This article is extracted from PESGB Monthly Newsletter, December 2006 and republished with permission.
The Norwegian Barents Sea: Historical Overview and Future Perspectives
By Llion Wyn Pritchard, North-West Europe Area Coordinator - IHS, Tetbury, Glos.
Introduction
Successful frontier exploration and low political risk are not often associated in today’s petroleum industry, particularly in mature provinces like North-West Europe. However, developments over the last two years in the Barents Sea, have given truth to this assertion. The view that the Barents Sea could become Europe’s latest major offshore oil and gas province has been significantly strengthened by ENI’s successful appraisal of the Goliat oil field, and Statoil’s recent announcement that it is considering developing Snøhvit’s oil leg. In addition, the award of 6 new licences in Norway’s 19th Licensing Round has opened additional acreage for future exploration. So, with guaranteed infrastructure, it could just be a matter of time before the Barents Sea achieves its potential.
Geography
Covering an area of 1.4 million sq km, the Barents Sea lies some 500 km inside the Arctic Circle between Svalbard to the west, and Novaya Zemlya to the east. In the north, it borders the Arctic Ocean, and in the south, the coastlines of both Norway and Russia. Water depths average 230 m, with the deepest depth reaching 500 m (see Figure 1).
Figure 1: The Barents Sea location map.
Exploration History
Prior to the 1980s, drilling north of the 62nd parallel had not been permitted, although seismic surveys had been undertaken on the Barents platform in the 1970s. The first offshore well in the area was drilled by Hydro in the summer of 1980 (7120/12-01). The following decade saw an active period of exploration, which resulted in the discovery of the area’s most notable gas fields, namely Askeladd and Albatross in the early 80s, and of course Snøhvit, which also featured an oil leg, discovered by Statoil in 1984. In 1987, the Saga well 7124/3-1 found minor gas over a thin oil zone. This was the first well in the West Finnmark area, and its results were judged encouraging for further exploration in the Barents Sea. Non-commercial oil had already been encountered in the East Finnmark region in early 1984 by Statoil in well 7128/4-1. The eastwards progression continued for the remainder of the 1980s with the discovery of the Triassic gas/condensate accumulation 7226/11-1 by Statoil in 1988.
During the 1990s, operations were mainly concentrated in the Hammerfest sub-basin, which hosts the Snøhvit, Askeladd and Albatross fields. However, one well 7128/6-1, was drilled by Conoco in the East Finnmark region in 1991, which recovered oil shows in Permian carbonates. The new millennium saw a new chapter of exploration in the Barents with ENI’s successful Goliat discovery, and plans regarding the development of Snøhvit went through the motions before they were finally approved in March 2002.
Snøhvit
Snøhvit is scheduled come on-stream in late 2007, with contractual deliveries of gas to start in December that year. The final phase of development drilling came to an end in early August 2006 with ten wells drilled, nine for production and one for carbon dioxide injection.
The field has a gas column of 124 m overlying a 14 m thick oil leg in Lower and Middle Jurassic formations. The discovery well (7121/4-1) flowed 17,763 Mcf/d and 239 bc/d from the Tubaen Formation, 3,143 Mcf/d and 591 bo/d from the Nordmela Formation and 685 bc/d and 29,876 Mcf/d from the Sto Formation (Figure 2). Current reserve estimates for the field come to 5.7 Tcf and 113 MMbc. The oil leg, which was not included in the initial PDO is thought to contain around 50 MMb.
Figure 2: Snøhvit Field Section.
The overall development plan of Snøhvit includes the construction of Europe’s first LNG plant on the island of Melkøya, near Hammerfest. A 145 km multiphase pipeline will link the field’s subsea facilities to the plant, which will have an annual gas liquefaction capacity of approximately 200 Bcf. A separate pipeline will then transport carbon dioxide, removed from the wellstream at the receiving terminal, for reservoir injection. Both subsea production and pipeline transport will be monitored and controlled remotely via fibre optic cables at the plant. Furthermore, at the Melkøya facility, water, condensate and carbon dioxide will be stripped from the gas stream, which is then liquefied and exported via LNG carriers.
