Traditional offshore activities boosting renewables offshoreSiri Kalvig - Meterologist and Partner, StormGeo
Oil and gas into renewablesSiri Kindem Espedal - SVP MPR REN, Statoil
Financing renewable technology projects grown from oil and gasNils Kristian Nakstad, Adm dir, Enova
12:15 - 12:20
12:20 - 12:35
12:35 - 12:50
12:50 - 13:05
13:05 - 13:25
Increased energy efficiency offshore – technologies for changePowering Gjøa – operators perspectives
Hilde Ådland - Head of operations, GDF SUEZ E&P Norge ASEFFORT – Recovering wasted heat
Marit Mazzetti - Project Manager SINTEF Energy, SINTEFCompact energy recovery solutions for processing plants and FPSOs
with amine gas sweetening processesJoan Gates, Energy Recovery
Zaptec – how supersmall power tech will give new opportunitiesBrage Johansen - CEO , Zaptec
14:00 - 14:15
14:15 - 14:30
14:30 - 14:45
14:45 - 15:00
Pitch presenta�onsIn co-operation with Innovation Norway, ENOVA and The
Research Council of Norway
10:15 - 11:00
Presenta�on by the winners of ONS Innova�on AwardsWinners to be announced 26 August
11:25 - 12:00
Panel debate: Importance of ground breaking technology developments
Arvid Hallèn - Director, Forskningsrådet and Finn Kr. Aamoth - SVP, Innovasjon Norge
11:10 - 11:25
15Wednesday, 27 August 2014
Norwegian Energy Minister Tord Lien congratulates the award winners, from left, Fishbones chief executive Rune Freyer, Tore Halvorsen of FMC and Christophe Dupuis and Emmanuelle Regrain from Schlumberger Photo: TOMAS ALF LARSEN
NORWEGIAN Energy Minister Tord Lien presented three innovation awards at
the Innovation Luncheon yesterday, with the ONS Special Innovation Award going to Tore Halvorsen of FMC Technologies for his pioneering work in subsea technology.
Four hundred delegates attended the event, which has been a feature of ONS since 1982, when Norwegian Contractors’ Condeep platform won the first innovation award.
This year 97 applications were sent on behalf of 79 different companies.
The 2014 winners announced yesterday were Tore Halvorsen of FMC Technologies for the ONS Special Innovation Award, Fishbones for the ONS SME Innovation Award, and Schlumberger for the ONS Innovation Award.
The Special Innovation Award is presented to an individual or organisation that has played a significant role in the wider energy sector, and has been part of ONS since 2006.
Tore Halvorsen is currently senior vice president in FMC Technologies, responsible for Global Subsea.
The jury said Halvorsen was given the award as a leading capacity in the development and implementation of subsea technology for the global oil and gas industry.
He has more than 30 years of experience in subsea field development.
Rune Freyer and Fishbones were awarded the SME
Prize-winning innovators
Innovation Award (small and medium sized enterprises) for well technology that brings in a new method for reservoir stimulation.
The Innovation Award went to Schlumberger for GeoSphere, a technology that reduces risk during horizontal drilling.
It was praised as a technology
that will save both time and cost. Christophe Dupuis and
Emmanuelle Regrain accepted the prize on behalf of Schlumberger.
“Research and development has been important, and will also be important in the future,” Lien said before the presentation.
“It will be a key factor in
keeping costs down and value creation high.
“Only in this way can we realise the great potential of the Norwegian continental shelf.”
This year’s jury consisted of representatives from the UK, the US, Norway and the Netherlands, with Siri Helle Friedemann as jury leader.
16 Wednesday, 27 August 2014
Tore Halvorsen, senior vice president of subsea technologies at FMC
COSTS for oil and gas developments have to come down through a combination of more industrialised manufacturing, simplification, common standards and better co-operation
across the industry, according to subsea specialist FMC Technologies.
“I am as embarrassed as everyone else about the cost curve in the industry in the last few years,” said Tore Halvorsen, senior vice president of subsea technologies at FMC, at the ONS conference in Stavanger.
“It is unsustainable. We have to break the curve, to change.”
The biggest opportunity for cost reductions can be found within technology improvements, accounting for about 50% of the total potential, according to Halvorsen.
“We have used research and development budgets to expand boundaries in our industry, reaching greater depths and so on. What we have not done is to use technology to induistrialise,” he said.
As an example of using technology innovation to simplify, he pointed to the electrionics industry and its move from large, complex devices to ever smaller and simpler ones.
While the subsea industry has a long way to go before it reaches the same level as the electronics industry, improvements have been made, Halvorsen said. For instance, a four-slot well template that weighted 650 tonnes in 1990 had been slimmed to 100 tonnes a decade later.
A potential area for simplification includes so-called Christmas trees. The subsea version currently costs up to eight times more than a surface tree — “an unnatural price difference” — partly because of additional auxiliary equipment that is only used during installation and removal, Halvorsen said.
Using robot technology during installation and removal of subsea trees could in the future eliminate the need for extra equipment and thus cut the cost, he said.
Robotics could also be used to build a compact subsea manifold that would be half the size and weigh 30% less than existing ones, according to Halvorsen.
This is “at early stages yet, but very promising,” he added.
Another area for trimming costs is beefing up the volumes of each product.
This can be achieved by getting one client to buy the same piece of equipment for several projects, or getting players in a specific region to agree on a common standard for certain products.
Widely accepted third-party specifications could also lead to higher volumes and lower costs, Halvorsen said.
Finally, closer co-operation between suppliers and clients is key to lowering the time spent on documentation, another cost driver.
The number of documents needed to approve a product ranges from around 80 for a standard product to more than 1000 for a tailor-made solution.
The savings potential could be as large as 50% for lead times and 40% on price on a four-well subsea system if the client cuts back on special documentation requirements, according to Halvorsen.
