Norwegian Licensing Round to Spark Further A&D Activity?

Big names, medium-sized players and small operators featured in the list of 38 production licensees for exploration of predefined, mature areas on the Norwegian continental shelf (NCS).

"This illustrates the diversity of companies on the NCS," said Terje Riis-Johansen, minister of petroleum and energy with the country's government, on announcing the awards in predefined areas for 2009.

Norway's ministry of petroleum and energy received applications for production licences in the seventh licensing round for mature areas on the shelf from 44 companies and granted them to 42 firms.

The 38 permits were divided between the North Sea, for which 25 were handed out: the Norwegian Sea (10) and the Barents Sea (2).

Riis-Johansen commented: "The industry's continuing interest for these areas indicates that the annual licensing rounds in mature areas work in accordance with the purpose of an efficient exploration of the mature areas."

Using Existing Infrastructure

The Norwegian government stressed that although these areas, the most explored on the shelf, often yield small discoveries which do not justify a standalone development, they can be profitable with a tie-in, perhaps leading to acquisition and divestiture (A&D) activity.

"It is therefore important to discover and develop resources in these areas before existing infrastructure in connection to other fields in shut down," the ministry said in a statement.

Among the licensees were Centrica Resources (Norge), Lundin Norway, BG Norge, ExxonMobil Exploration and Production Norway, BP Norge, Skeie Energy, E.ON Ruhrgas Norge, Dana Petroleum Norway and GDF Suez E&P Norge, many of which have been involved in other A&D activity over the past year.

Near-field Exploration

Statoil Petroleum was among the biggest winners in the licensing round, which is the seventh since the inception of such mature area awards in 2003. The company has seen record-high exploration activity during the past two years.

Most of the wells drilled by Statoil have been near-field, where discoveries can be quickly brought on stream.

Tove Stuhr Sjùblom, senior vice president of exploration on the NCS, said that the company was very pleased with this year's awards.

"The annual availability of acreage in mature areas on the NCS has provided the industry with constancy and formed the basis for the good results we have achieved in our near-field exploration during recent years," she commented.

Maximising Norway's Potential

Tove Stuhr Sjùblom said that the permits will allow the firm to maximise the use of its existing near-field infrastructure.

"The licences can provide additional volumes on fields already in production and thereby extend the lifetime of installations," she explained.

Gunnar Myrebùe, executive vice-president in charge of projects and procurement at Statoil, said at this month's Offshore Strategy Conference that the NCS was and would continue to be important for the Statoil and Norwegian industry.

"Bold technology developments and close collaboration with suppliers have brought us to where we are today. And it is these elements that will take us forward," he said.

"Nevertheless, we do have to acknowledge the spiralling development of costs during the past decade and the trend of reduced quality in our deliveries."

Perhaps this will lead to further A&D activity within the sector.

Boosting Knowledge with A&D

It is not just Norwegian companies that see advantages in the country's energy industry, however. Scottish firm Dana was awarded interests in nine offshore blocks under six production licenses. Chief executive Tom Cross said the company was delighted with the announcement.

"Some ten new exploration prospects have already been identified within these blocks with total unrisked reserves potential of more than 200 million barrels of oil equivalent net to Dana," Cross commented.

"This provides a significant portfolio of new opportunities, building upon Dana's existing business in Norway," he added.

Bayerngas Norge, meanwhile, secured six licenses and is aiming to continue growth within the NCS in the future. It has already built up a solid knowledge base for development within the region through A&D activity.