A new dawn
Primarily due to environmental and ecological constraints imposed by the Norwegian government, and expectations over the outcome of a White Paper governing future activity in the area, the late 1990s saw little activity in the Barents Sea. A three-year moratorium was imposed on any petroleum activity, starting in 2001, and when lifted, full year activity was only allowed for the southern sector of the Barents Sea. Since then, however, the three exploration wells drilled have proved unsuccessful; Statoil’s Guovca (7131/4-1) and Uranus (7122/11-1S) wells were both dry, and Hydro’s Obelix (7220/6-1) well only encountered traces of oil.
Future exploration is now relatively secure thanks to 6 new licences, covering 4,526.4 sq km over some 17 blocks (or parts of), awarded as part of the 19th Licensing Round in March 2006 (Figure 3). This was the first time since 1996 that such awards had been made, and it is being expected that these awards will form the basis for a gradual and efficient exploration of the northern and eastern fringes of the Barents Sea. Core blocks for further geological study were also included in the round. Statoil and Hydro, as expected, were the big winners this time round, with the UK gas company BG obtaining a single licence to operate.
Figure 3: Norwegian Barents Sea - fields, wells and licence locations.
During the same period that the licensing round was announced, the government issued its ‘integrated management plan’ which will close off certain areas from petroleum activity. The aim is to ensure that fisheries and petroleum activity in the Northern seas can be undertaken in an environmentally responsible manner. Some of the areas where restrictions will apply include the coastal zone along Troms and Finnmark, Bear Island and Tromsøflakket. A revision of this plan is scheduled for 2010.
Blocks are also on offer in the Award for Predefined Areas of 2006, and mainly concentrated in the Greater Snohvit area. The awards should be made in December 2006.
A future energy province
With various agencies and academics claiming that the Arctic regions hold some 25% of the world’s undiscovered hydrocarbon resources, the view that the Barents Sea could be Europe’s next big oil province began when oil was found in commercial quantities with ENI’s Goliat discovery in 2000. Oil and gas are trapped in sandstones of the Realgrunnen Group (Middle Jurassic - Upper Triassic). The structure is different from other discoveries in the area, being a Cretaceous compressional structure developed as a result of lateral movements along the southern boundary Fault. This structure may not have undergone as much uplift as the other structures and therefore retained its oil. It may also have received its charge from the oil expelled from the other fields in the basin as they underwent inversion in the late Tertiary.
A highly successful drilling campaign in 2005 upgraded Goliat’s reserves to 200 MMbo and 280 Bcfg. Oil was also encountered in two deeper intervals, with the deepest reservoir (Triassic) indicating significant volumes of gas. A second appraisal program of two more wells, targeting two separate structures, began in September 2006. Reports suggest that the estimated additional mean oil potential could be in excess of 100 MMb.
Further successes will definitely warrant a definitive development plan, with various scenarios now being considered by the operator.
With current oil prices hovering between US$50 and 70, it was inevitable that Snøhvit’s oil leg, previously thought unprofitable, would become a matter of commercial interest. the Norwegian Petroleum Directorate (NPD) has long pushed for this, and now Statoil is evaluating whether oil production is feasible. A new appraisal well is planned to make a better judgment of the oil zone, and to give further information on the recoverable reserves, which NPD currently puts at between 50 and 100 MMbo. One concern is the timeline involved, as reservoir pressure will diminish with gas production, making it much harder to extract the oil as time goes on.
Exploration potential
Knowledge of the prospectivity of the Barents Sea is limited, with only 63 exploration and appraisal wells drilled to date. Exploration in this vast region is still in its infancy. NPD puts total undiscovered resources in the Barents Sea at 6.2 Bboe, with an uncertainty range between 2.8 and 10.7 Bboe. Oil in place is put at 1.25 Bboe. (Figures do not include disputed areas and the continental shelf surrounding Jan Mayen.)