“There will be no major cost reductions if we do not make major changes to our way of working. I am optimistic now, the pressure is on and everyone has it on their agenda,” said Halvorsen.
“We must industrialise our business. We are still at the prototype stage, and we have to change the direction.”
‘Cost cuts require co-
NORWAY could have a lot more undiscovered oil and gas than the country’s authorities estimate, according to industry analyst Philip Lambert.
The Norwegian continental shelf probably holds about 30 billion barrels of oil and gas yet to be found, Lambert, chief executive of UK-based Lambert Energy, said at the ONS conference in Stavanger.
The Norwegian Petroleum Directorate has put undiscovered resources at only about 19 billion barrels.
Much of Norway’s current development boom is due to increased exploration and an influx of companies that has followed Norway’s introduction of a favourable tax-credit system for exploration, introduced at the start of this
century. “If the government changes the exploration tax, much of those 30 billion barrels will be left in the ground. Please do not change it,” Lambert urged in his speech at ONS.
Lambert also called for greater co-operation between the North Sea nations to harmonise regulatory requirements for drilling rigs and other offshore operations.
Norway and the UK should lead the way, and encourage Denmark and the Netherlands to follow, he said.
“Standardising on a regional basis would be a great way of saving costs,” Lambert said.
“I think it is perfectly possible. Everyone in the UK and Norway have an interest in costs coming down — it means more revenue.”
A NORWEGIAN university professor who pioneered the development of four-dimensional seismic technology has been awarded the Norwegian Petroleum Directorate’s (NPD’s) annual award for contributions to increased oil recovery.
Martin Landro is a professor of Applied Geophysics at the Norwegian University of Science & Technology in Trondheim.
He has previously worked for several research foundations and Statoil.
Time-lapse seismic, or 4D
Lambert paints rosy picture Landro lands I
Photo: KAIA MEANS
-operation’17Wednesday, 27 August 2014
Trevor Garlick, regional president of North Sea activities at BP Photo: KAIA MEANS
NORWAY should step up efforts to increase oil recovery before declining production and ageing facilities make new measures unprofitable, BP’s head of North Sea operations warned.
Norway is about 10 years behind the UK continental shelf in terms of maturity, giving it an advantage over its southern neighbour, Trevor Garlick, regional president of North Sea activities at BP, said at the ONS Conference in Stavanger.
“The longer you leave it, the harder it gets. The technology needs to be fitted at the start, or retro-fitted before it is too late,” Garlick said.
“The technology is already out here. Norway is less mature than the UK, but urgency is still required. We should not waste what we have found.”
Garlick should know — he started his career as an engineer on the Norwegian, BP-operated Ula field, which has had its life extended by about 15 years thanks to water alternating gas injection (WAG) and tie-ins of additional discoveries.
BP is also busy with a number of enhanced oil recovery (EOR) projects on its fields in the UK, including the redevelopment of the Schiehallion field west of the Shetland Islands which will include polymer injection facilities.
While Norway is doing a good job on the research and development stage, including some pilot studies, both Norwegian and UK players need to get better at taking the final step and install new EOR systems on the fields, Garlick said.
Better collaboration between companies could be one move to help more EOR projects see the light of day.
Nearby fields could for instance share a common supply of polymers or other injection chemicals, thus saving money and making projects more financially viable, Garlick said.
“There is not a huge competitive advantage to this, so we can share more, be more open about lessons learned,” Garlick said.
Boosting production from ageing fields has a high priority for the Norwegian government, which wants to push the recovery rate as high as possible to maximise national income before platforms are shut down.
“For Norwegian authorities it is essential that all profitable resources are produced. To achieve this all involved partners must contribute — industry, service providers, suppliers, authorities and research institutes and universities,” Bente Nyland, director general of the Norwegian Petroleum Directorate, said at the ONS conference.
Norwegian Energy Minister Tord Lien also emphasized the obligation oil companies have to make every effort to drain their fields:
“Pursuing the easy oil only is not in accordance with good resource management and the licence to operate,” he said at ONS.
“If cost cuts lead to viable resources being left in the ground it is not in according with the social contract.”
‘Norway needs to boost flows’
s IOR award in Stavangerseismic, allows oil companies to compare seismic studies over time to see how reservoirs are drained over a field’s production life.
Landro was one of the pioneers behind the application of this technology at the Statoil-operated Gullfaks field as well as on other fields offshore Norway.
“This year we are awarding the creativity and steadfast resolve of a demanding and continuing research effort,” director general Bente Nyland of the NPD said when she handed over the award
at the ONS conference in Stavanger. “4D seismic is now the standard for mapping remaining resources in fields and reservoir monitoring,” she said.
The government estimates that the use of 4D seismic offshore Norway has created values of more than Nkr22 billion ($3.6 billion) over the past decade, including about Nkr6 billion at Gullfaks.
The 4D seismic technology is also used to monitor reservoirs where carbon dioxide is stored to detect potential leaks.
18 Wednesday, 27 August 2014
IEA executive director Maria van der Hoeven Photos: RUSSELL MCCULLEY
NORWAY should resume its lead in carbon capture and storage research to help meet global carbon emission reduction targets, the
head of the International Energy Agency (IEA) said on Tuesday.
Speaking on Tuesday at ONS 2014’s Centre Court, IEA executive director Maria van der Hoeven expressed disappointment in the Norwegian government’s decision last September to terminate a full-scale carbon capture and storage (CCS) project at the Mongstad refinery.
“I am concerned about the decision Norway has made on phase two of the Mongstad project,” van der Hoeven said during a discussion of the agency’s recently released Energy Technology Perspectives 2014 report.
“What I would like to see is that you redouble your efforts to develop and deploy CCS.”
The IEA estimates that as much as $45 trillion in investment will be needed to meet sustainable clean energy goals by 2050. The agency maintains that the investment could generate $150 trillion in savings — chiefly in lower fuel consumption — but van der Hoeven acknowledged the challenge of mounting an aggressive reform of the energy system.
