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Statoil’s 2017 Barents Sea Exploration Proves Disappointing

Offshore

Norway’s Statoil said on Monday that it had made a small non-commercial gas-only discovery in the third well in the Barents Sea it had drilled so far this year, underwhelming earlier expectations that it could prove additional oil resources close to the Wisting discovery.  

“The well was drilled with the ambition of proving up additional oil resources in the vicinity of the Wisting discovery, but like the previous Blåmann well, we discovered gas,” Jez Averty, senior vice president for exploration in Norway and the UK, said in Statoil’s press release.

“While this well proved a non-commercial gas discovery, the results provide grounds for cautious optimism for additional potential both within this license and the Hoop Area” Averty continues.

Although the well proved minor gas and oil discovery in the production license, “the discovery is not profitable as of today”, the Norwegian Petroleum Directorate (NPD) said, adding that the well had been permanently plugged and abandoned.

In April this year, the NPD said it expected a new record in the number of exploration wells in the Barents Sea in 2017, with 15 wells slated for drilling, two more than in the record year 2014.

Statoil’s first drilled Barents Sea well this year, the Kayak well in the Johan Castberg license, found oil totaling between 25 and 50 million barrels of recoverable oil equivalents, according to the Norwegian company.

Two weeks later, in the Blåmann well between the Snøhvit and Goliat fields in the Barents Sea, Statoil found small volumes of gas, but its goal was to find oil.

Related: Shale Producers Hedge At Much Lower Prices

“We were exploring for oil and this is not the result we were hoping for,” Averty said back then.

Statoil is cutting its exploration guidance for this year from US$1.5 billion to US$1.3 billion related to efficiency gains and stricter prioritization, chief financial officer Hans Jakob Hegge said on the day the company announced its Q2 results.

“So far this year, we have drilled 14 exploration wells and made nine discoveries. Several of these can quickly be put into profitable production. Our exploration programme in the Barents Sea started with the Kayak discovery and gives us the opportunity to test several new prospects. We expect to drill around 30 exploration wells in 2017,” Statoil’s president and CEO Eldar Sætre said in the company statement.

By Tsvetana Paraskova for Oilprice.com

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