Cooperation, technology called keys to arctic work

March 4, 2005
Tapping the undeveloped oil and gas potential of the Arctic requires cooperation between nations and new technology, speakers told a US-Norway oil and gas summit in Houston on Mar. 2.

Paula Dittrick
Senior Staff Writer

HOUSTON, Mar. 3 -- Tapping the undeveloped oil and gas potential of the Arctic requires cooperation between nations and new technology, speakers told a US-Norway oil and gas summit in Houston on Mar. 2.

"It is our hope that the huge successes we have experienced in the North Sea and the Norwegian Sea can be repeated in the Barents Sea," Norwegian Oil Minister Thorhild Widvey said. Norway plans a 19th concession round this summer that will include the Barents Sea.

The Norwegian Oil and Gas Partners hosted the summit to promote energy-development partnerships between US and Norwegian companies and research institutions.

"Norway's intention, in cooperation with our partners, is to remain a long-term supplier of oil and gas and also to contribute to continued exploration and development in the cold," Widvey said. "I see opportunities for continued cooperation between Norway and the US."

Norway's King Harald V attended part of the summit. He and Queen Sonja are touring cities in the US in celebration of Norway's 100th anniversary of independence from Sweden.

"Today, we are facing a number of challenges in the arctic regions," Harald said, emphasizing the importance of environmentally sound and sustainable business practices.

"The harsh, unique environment of the Arctic and other regions makes technological innovations critical," he said.

ExxonMobil Corp. Chairman and CEO Lee Raymond also emphasized that technology, particularly extended-reach drilling, enables exploration and development of remote, harsh environments while leaving "a smaller environmental footprint."

Advances in extended-reach drilling allow wells to reach reservoirs nearly 6 miles from their surface locations, he said.

"Successfully addressing the world energy challenges is a shared responsibility," Raymond said. "The amount of energy that will be demanded to support economic prosperity in the future is going to be huge."

Energy demand grows as economies worldwide grow, he said, noting that developing countries are less efficient in their energy use than industralized countries.

ExxonMobil estimates that by 2030, worldwide energy demand will be 335 million boe/d—50% more than is being used today. If all 335 million boe/d were oil, it would be equivalent to about 30 times the volume that Saudi Arabia now produces or more than 100 times that produced by Norway, Raymond said.

"We all know that there are very few unexplored basins remaining in the world, which means that these increased oil reserves and production will need to come from areas where we have already done some exploring and producing."

ConocoPhillips Chairman and CEO Jim Mulva said the special challenges of working in arctic conditions make it crucial that governments offer attractive terms of participation.

In Alaska, ConocoPhillips has learned "to think small," he said, noting that crews build ice roads in the winter using truckloads of ice, snow, and 1 million gal of water. The roads melt in warm weather.

ConocoPhillips has a memorandum of understanding with OAO Gazprom to jointly study development of Shtokman field in the Barents Sea off Russia (OGJ Online, Dec. 22, 2004).

One of the largest gas fields in the world, Shtokman lies in the Arctic about 500 km from Murmansk. Russia plans to develop Shtokman with an LNG terminal at Murmansk and export the LNG to the US (OGJ, Aug. 25, 2003, p. 100).

Norsk Hydro AS also is interested in Shtokman field, said Tore Torvund, Norsk Hydro executive vice-president. The company plans to draw on its experience in developing Ormen Lange gas and condensate field, which is to produce 2.5 bcfd of gas beginning in 2007 from subsea completions in 3,300 ft of water 100 km northwest of Aukra, Norway, he said.

Statoil ASA also is talking with Gazprom regarding development of Shtokman, said Henrik Carlsen, senior vice-president, Barents region, Statoil. A Gazprom subsidiary, Sevemorneftegaz, has the license for Shtokman.

"In the Barents Sea, we will need to push technological skills even farther," Carlsen said. Statoil now is working to develop a long-term perspective regarding its future involvement in the Barents Sea.