Equinor Wins 29 Licenses in NCS, Finds Gas in Ragnfrid North
Equinor ASA recently won 29 licenses for exploration in mature regions of the Norwegian Continental Shelf (NCS). Moreover, it has announced a discovery of natural gas and condensate from the Ragnfrid North (6406/2-9 S) exploration well, located in the Norwegian Sea. Additionally, the state-run energy company of Norway has decided to invest NOK2.3 billion (around $270 million) in the Gullfaks Field located in the North Sea, in a bid to ramp up oil output.
Exploration Licenses in NCS
The NCS region, which supports Norway’s energy industry, provides direct and indirect employment opportunities for 170,000 people. However, the region lacks large discoveries. To improve the situation, the government of Norway recently awarded a record number of exploration licenses in 83 blocks of the matured areas in the NCS, which can boost confidence in the country’s oil and gas industry. A total of 37 licenses were awarded by the government in the North Sea, 32 in the Norwegian Sea and 14 in the Barents Sea. The licensing round received bids from 38 oil companies, out of which, 21 companies won operatorships.
Equinor won the majority of the blocks as it received 13 operating licenses and 16 licenses as partner to other exploring firms. The company believes that the winning of the licenses is in line with its strategy of maximizing value creation using its existing infrastructure in the region. The awards are also expected to provide the company with opportunities to test new ideas, which can lead to creation of new growth options for Equinor.
Another Norwegian company Aker BP won 11 operating licenses, while Sweden’s Lundin Petroleum received nine operatorships. The list of other companies that won exploration licenses comprises ConocoPhillips COP , Royal Dutch Shell, France’s TOTAL S.A., and others.
New Discovery
Equinor discovered natural gas and condensate in its Ragnfrid North (6406/2-9 S) exploration well, which is partnered by Exxon Mobil Corporation XOM, TOTAL and Petoro. The company expects 6-25 million barrels of oil equivalent recoverable resources from the region. Located in the Norwegian Sea, the well lies 20 kilometres south of the company’s Kristin platform, wherein it will likely be tied.
The company expects the new discovery, along with the Lavrans and Erlend East discoveries to provide it with a clear picture of the potential of the region. Drilling of the well commenced on Oct 3, 2018 by the West Phoenix rig, which will now be relocated to Equinor’s Big Foot prospect in the U.K. Continental Shelf.
Gullfaks Field Oil Recovery to Get a Boost
Equinor intends to invest NOK2.3 billion (around $270 million) in the Gullfaks Field of the North Sea, in order to boost oil production. The company submitted its spending plan to the Norwegian Petroleum Directorate, which appertains to use water for pressure pumping in the wells, located 1,700-2,000 meters under the seabed. Equinor plans to drill seven new wells in the Shetland Group reservoir. The wells are expected to help the company enhance oil recovery by 17 million barrels.
Production from the field is currently profitable due to the use of natural fracking techniques. Equinor’s breakeven oil price from the fields with carbonate reservoirs like Gullfaks is currently less than $30 per barrel, which makes the project significantly profitable. Operator Equinor has 51% stake in the field, while partners Petoro and OMV have 30% and 19% interest, respectively. The companies have invested more than NOK1 billion in the production wells since 2013, which resulted in the production of more than 6 million barrels of oil.
Price Performance
Equinor has lost 4.4% in the past year compared with 5.7% collective decline of the industry it belongs to.
Published: 16-01-2019