“While the long-term cost effectiveness (of low carbon technologies) is demonstrated, current financing approaches do not work in all cases,” she said. “And policy uncertainty has even a greater impact on deployment here than on conventional energy technologies.”
Van der Hoeven pointed out a “renaissance of coal in Europe” due to climbing gas prices, cheap coal imports from the US, and the phasing out of nuclear power in some countries. Strict carbon emissions limits on coal-fired power plants will be needed to encourage development of effective CCS technology development, she said.
The IEA report notes that 40% of energy is used to produce electricity, and that electricity is currently responsible for 40% of carbon emissions — a trend van der Hoeven deemed “unsustainable” in light of growing global energy demand.
“The longer we wait to transform our energy system, the more expensive it will get,” she said. “And you know, the world isn’t short on options. It’s short on actions.”
NORWAY could become a net exporter of the hydrogen used in fuel cell technology, an official with the research organisation Sintef said on Tuesday.
Speaking to an audience at ONS 2014’s Centre Court, Sintef vice president of marketing Steffen Moller-Holst said vast improvements in the performance, durability and cost of fuel cell technology over the past decade have made fuel cell batteries a viable option for transportation.
“We see a new era where both battery electric vehicles as well as hydrogen fuel cell electric vehicles will dominate the roads,” Moller-Holst said. “In Germany alone, they are building 50 hydrogen refueling stations by next year, and 100 by 2017.”
Norway, which has five hydrogen refueling stations, is well poised to supply hydrogen produced by wind energy, he said.
“We have the potential to become a key player in this area, because we have one of the highest wind energy potentials in Europe — high wind speeds both onshore and offshore,” Moller-Holst said.
While acknowledging the significant amount of investment necessary to harvest wind energy, he said Norway’s experience in compressed gas transportation and liquefied natural gas tanker technology could be parlayed into an international export market for hydrogen generated by “stranded wind” projects.
“This knowledge and competence should be used for liquid hydrogen, which could become an international commodity in the near future,” he said.
The hydrogen could be stored in salt caverns and liquefied for export, Moller-Holst said.
“If we really evolved our investments in the technology… we could export hydrogen by mixing it into existing pipelines to Europe, making this natural gas cleaner and greener. And if volume increases to a certain level, we could also discuss building pipelines for hydrogen for export to Europe.”
“We are a large exporter of oil and gas today. We could become a large exporter of renewable energy in the future.”
Request for Norway to resume lead CCS role
Nation could become key hydrogen player
Sintef marketing vice president Steffen Moller-Holst
19Wednesday, 27 August 2014
Professor Jonathan Stern Photo: KAIA MEANS
CHANGE has been designated as the theme of ONS 2014 and the conference organisers showed they, too, were willing to join in on
Tuesday by introducing a session that had never been tried before.
At the ONS 2014 Summit, a select group of industry leaders gathered to hear short presentations by International Energy Agency executive director Maria van der Hoeven and Professor Jonathan Stern of the Oxford Institute for Energy Studies.
The idea was that the summit would be held away from the glare of the media in the hope that this would foster an atmosphere of open debate among the attendees.
The presentations looked at changing demand and investment in the global energy market and challenges faced by the gas sector.
The two presenters told journalists, who were invited in at the end of the session, that interesting debate had indeed been stimulated.
Stern spoke of his surprise at the degree of agreement he had met with his assertion of a “dark age of natural gas in Europe”, characterised by low demand and little evidence of any improvement in sight.
However, he did note that one German attendee spoke optimistically of a changing attitude in Germany, moving away from coal in favour of gas, which represented a sign of hope.
Van der Hoeven, meanwhile, highlighted the need to pursue the right level of return on investment and emphasised the need for consistency in policy.
She added that standardisation, not cost, should be used to drive efficiency.
Change in action at ONS
20 Wednesday, 27 August 2014
Scenes from the show Photos: KAIA MEANS
In the picture at ONS...
Wednesday 27 August 2014 Show Daily 21
EUROPE
NORWAY is sitting on a gold mine of 10 billion barrels of oil equivalent in untapped discovered hydrocarbon resources worth an estimated $106 billion but significant technical and commercial obstacles are barring the way to the glittering prize, ac-cording to Wood Mackenzie.
The potential resource haul is hidden in 206 discoveries, includ-ing the giant Johan Sverdrup find with estimated volumes of 2.4 bil-lion boe, with about half of the vol-umes in the North Sea and the re-mainder divided roughly equally between the Norwegian and Bar-ents seas, the UK-based research firm stated in a new analysis.
WoodMac estimates that more than 60% of the estimated resource tally could be commercialised to generate significant returns in the form of oil and gas revenue.
“We consider 4.8 billion boe likely to be economic, 1.6 billion boe po-tentially economic and the remain-ing 3.6 billion boe not commercial and therefore will remain undevel-oped,” said North-West Europe up-stream analyst James Webb.
“From this we estimate the vol-umes in the likely and potentially economic discoveries represent $22 billion of potential value for com-panies in the sector and $84 billion in tax revenue alone for the Norwe-gian government - excluding the profits of Statoil and the State’s Di-rect Financial Interest.”
However, exploitation of the re-sources remains challenged by a range of technical obstacles — such as low reserves, lack of infra-structure and complex geoglogy — while stricter capital discipline and project prioritisation by oil companies such as Statoil are also putting the brakes on develop-
ment and Webb said “not all unde-veloped discoveries will reach commerciality”.
“Commercially, the global up-stream industry faces an extreme-ly difficult economic environment. Investors are increasingly de-manding bigger dividends and a better rate of return,” he explained.
“As a result, many companies have committed to stricter capital discipline and are intensely screening projects based on finan-cial criteria. Capital-intensive projects are particularly being scrutinised. This means more dif-ficult projects could be delayed, and in some circumstances will simply remain undeveloped.”