The most established plays in the Barents Sea platform area are confined to the prolific Hammerfest Basin. These mature Lower to Middle Jurassic plays are tilted fault blocks, where main shallow marine sandstone reservoirs are sealed by transgressive Upper Jurassic shales. In some cases, erosion took place leaving eroded sandstones unconformably overlain by Upper Jurassic shales. The Goliat success definitely adds scope to the Jurassic Structural-Uncomformity play in this area.
In the central and eastern parts of the platform, it is believed that Triassic plays are prevalent. These are either tilted fault blocks or elongate domal structures, containing Triassic shallow marine sandstones sealed by interbedded mudstones and shales, or pinch-out traps associated with salt pillars and walls. The latter play is largely confined to the Nordkapp Basin. NPD’s regional structural maps show a large number of the aforementioned domal structures in Triassic sediments in the northern part of the Kong Karl platform to the north of the Hopen Hogda. These structures also are present adjacent to the deep Northern and Southern Barents basins in the ‘Disputed Area’ between Norway and Russia. Such deep basins could source the structures through lateral migration.
A high-risk play could be in the Devono-Carboniferous Structural setting, mainly located in the early grabens on the Barents Sea platform. Lower Carboniferous fluvial sandstones failed in Statoil well 7128/4-1 due to tight reservoirs. Tightness is also the factor in large bioherms of the Upper Permian play, although leached reservoirs could prove prospective, as in 7128/4-1, which encountered oil.
Carbonates and sandstones of the Permo-Carboniferous, unconformably overlaid by Triassic shales, were proven to contain residual oil by Norsk Hydro well 7120/2-1. It proved that a large oil field had existed, but which was probably destroyed by fault seal failure due to Tertiary uplift.
In the northern and southern flanks of the Hammerfest Basin, and probably around the flanks of the Nordkapp Basin, Lower Cretaceous turbidite fan sandstones sealed with interbedded shales exist. Shell’s well 7120/1-2 tested sub-commercial oil from this play; it could have further exploration potential.
However, , based on erosion mapping undertaken, it is likely that significant volumes of hydrocarbons were lost to migration in Upper Eocene – Lower Oligocene times as seabed uplift and erosion led to the fracturing of the cap rock. Not all areas in the Barents were affected by these processes, and the level of exploration success is a firm indicator of the potential of the region.
Russia and the ‘Disputed Area’
The border between Norway and Russia in these northern waters has long been disputed. Disagreement on how to demarcate the border, which stretches to the Arctic sea, has meant that the so-called ‘Disputed Area of 173,000 sq km, has remained untouched by oil exploration activity for the last 30 years. With estimated resources of 12 Bboe, the ‘Disputed Area’ is of great interest to both countries.
However, relations between the two countries are good; both Statoil and Hydro were strong contenders as partners to Gazprom in the giant Schtokman gas field development. Others are Total, ConocoPhillips and Chevron. (Latest information is that Gazprom is to go it alone.)
The Russian sector of the Barents is estimated to contain recoverable (P+P) resources of 430 MMbo, 180 MMbc and 96 Tcfg. The Schtokman field, discovered in 1988, contains gas reserves (ABC1 category) of some 90 Tcf and condensate reserves of 150 MMb in several Jurassic reservoirs. It is expected to be onstream in 2010.
Conclusion
A new phase of exploration activity is starting in the Northern waters of Norway. Statoil has already made a successful drilling campaign this summer, finding gas with its Tornerose appraisal well 7122/6-2; and ENI kicked off the first of two wells to appraise the Goliat area in Q3. Ongoing seismic programs will elucidate some of the acreage awarded in the 19th Round, and it will not be long before further drilling campaigns are announced. It remains to be seen if the Barents Sea blocks under offer in the APA 2006, mainly in the Hammerfest Basin and Snøhvit areas, will be taken up. Finally will border negotiations between Moscow and Oslo finally come to a conclusion, a result which could unlock resources of potentially 40 Bboe located in the Artcic seas?
For more information concerning this article, please contact Andrew Hayman, Director, Industry Relations at IHS Energy (andrew.hayman@ihsenergy.com).