Norway - Significant North Sea Discovery by Statoil Suggests Possible Slower Decline of Regional Production

22 Aug 2011 • by Natalie Aster

Statoil's discovery in the North Sea confirms that the region retains significant oil and gas potential, although it will not change the company's growing reliance on the Norwegian Sea and Barents Sea, given the natural decline.

Norwegian operator Statoil has reported a "high-impact" well discovery in the Aldous Major South prospect in the North Sea (PL 265). The 65 metre oil column was identified in the Jurassic sandstone and has been reported to be of "excellent" reservoir quality. The company estimates primary volumes to be 200-400mn barrels of oil equivalent (boe). This well could be linked as a tie-in to the Alvanese discovery (PL 501) made earlier last year as the same oil-water contact has been found in the two structures. Statoil said that it would update its resource estimate for the combined structure as soon as the data is fully available and analysed.

A Considerable Discovery in a Declining Market

There has been a 40% decline in oil reserves in Norway in the past decade, equivalent to 5bn barrels (bbl). This has been mainly due to the terminal decline in the North Sea - the traditional centre of Norwegian offshore exploration. This decline has been evidenced by disappointing Q111 exploration results, as it emerged that none of the six offshore wells drilled in these three months, including those in the North Sea, were commercially viable.

Norwegian Output Declining

Norwegian Oil Production, Consumption And Exports


e/f = estimate/forecast; Source: Historical, BP Statistical Review of World Energy, June 2011; Estimates/Forecasts, BMI


The Aldous discovery is certainly welcome news for Statoil, but is unlikely to lead to a significant rise in exploration investment in the Norwegian North Sea, owing to its mature status, although further such discoveries could lead to a slower decline rate. In order to maintain reserve replacement rates and boost output, Norway has been encouraging companies to boost extraction from existing fields and re-develop mature areas.

International Expansion Firmly on the Agenda

With declining Norwegian production, Statoil has been boosting its international exposure by leveraging its expertise in offshore and deepwater exploration. One market where this expertise has paid off is Brazil, where, in H111, Statoil announced the start of production from its offshore Peregrino heavy oil field, and followed that with the news of a new oil discovery at two related sidetrack wells in June 2011. We expect Statoil to continue pushing forward its global expansion while maximising the returns from its asset base in Norway.

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Saudi Arabia Oil and Gas Report Q3 2011;

Russia Oil and Gas Report Q3 2011;

Iran Oil and Gas Report Q3 2011;

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Egypt Oil and Gas Report Q3 2011;

Bahrain Oil and Gas Report Q3 2011;

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