Statoil has already postponed development of the $15 billion Jo-han Castberg discovery in the Bar-ents Sea where a lack of resources in the remote Arctic region lack-ing existing infrastructure, as well as a punitive tax hike and higher costs, have undermined the commerciality of the project.
Webb said recent exploration success off Norway has also hin-dered the pace of development of discoveries. “Over the last five years the average size of new discoveries has been greater than the average undeveloped field and therefore new fields have been prioritised,” he said.
As a result, more complex devel-opments — such as high-pressure and high-temperature fields – have been delayed in favour of simpler projects, according to the analyst.
However, WoodMac still believes the pipeline of future developments off Norway remains strong, with the undeveloped resources account-ing for much of the value creation for companies such as Lundin Pe-troleum and Det Norske Oljeselskap.
On board: workers at the Johan
Sverdrup discovery off Norway
Photo: OYVIND
HAGEN/STATOIL
Norway flush with richesReport hails abundance of untapped resources and spotlights massive potential revenue for oil and gas producer
DONG Energy is one of the leading energy groups in Northern Europe.
Our business is based on procuring, producing, distributing and trading
in energy and related products in Northern Europe. DONG Energy has
around 6,500 employees and is headquartered in Denmark. The Group
generated DKK 73 billion (EUR 9.8 billion) in revenue in 2013.
For further information, see www.dongenergy.com
DO
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THE RESULTS SPEAK FOR THEMSELVES OUR SPECIALISTS WILL SPEAK TO YOU
Every day at our stand you can learn more about:
• The Hejre project and development
• West of Shetland and the Laggan Tormore project
• 3D seismic shoot at Turtles PL 728
• Our Wind Power strategy
For information on schedule please
visit our stand E518. Refreshments
will be served.
STEVE MARSHALLStavanger
Upstream offers all ONS attendees two weeks
of free access to our print and digital services.
• The award-winning Upstream newspaper, packed every week with exclusive
news on projects, drilling programmes and major contracts from all corners
of the world
• Insider news used by readers to identify business opportunities
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the clock and Upstream’s extensive archive
• Each edition of Upstream’s ONS Today newspaper via email, and more
See first hand why Upstream is the world’s
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Simply visit http://www.upstreamonline.com/ONS2014 or scan the QR code to take advantage of this limited offer!
Special offer!
THE INTERNATIONAL OIL & GAS NEWSPAPER
Wednesday 27 August 2014 Show Daily 23
ASIA
ANGLO-Dutch supermajor Shell is fast building up its discovered gas reserves off Malaysia after un-earthing another find this week.
The company has come up trumps at the Marjoram-1 well in Block SK 318, a matter of months after striking a large gas column at the Rosmari-1 wildcat on the same tract.
Shell did not given any indica-tion in Tuesday’s announcement of the size of the Marjoram find, but a spokesperson told Upstream that the details the company has on both of the block’s wells indi-cates a combined discovery of more than 200 million barrels of oil equivalent.
The Marjoram well sits in about 800 metres of water and is situat-ed about 180 kilometres off the coast of Sarawak, East Malaysia.
In April, Shell found a column of more than 450 metres at the Rosmari-1 wildcat, which was drilled to 2123 metres. Water depths in that area are between 400 metres and 700 metres and the well is situated 135 kilometres from shore.
Shell operates the block on 85%, with local partner Petronas Cari-gali on 15%.
The European giant signed a production sharing licence for the block at the end of 2012 for 27 years, with a three-year explora-tion period. At the same time, it
Shell adds weight off MalaysiaSupermajor’s campaign is blossoming as Marjoram well hits gas to join sucessful Rosmari probe on same block
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LONDON-listed Circle Oil has encountered “strong hydrocar-bon” shows at an exploration well off Tunisia, writes Bianca Bartucciotto.
Preliminary results from the EMD-1 well in the Mahdia permit found light oil shows in the Lower Birsa and Upper Ketatna carbon-ates secondary targets.
A 77-metre oil zone interval in the Lower Birsa and a 48-metre gross oil zone in the Upper Ketatna will now be confirmed by logs.
The company said the hydrocar-bon indications in the well con-firmed a working petroleum system in the permit area, and also proves the size of the El Medi-ouni trap.
Circle said there was the poten-tial for likely recoverable prospec-tive resources discovered by the EMD-1 probe of about 100 million barrels of oil.
The company was granted a six- month extension to the Mahdia permit to January 2015 and has the right to apply for another two renewals of the permit, each for three years.
Circle on the mark off Tunisia
EOIN O’CINNEIDEStavanger
signed a PSC for Block 2B. The blocks cover a combined area of about 9000 square kilometres.
Shell’s minimum financial com-mitment for the two blocks through to April 2016 is about $145 million. The operator is obligated
to acquire 3D seismic, carry out five electromagnetic surveys and drill five exploration wells.
The exploration programme is expected to de-risk the challeng-ing deep-water environment in the waters of North Luconia.
24 Show Daily Wednesday 27 August 2014
EGYPT
RWE Dea has begun producing gas from its new central treatment plant at the Disouq development project in Egypt’s Nile Delta.
Production commenced from the new plant with output from five wells from three gas fields — North Sidi Ghazy, South Sidi Ghazy and North West Sidi Ghazy.
RWE Dea chief operating officer Dirk Warzecha said the company had achieved significant produc-tion growth in Egypt to contrib-ute to local energy production, despite “starting the project dur-ing difficult times in the country, which required special measures for security and logistics”.
Output from the plant began at an initial rate of 45 million cubic feet per day of gas and has recent-ly ramped up to 90 MMcfd, with further rises expected next year when seven more wells are brought online.
The Hamburg-headquartered operator is producing more than 150 MMcfd at the project altogeth-er including existing production from the concession’s North West Khilala field.
The North West Khilala field came online last September, with volumes being routed to a process-ing facility operated by produc-tion partner Suez Oil Company that are separated into dry gas and condensate before being fed into the national supply grid.
