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Statoil: Too Early To Write Off Barents Sea For Energy

Statoil says its failure so far to find commercial quantities of oil and gas in the Arctic Barents Sea doesn’t mean the company is ready to write off exploration in the region – yet.

During drilling this summer, Norway’s largest energy company made only a “minor gas discovery” of up to 2 billion cubic meters of gas at the Mercury well in the sea’s Hoop area, nearly 200 miles off Norway’s northern coast, according to a statement Aug. 7 by the Norwegian Petroleum Directorate.

Earlier this summer, Statoil also came up dry at a second well in the area, called Apollo, which had been occupied for two days by activists from Greenpeace. It also tapped another well at a third site in the Hoop, named Atlantis, but it didn’t contain commercial amounts of oil.

Statoil’s efforts in the Arctic came as its production in the North Sea has been declining in recent years. It had been trying to do as well in the Hoop area after it made the first commercial-level oil discoveries in the Barents sea in 10 years at the Skrugard and Havis wells in 2011 and 2012. Together, Skrugard and Havis are believed to contain at least 40 percent of Norway’s undiscovered energy resources.

The Norwegian energy giant also expected to find oil in two areas near its Hoop wells, given the oil discoveries made by Vienna-based OMV at Wisting in 2013 and the nearby Hanssen well in June 2014.
Irene Rummelhoff, Statoil’s senior vice president for exploration in Norway, issued a statement saying the company isn’t ready to give up.

“We are naturally disappointed,” Rummelhoff said. “Hoop is a frontier area of more than 15,000 square kilometers with only six wells completed to date, so we do not have all the answers about the subsurface yet. Non-commercial discoveries and dry wells are part of the game in frontier exploration.”

Still, the company stressed that “exploring for hydrocarbons in the Barents Sea takes time and stamina.”

Statoil’s move to Arctic exploration has drawn protests from environmentalist groups, who fear a spill in the region could harm its sensitive wildlife. In May Norwegian police had to remove Greenpeace demonstrators who had boarded one of the rigs in the Hoop area in an effort to stop work there. Statoil said it had strong measures to make any spill “very unlikely.”

The failure to find meaningful amounts of oil and gas in the Barents Sea was good news to Greenpeace and Bellona, a Norwegian environmentalist organization. Frederic Hauge, a Belona co-founder, said, “This is not an area where we should drill for oil, both from an environmental and economic cost perspective.”

Statoil isn’t the first company to come up dry in the Arctic. Royal Dutch Shell also has suspended operation in the Arctic north of Alaska, at least for the remainder of 2014.

Yet there has been some success in the Arctic. Russia’s Gazprom is extracting oil at the Prirazlomnoye field elsewhere in the Barents Sea, while ExxonMobil and the Russian oil giant Rosneft are exploring for oil in the Kara Sea, east of the Barents.

By Andy Tully of Oilprice.com




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