Barents Sea Oil and Gas Resources

The Barents Sea, supports one of the world’s major fisheries, and is as such, already economically very important. Several major oil firms have expressed interest in exploring deep into Arctic territories, and governments of countries such as the United States, Russia, Canada and Norway have been preparing for this eventuality. RIGZONE published a very interesting article this week regarding Barents Sea exploitation.

RIGZONE‘s article among other talks about this year’s oil and gas companies steps regarding the exploration ofthe Arctic with several drills scheduled to take place in the Barents Sea. More specifically:

Norwegian major Statoil plans to follow up its Skrugard and Havis discoveries of March 2011 and January 2012 with a four-well drilling campaign that it aims to complete by late spring/early summer 2013. The combined discoveries of Skurgard and Havis have been estimated at between 400 million and 600 million barrels of oil equivalent.
Eni Norge completed in December an appraisal well at its 174 million-barrel Goliat discovery which is expected to be brought into production in the summer of 2014.
Repsol has secured a permit from the Norwegian Petroleum Directorate to drill a frontier wildcat at the Darwin prospect in the Barents Sea. Faroe Petroleum, participates with a 12.5-percent in the Repsol-operated Darwin prospect. Darwin is estimated to hold one billion barrels.
Other promising Barents Sea prospects where Faroe is involved is Samson Dome and Kvalross. In Samson Dome Faroe has gained a 20-percent interest (operator BG Group holds 40 percent, while Statoil and Wintershall each hold 20 percent). A new 3D seismic dataset is being interpreted at Samson Dome, and a decision to drill is expected to be taken in 1Q 2013.
Total plans to drill an appraisal well on its Norvarg gas field, where a wildcat well discovered a resource in August 2011 that has since been estimated at more than 200 million barrels of oil equivalent.

The Barents sea is split by a natural geological border zone, following approximately along the midline between Norway and Russia. This border separates some enormous gas fields identified on Russian side from several modest discoveries on the Norwegian side. There is 0,3 billion Sm3 o.e. (standard cubic meters of oil equivalents) of extractable oil identified on the Norwegian side, mainly as gas, with another estimated 1 billion m3 unidentified.

The Barents Sea shelf has a long geological history, where rock formations favourable for later oil and gas occurrences developed. A few million years ago, when the Atlantic Ocean opened all the way to the Arctic Ocean, land on the side of the new ocean raised while land further away from the rift were not lifted. Erosion of this new land lead to decreased pressure from the above rocks on the oil and gas already trapped there. The rocks cracked leading to leakage or expansion of the gas pressed oil out of the traps.

Apart from the obvious exploration opportunities, according to Faroe Petroleum Chief Executive Graham Stewart Stewart the Norwegian zone of the Barents Sea offers additional benefits for oil and gas companies over rival frontier plays. “You’ve got a politically stable regime, albeit quite high tax… And yet they have a tax regime that encourages exploration very actively through the state participation in exploration wells – at least financial participation through the use of a tax rebate,” he pointed out.

Exploration incentives introduced by Norway in 1999 have been responsible, at least in part, for a doubling of the number of explorers drilling on the Norwegian Continental Shelf, according to a research report from Wood Mackenzie in August 2012.