Fresh Eyes
As we were preparing to go to press, the Ministry of Petroleum and Energy and the Petroleum Directorate (NPD) announced that the Awards in Predefined Areas 2008 (APA 2008) have once again proven to be the best ever.
“The high level of interest shows that the APA system contributes to efficient exploration of the shelf, in line with the authorities’ intentions,” says Sissel Eriksen, director in the Norwegian Petroleum Directorate with responsibility for exploration.
This year’s APA 2008 was announced last May and has garnered the interest of 47 companies, with a significant number of smaller contenders on the list. Of course, the list includes heavy hitters such as StatoilHydro, Repsol, ConocoPhillips and ExxonMobil, but the number of mid-sized and smaller companies underscores that even though the region is considered mature, opportunities do exist.
Although the number of companies this year is only one more than last year’s APA, it’s important to remember that just 5 years ago during the first APA round the authorities received applications from 16 companies. The companies have not only increased – the number of blocks and partial blocks offered has increased.
All together in this round, companies have had the opportunity to apply for 215 blocks or partial blocks – an area totalling 48,057 square kilometres. The blocks and partial blocks are divided between the North Sea (114), the Norwegian Sea (62) and the Barents Sea (39).
The intention of the APA system is to promote more rapid exploration in mature areas. The programme provides predictability in that the industry knows which areas will be available in the more mature areas of the Norwegian Continental Shelf (NCS), it more attractive for new and smaller companies to establish themselves on the NCS.
When it comes to exploration, the predefined areas include acreage that has already been well explored and acreage where no exploration has been carried out for some time. The authorities are hopeful that major prospects may be discovered via the aid of new technology.
The NCS is well surveyed and data is readily available – especially in the mature areas characterised in the APA offerings. But that doesn’t mean there aren’t surprises. In August StatoilHydro announced the Dagny discovery, located some 10 kilometres northwest of Sleipner West. Not only does Dagny have the potential to be a significant, independent field, its proximity to Sleipner affords the opportunity to use existing infrastructure for development.
It’s important to keep in mind that although a total of 52,415 km2 distributed among 197 blocks or partial blocks was available in APA 2007, awards totalled 16,423 km2, of which more than 10,000 km2 have since been relinquished (and this acreage has been included in the area available in APA 2008).
Such numbers emphasise that those who apply face risks that have the potential to sink a smaller company. Without deep pockets, one false move can mean disaster for a small operator. But the smaller operators bring their own dynamic to the shelf. They can be more nimble, with a leaner bureaucracy that may be more willing to take risk. As NPD director general Bente Nyland told us during ONS: “I think this is exciting. Areas that have been explored over and over again are looked upon with ‘fresh’ eyes, and some newcomers make a hit.”
The infusion of fresh eyes also paves the way for new deals and consolidation. In essence, fresh opportunities will arise for the entire industry on the shelf.
One thing is for certain. The APA programme has done much to encourage a dynamic NCS. Larger firms work shoulder-to-shoulder with smaller, niche operators, and as the NCS continues to mature, the programme has done much to ensure the region ages gracefully
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