RWE Dea expects further pro-duction increases from the new plant and North West Khilala to lift production to capacity levels of around 200 MMcfd in 2015.
It holds 100% of the shares in the seven-field development con-cession with Egyptian Natural Gas Holding Company (EGAS) as state partner.
The exploration and production arm of German utility RWE was sold to the LetterOne group of in-vestors led by Russian tycoon Mikhail Fridman last year.
The sale is rumoured to be get-ting Germany’s go-ahead despite Western sanctions against Russia over the Crimean crisis. Ramping up: RWE Dea’s Disouq development in the Nile Delta Photo: RWE Dea
First gas for RWE Dea at Nile Delta developmentOutput from three fields adds to production growth despite ‘difficult times in the country’
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NORWAY’S TGS Nopec Geo-physical is to expand its 3D seismic library off Sierra Leone by about 16% under a fresh mul-ti-client, industry funding-supported survey.
TGS’s senior vice president for the eastern hemisphere Stein Ove Isaksen said the shoot would expand the con-tractor’s coverage of an “impor-tant and prospective area”.
“TGS has been active in ac-quiring data over the West Af-rica Transform Margin for the past decade and we are pleased with the level of customer sup-port to continue our invest-ment in this region,” he said.
The Asker, Norway-head-quartered geosciences player has chartered the 12-streamer seismic vessel Polarcus Alima for the survey, with the vessel listed on its charter books for late August through to mid-September.
The Polarcus Alima will gather an additional 1000 square kilometres in the Sierra Leone Block 4A Extension sur-vey to add to the seismic con-tractor’s existing 6268-square kilometre data bank for the West African state.
Oslo-listed TGS is to process the survey data, which will be available to clients in the first quarter of next year.
New TGS seismic survey
SINGAPORE-based Nordic Mari-time has gained a short-term charter from Norway’s Statoil for its DP2 multi-purpose off-shore vessel Mokul Nordic.
The Stavanger-headquar-tered state oil and gas company has hired the vessel on a 30-day firm charter for work in the North Sea with an option for an additional 15 days.
The Mokul Nordic can ac-commodate 60 workers and is equipped with a 100-tonne ac-tive heave compensated crane and full cargo deck capacity.
The subsea service vessel is capable of remotely-operated vehicle and inspection, main-tenance and repair work. It has just completed its maiden charter with N-Sea Offshore.
Nordic Maritime chief execu-tive Kjell Gauksheim said a sis-ter vessel to the Mokul Nordic, Nordic Amprak, is under con-struction and due for delivery in the second quarter of next year.
Nordic Maritime is also in the final build stages of a new research catamaran with ocean bottom node technology for use in seismic support and subsea mapping.
Statoil job for Nordic
BILL LEHANELondon
Wednesday 27 August 2014 Show Daily 25
NORTH AMERICA
US SUPERMAJOR Chevron has been searching for up to $1.5 bil-lion of equity investment to help develop its Duvernay shale assets in Canada and has contacted a number of potential investors, ac-cording to Reuters.
Chevron holds about 330,000 net acres in exploration leases for the Duvernay shale, about 200 kilometres north-west of Edmon-ton, Alberta.
The California-based company sent an offering memorandum to potential investors over the sum-mer, the news wire reported.
Because oil and gas develop-ments take many years to gener-ate a return for their investors, Chevron was looking for an equity investor with a long-term invest-
ment horizon, sources told the news wire.
A representative for Chevron declined to comment to Reuters.
Chevron announced in October that its initial exploration of the Kaybob area of the Duvernay shall formation was complete.
At the time, it said the next step was changing to a two-rig drilling programme to optimise well and completion design.
A potential equity injection would help Chevron diffuse the development risk for the next phase of the project.
Chevron began an exploration programme in the Duvernay in 2011 and, as of this month, has drilled 15 wells, completed 13 and tied in 10 wells to existing third-
party processing facilities. Some private equity firms had looked at the opportunity to provide an equity investment into the Duv-ernay project, but may not ulti-mately partner with Chevron because of the long investment horizon, according to the people familiar with the matter.
Chevron has recently bulked up its Duvernay acreage by 20%.
In August, it bought the inter-ests of Alta Energy Luxembourg, which had nearly 68,000 acres.
New York-based private equity firm Blackstone Group was an in-vestor in Alta Energy.
Other lease owners in the Duv-ernay shale formation include Penn West Petroleum, Shell and Athabasca Oil.
Flying the flag: Chevron is looking to develop its Duvernay assets Photo: BLOOMBERG
Chevron casts net in bid to secure Duvernay fundsUS supermajor seeking up to $1.5 billion to help develop assets in Canadian shale play and diffuse development risk for next phase of the project
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US INDEPENDENT Cimarex En-ergy has signed a set of purchase and sale agreements for oil and gas assets in three domestic plays for a total of $326 million.
The Denver-based explorer said the largest divestment was that of 4200 net acres and associated wells in the Midland basin of Rea-gan County, Texas to an unnamed buyer for $242 million.
Cimarex also sold $84 million worth of non-core properties in
the Mid-Continent and US Gulf Coast regions.
The company said it had sold about 47 billion cubic feet equiva-lent of proven developed reserves, almost two-thirds of which is natural gas, as well as production of around 11 million cubic feet equivalent per day.
Cimarex said it would use the proceeds of the sales to fund its ongoing capital investment pro-gramme.
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Wednesday 27 August 2014 Show Daily 27
RESULTS
PETROFAC saw its profits slide 44% in the first half of the year but a record order intake of $7.2 billion during the period is set to boost its earnings for the rest of 2014.
The London-listed oilfield serv-ices contractor earned net profit of $136 million in the first six months, compared with $243 mil-lion in the same period of last year, as revenue dropped from $2.8 billion to $2.3 billion over the year.
Its earnings before interest, tax, depreciation and amortisation were down at $340 million versus $405 million a year ago.
