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Positive well for Mikkel

December 23, 1999, 14:00 CET

The latest appraisal well on Statoil's Mikkel gas field in the Norwegian Sea indicates that this discovery could be developed and operated profitably.

Byford Dolphin recently completed drilling on the southern flank of Mikkel, which was discovered in 1985 by a wildcat at the northern end of the reservoir.

An application for allocation to a European gas sales contract from 2002 was submitted by the field's licensees earlier this year to Norway's Gas Supply Committee, with the proviso that the new well lived up to expectations.

The appraisal results appear to confirm that the reservoir contains sufficient recoverable reserves to justify development, says Kjetil Ohm, core team leader for the Mikkel project.

But he emphasises that no decision to proceed has yet been taken. The licensees will be meeting in mid-February to decide the development issue.

Providing they reach agreement then, a plan for development and operation could be submitted to the authorities in the summer.

Two options are under consideration, including a subsea facility with three wells and wellstream transfer to Statoil's Åsgard B gas platform via Midgard.

This option would make it possible to recover some 16 billion cubic metres for an investment of NOK 1.7 billion in current money.

The other alternative also involves subsea production, but with the gas transferred to Shell's Draugen field. That would recover about 24 billion cubic metres but carries a development price tag of NOK 2.5 billion.

In both cases, Mikkel output would be piped through the Åsgard Transport trunkline to Statoil's Kårstø gas treatment complex north of Stavanger for processing before onward transmission to continental Europe.

The field could be on stream in 2002 or 2003, and Mr Ohm says project profitability will be good at a minimum oil price of USD 11.50 per barrel.

Mikkel straddles production licences 092 and 121. Mobil has 40 per cent of PL 092, where the state's direct financial interest (SDFI) is 30 per cent, Statoil has 20 per cent and Saga Petroleum 10 per cent.

The SDFI holds 40 per cent of PL 121, while Mobil and Norsk Hydro have 20 per cent each and Statoil and Saga 10 per cent respectively.

Hydro is retaining all Saga's interest in PL 092 when it acquires the latter company on 1 January, but its combined share of PL 121 will be reduced to 10 per cent by transferring 20 per cent to Statoil.