Norway awards production licenses on NCS

Uchenna Izundu
OGJ International Editor

LONDON, May 5 -- Norway has awarded 21 production licenses on the Norwegian Continental Shelf in its 20th licensing round.

In the licensing round, 34 companies were awarded production rights and 15 of those secured operatorships, including North Energy AS for the first time. Other operators include AS Norske Shell, BG Norge AS, Chevron Norge AS, Hess Norge AS, Petro-Canada Norge AS, and StatoilHydro.

StatoilHydro was awarded interests in seven production licenses and will operate five of them. Three are in the Barents Sea and four in the Norwegian Sea. "The new licenses lie in different geological provinces and their resource potential could form the basis for stand-alone developments," said StatoilHydro. However, it called upon the government to open new areas because "the chances of making major discoveries are limited."

The Norwegian Oil Industry Association (OLF) said companies won only 63 blocks despite nominating 301 blocks. Lars Arne Ryssdal, OLF's business and environment director, said production on the NCS was declining and the acreage granted would not be enough to offset it.

Norway permitted access for the first time to areas furthest to the west and north in the Barents Sea, and the information collected from these blocks will enable companies to continue further exploration.

The petroleum ministry granted 9 production licenses in the Barents Sea and 12 production licenses in the Norwegian Sea, stressing high environmental standards would be met as a result of concerns about the effects of production on fisheries. "In some blocks there have been introduced time restrictions on seismic surveys," said the petroleum ministry.

Norway's Petroleum Minister Riis-Johansen said time restrictions also were placed on exploration wells on some blocks to address these concerns.

The Norwegian Petroleum Directorate said, "This round includes blocks further northwest than previously, in an area that has been marked by significant volcanic activity. There will be significant challenges associated with mapping the prospective levels in this area because a thick layer of lava covers the levels below."

Forty-six companies applied for production licenses and 79 blocks in the Barents and Norwegian Sea were made available. Several blocks are in the deepwater Voring basin. However, the licensing round was effectively delayed for a year compared to the timing of previous rounds.

According to the ministry, the awards comply with the new management plan for the Norwegian Sea that is expected to be presented shortly as a white paper to the parliament and will provide a framework to regulate commercial activity so that it does not adversely affect the environment.

For the first time, the government allowed the public to comment on its proposal for the 20th licensing round, and it revealed which blocks were of interest after the deadline closed.

Contact Uchenna Izundu at uchennai@pennwell.com.

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