However, the mammoth haul of engineering, construction, opera-
tions and maintenance work, which has lifted the company’s backlog by 35% to $20.3 billion, has given it “very good revenue visi-bility for the rest of this year and beyond”, Petrofac said.
Orders secured since the end of the reporting period have in-creased its total contracts so far this year to $8.2 billion.
Its order intake during the pe-riod included $4.5 billion in on-shore engineering and construc-tion work from major awards in Kuwait, Oman and Algeria, as well as a $1 billion engineering and procurement contract for Pe-troleum Development Oman to provide services for the Rabab
Harweel facility. In addition, Petrofac has gained several exten-sions for service contracts in the UK North Sea — including for Total and EnQuest — and recently landed a multi-million-dollar frame deal with GDF Suez E&P to support the latter’s operations off the UK, including the Cygnus gas field due on stream next year.
The company said it remains on track to earn full-year net profit of between $580 million and $600 million, in line with previous guidance.
Chief executive Ayman Asfari said the latest awards “reflect on-going high levels of investment” by clients in the contractor’s key
Petrofac profits dip but order book is in good shapeFirst-half figures disappoint for services contractor, however record intake bodes well for rest of year
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regions. “Our pipeline of bidding opportunities remains attractive and we are confident of securing a number of further awards and contract extensions during the second half of the year,” Asfari added.
Petrofac insisted it is making “good progress” on stalled work to complete construction of the top-
sides on the FPF1 semi-submersi-ble production unit at a Polish yard, which has delayed start-up of Ithaca Energy’s Greater Stella field development off the UK to mid-2015.
The company said there was no change to the current schedule, with the unit due for sailaway in spring of next year.
28 Show Daily Wednesday 27 August 2014
AUSTRALIA
JAPANESE giant Inpex has signed up Transocean’s semi-submersible Jack Bates to drill two wells off Australia.
Transocean revealed in its fleet status report that it had been awarded the contract by Inpex to use the rig to drill two wells be-tween February 2015 and July 2016, at a dayrate of $420,000.
It is understood the rig will be used as part of Inpex’s planned three-well campaign off Australia.
Inpex is currently planning to drill wells in blocks WA-341-P and WA-343-P, where it is partnered by France’s Total, and on Block AC/P36 on behalf of co-venturer Murphy Oil.
The drilling programme will be aimed at assessing the economic potential of gas and condensate reserves contained within a Jurassic reservoir.
The contract is expected to add $59 million to Transocean’s back-log.
The rig-owner also stated in its August fleet status report that its newbuild drillship Deepwater Asgard had started operations on a three-year contract at a dayrate of $600,000.
While Transocean did not re-veal the client or location of the rig, it is understood the Deep- water Asgard is working in Indonesia carrying out a develop-ment drilling contract at the Chevron-operated Gendalo Gehem project.
Transocean also revealed in Au-gust’s fleet status report that its
Signed: Transocean semisub Jack Bates Photo: SANTOS
Inpex signs up semisub Jack Bates for two wells Transocean awarded deal that will see unit used as part of three-probe campaign
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AUSTRIA’S OMV has come up dry at an exploration well in New Zea-land’s offshore Taranaki basin.
Joint venture partner Horizon Oil revealed on Tuesday that the Whio-1 well had reached a total depth of 2824 metres and, al-though it encountered sandstones in all objectives as expected, it
could not confirm the presence of commercial hydrocarbons.
The warning signs that Whio-1 could be a dry well emerged last week when another joint venture partner, Cue Energy Resources, announced the well had hit a wa-ter-bearing reservoir in the upper objectives, the Whio A, M2A and
Upper Moki. The well was drilled using the semi-submersible Kan Tan IV rig, about 4.5 kilometres south-east of the Maari wellhead platform, and will now be plugged and abandoned.
Before drilling, the prospect had been estimated to hold mean unrisked prospective resources of
18 million barrels of oil. OMV funded the drilling under the terms of the farm-in agreement it signed in December 2012.
The Whio prospect lies in PEP 51313 where OMV holds a 30% op-erated stake and is partnered by Horizon on 21%, Todd Exploration with 35% and Cue on 14%.
Austria’s OMV comes up dry with Taranaki basin well
PERTH-based AWE has deep-ened the Senecio-3 appraisal well in Western Australia after elevated gas shows were observed in the Dongara- Wagina formation, writes Josh Lewis.
The company said on Tues-day that it had made a decision to deepen the well beyond the original target depth of 2783 metres to 3370 metres.
AWE is currently wireline logging at the deeper level.
The decision to deepen was made after elevated gas shows were observed in the Dongara-Wagina formation.
The Senecio-3 well was de-signed to test the unconven-tional gas potential on the western side of the Senecio res-ervoir.
Core samples and log data will be collected and sent for testing.
AWE has decided not to carry out hydraulic fracturing at this stage on the Perth basin well in permit L1-L2.
If the results are positive, AWE will start the approvals process for the first phase of gas field development.
The company said the well could potentially be completed as a production well in future development.
AWE is the operator of L1-L2 and is a 50% stakeholder, while Origin Energy Resources holds
AWE set to drill deeper
JOSH LEWISPerth
DIRECTORS of Australia’s Am-bassador Oil & Gas have accept-ed the unconditional takeover offer by Drillsearch Energy, the latest development in the on-going tussle between Drill-search and US player Magnum Hunter Resources.
Directors of the target com-pany control about 8.8% of the issued share capital of Ambas-sador.
Drillsearch initially made a takeover bid for the company earlier this year, before Mag-num trumped it by about 20%. This led the former to increase the cash element in its offer.
Offer acceptedestimated 2014 planned out-of-service time increased by a net 28 days.
It also increased its estimated
2015 planned out-of-service time by a net 236 days, due primarily to about 97 days associated with projects deferred from 2014.
