Assessing gas projects

September 8, 1999, 10:00 CEST

Submitting two offshore discoveries this year as candidates for future gas deliveries is under consideration by Statoil.

Before possible development decisions can be taken for Kvitebjørn in the North Sea and Mikkel in the Norwegian Sea, the size of their reserves must be determined and a sales deal put in place.

Norway's present delivery commitments to European gas customers can be met until 2004-2005 without new field developments.

"An early Kvitebjørn development depends on being allocated to an existing gas contract as well as acceptable terms and tariffs for using third-party facilities," says Bjarne Bakken, project manager for this field.

The overall cost of developing both fields would be almost NOK 11 billion, with Kvitebjørn coming on stream in the autumn of 2004 and Mikkel able to deliver gas as early as 2002 providing plans for the project are approved by the authorities.

Statoil postponed a Kvitebjørn project last January because it was not sufficiently profitable, and is now assessing development solutions which would pay off at an oil price of USD 12 per barrel.

The proposal which permits production to start in October 2004 would need government approval of a plan for development and operation (PDO) next spring.

Mikkel, which lies south-east of Statoil's Åsgard field, contains about 15 billion cubic metres of proven gas - considered by Statoil to be insufficient for profitable production.

The group accordingly wants to drill an appraisal well on the southern flank of the discovery in the hope of finding larger reserves ahead of a development decision.

This operation is planned for the autumn, but Statoil needs a go-ahead from its partners before starting work, reports Yngve Vassmyr. He is vice president for exploration and development of the Halten/Nordland area in the Norwegian Sea.

Providing the well goes ahead and yields positive results, the aim is to have a PDO ready by next summer.

The deadline for submitting Kvitebjørn and Mikkel to Norway's Gas Supply Committee (FO) as candidates for allocation to a sales contract is 1 December.

In turn, the FO has until March to make its recommendations to the Ministry of Petroleum and Energy as the basis for a decision on which fields should be developed.