AUSTRALIAN APPRAISAL
Wednesday 27 August 2014 Show Daily 29
PAKISTAN
PAKISTAN plans to start drilling activities for shale gas exploration in the country next year, as the government is close to finalising the nation’s shale gas policy.
Pakistan’s Minister for Petrol-eum & Natural Resources Shahid Khaqan Abbasi said that the gov-ernment was closely working on a shale gas policy framework, add-ing drilling would start next year.
Local media reports suggest that a shale gas policy has been prepared by Pakistan’s Petroleum
Ministry, which could soon be presented for Cabinet’s approval.
Pakistan is likely to offer a gas price of more than $12 per million British thermal units to explorers for shale gas production, reports said.
Pakistan had earlier approved a policy framework for three shale pilot projects in the country.
Pakistan’s technically recover-able shale gas reserves are esti-mated at 105 trillion cubic feet of gas and more than 9 billion bar-
Flagging it up: arranging a giant Pakistan flag before Independence Day celebrations earlier this month
Photo: AFP/SCANPIX
Shale gas policy on the horizon for PakistanGovernment closes in on framework with drilling due to start next year
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PERMIAN-focused US player Parsley Energy has bulked up its position in West Texas, adding acreage that will allow it to drill longer horizontal wells on its existing assets, writes Luke Johnson.
Parsley paid “multiple sell-ers” a total of about $252 mil-lion in separate transactions for 5472 acres across several un-developed and producing oil and gas properties in Reagan County, Texas.
The acreage is prospective for multiple horizontal inter-vals in the Midland sub-basin of the Permian, including the Wolfcamp A, Wolfcamp B, Wolfcamp C, Cline and Atoka formations.
By adding the contiguous acreage, Parsley said it will be able to convert 30 existing short lateral drilling locations to long lateral locations. The new properties have 157 net horizontal locations, each with an expected 6900-foot lateral.
Parsley plans to start well completions on the two un-completed wells upon closing, with the first new wells to be spud in the first quarter of 2015.
The properties have estimat-ed net production of about 1800 barrels of oil equivalent per day.
Parsley in grab for acreage
NISHANT UGALNew Delhi
rels of oil, according to the US En-ergy Information Administration.
The government of Pakistan is also carrying out a study with the technical assistance of the US Agency for International Develop-ment for further ascertaining the
shale gas potential in the country.Pakistan’s gas production stands at about 4 billion cubic feet per day, while oil production is at 100,000 barrels per day, which is insufficient to cater to the nation’s rising oil and gas demand.
30 Show Daily Wednesday 27 August 2014
FEATURE: NATIONAL OIL COMPANIES
THE need for technology and finance is eroding monopoly roles long en-joyed by some of the
world’s biggest state oil compa-nies, although resource national-ism is still pretty much the trend in many parts of the globe.
While energy-rich nations are showing a willingness to embrace foreign players, the less fortunate and especially those with grow-ing energy needs such as China and India are constantly urging their national companies to look abroad to secure supplies for their rapidly expanding economies.
Of late, Latin America is dis-playing a more pragmatic and business-driven approach to-wards foreign investment after a period of resource nationalism, which in the case of Venezuela, has hobbled its once booming upstream sector.
Mexico is setting the trend in shaking up its energy landscape through reforms that will require state-owned Pemex to compete with its international peers for major projects.
The reforms will give inter-national oil companies such as Exxon Mobil, Shell, Chevron and others access to untapped oil re-serves that Pemex says could total 113 billion barrels.
Changing attitudes In the Persian Gulf region, which con-tains the lion’s share of the globe’s conventional oil resources, state companies have yet to relax their grip on the upstream sector.
However, attitudes are certain-ly changing as several countries are allowing international players to help them develop their enor-mous resources.
Saudi Arabia, which sits on proven oil reserves of around 250 billion barrels, sees no need for reforms in its oil industry, with the national player Saudi Aramco firmly in the saddle.
Similarly, Kuwait allows no access to its proven reserves, esti-mated at more than 100 billion barrels, despite unsuccessful efforts by the emirate’s Oil Minis-try in the past decade to offer for-eign players a role in developing its heavy oil fields.
State oil company Kuwait Petrol-eum Corporation (KPC) oversees the hydrocarbon sector. Despite their monopoly role in running the day-to-day upstream operations, neither Aramco nor KPC are regu-lators since oil policy is dictated by the ruling royal families.
The United Arab Emirates, with
Eyes on the prize: Saudi Arabia sees no need for oil industry reforms but Mexico, Iran and Kurdistan are embracing change
Winds of change blowing thWhether to end monopolies and open up to foreign players are questions many nations are wrestling with
NASSIR SHIRKHANILondon
estimated oil reserves of 98 billion barrels, and Qatar and Oman have long allowed joint ventures with international companies because of their needs for cutting edge technology to get the most out of ageing fields.
The trend is bound to continue for the foreseeable future as the three Arab Gulf states have neither the required manpower nor the
technological expertise to tackle complex fields on their own. Iran and Iraq are witnessing a transfor-mation of the local upstream scene, as decades of wars and sanc-tions have wrought havoc on their oil industries, thus creating an ur-gent need for foreign participation.
The National Iranian Oil Com-pany’s (NIOC) dual role as both regulator and upstream player is
being transformed, allowing for-eign exploration companies much greater latitude.
The trend started in a mild form with the modified buy-back for-mula about a decade ago, allowing foreign companies to go on to the development stage automatically.
Now, under the newly-framed Iran Petroleum Contract formula due to be presented to interna-
tional oil companies in London in November, exploration and devel-opment are directly linked.
Joint venture arrangements will be inherent to the new formula, overcoming domestic political objections to alleged for-eign company privileges.
The planned joint ventures between NIOC and foreign compa-nies would also allow the foreign
Wednesday 27 August 2014 Show Daily 31
Photos: REUTERS/SCANPIX
hrough resource nationalism
OWNED RESOURCES (including expected yet-to-find)
0 200 400 600 800 1000 1200
4
Middle East
NorthAmerica
Russia
Asia
Billion boe
Africa
Europe
Australia
SouthAmerica
NOCs
Other companies
Graphic: Rystad Energy
TOP 30 NOCs
Qatar PetroleumRosneft
Kuwait Petroleum Corp (KPC)
PDVSATurkmenneftegaz
PemexSouth Oil Company (Iraq)
Abu Dhabi NOCSonatrach
NOC (Libya)
Petoro
GazpromPetroChina
Petrobras
StatoilPetronas
CNOOCSinopec
ONGC (India)CNPC (parent)
PTTEP (Thailand)
PetroVietnam
OMVKNOC (South Korea)
TPAO (Turkey)Sinochem
NNPC (Nigeria)North Oil Company (Iraq)
NIOC (Iran)
Saudi Aramco
“International” national oil companies -
these have a presence outside their
“own” country
Pure national oil companies
50,0
000
100
,00
0
150
,00
0
200
,00
0
250,0
00
Resources (Million bbl) Graphic: Rystad Energy
OPERATED PRODUCTION
Million boe/d
Graphic: Rystad Energy
0
20
40
60
80
100
120
140
160
180
2000 2005 2010 2015 2020 2025
NOCs
Other companies
EQUITY PRODUCTION
Million boe/d
Graphic: Rystad Energy
0
20
40
60
80
100
120
140
160
180
2000 2005 2010 2015 2020 2025
NOCs
Other companies
investors to book the relevant re-serves.
The removal of sanctions is like-ly to turn Iran, which has estimat-ed oil reserves of 150 billion bar-rels, into one of the world’s most prized upstream destinations.
Iraq, which also holds estimat-ed proven oil reserves of 150 bil-lion barrels, became a magnet for foreign investment following the
2003 US-led invasion that removed Saddam Hussein from power.
International players are now partners with regional companies in long-term technical service contracts aimed at more than dou-bling Iraq’s current oil production of 2.7 million barrels per day in the next few years.
This is a departure from the Saddam era, when Iraq ran its oil
industry single-handedly. While Baghdad does not allow produc-tion sharing contracts with inter-national companies, Iraq’s auton-omous Kurdistan region has managed to draw in such heavy-weights as ExxonMobil, Chevron, Total and Marathon Oil by offer-ing them lucrative PSCs.
The move has exacerbated a long-running oil dispute with the
central government, which claims sole authority over up-stream awards.
Nonetheless, with Iraq disinte-grating into separate Shia, Sunni and Kurdish regions, inter-national players are increasingly setting their sights on getting a larger share of Kurdistan’s estimated 40 billion barrels of oil reserves.
The removal of sanctions is likely to turn Iran, which has estimated oil reserves of 150 billion barrels, into one of the world’s most prized upstream destinations.
International players are increasingly setting their sights on getting a larger share of Kurdistan’s estimated 40 billion barrels of oil reserves.
Latin America is displaying a more pragmatic approach...Mexico is setting the trend.
32 Show Daily Wednesday 27 August 2014
NORWAY
VNG Norway has not ruled out forming a collaboration on opera-torship of its landmark Pil & Bue discovery in the Norwegian Sea if it decides on a standalone develop-ment of the dual find.
The operator is preparing to drill a pair of key exploration wells in the licence next year.
The overall size of the oil and gas discovery has now ballooned to between 80 million and 200 million barrels of oil equivalent after the latest Bue find last month that unearthed up to 25 million boe, according to VNG managing director Atle Sonesen.
The German operator has previ-ously stated that it was looking at a resource threshold of around 200 million boe for a possible stand-alone solution entailing a new floating production, storage and offloading vessel to develop the discovery — the largest off Nor-way so far this year.
Alternative development op-tions under consideration are a 32-kilometre subsea tie-back to the Statoil-operated Njord A plat-form or a longer 60-kilometre tie-back to Shell’s Draugen, where VNG recently came onboard as a partner after acquiring a 7.56%
stake from Chevron. Sonesen said the decision on a development concept will be heavily dependent on the results of two further ex-ploration wells tentatively sched-uled for drilling in late spring next year in VNG-operated pro-duction licence 586 using semi-submersible Trans ocean Arctic, with the work likely to be wrapped up by early 2016.
“We smiled when we made the Pil and Bue (Arrow and Bow) dis-coveries earlier this year, but we are smiling just as much at the up-side resource potential in the li-cence,” Sonesen told a presentation at the ONS conference in Sta-vanger, where he also played a magic card trick on the audience picked up from a magician who performed at the company’s booth.
However, he underlined the company had to carry out lots of exploration data analysis and study work before it arrives on a final development concept and could not disclose a firm timeline for the decision.
While Sonesen said the compa-ny was “prepared to take on the challenge” of its first operated project off Norway, he admitted to Upstream that a standalone devel-
opment may be a bridge too far and that it would then look to rope in a more experienced partner on the operatorship side.
“That task may be too big for us as an operator,” the VNG boss said, adding that novice operators off Norway have historically taken on smaller tie-backs rather than launching into full-blown stand-alone schemes.
“We would be prepared to take on a subsea tie-back but operating a standalone project would be a big step up that would be very challenging and there are proba-bly other ways of doing that.”
He suggested options could in-clude forging a partnership with an experienced major player, a strate-gic alliance or split operatorship.
Sonesen said VNG would focus on an area-wide solution to de-velop Pil & Bue in its core Halten Terrace area, where it also has stakes in the producing Njord and Hyme fields, as well as Draugen, and the Snilehorn discovery along with other licence interests.
Development plans: VNG managing director
Atle SonesenPhoto: STEVE MARSHALL
On call: the Transocean Arctic Photo: HELGEN HANSEN
VNG eyes tie-up for Pil projectOperator not ruling out collaboration on its landmark Norwegian Sea discovery
