Statoil bets on Flemish Pass

A lot has changed for Statoil in the past four years. In 2010, the company had two core exploration areas (the Norwegian Continental Shelf and the US Gulf of Mexico), said Jez Averty, Senior Vice President of Exploration for Statoil, North America. Now the company has six: the Norwegian Continental Shelf, US Gulf of Mexico, Brazil, Angola, Tanzania, and now east coast Canada.

Averty touted the Norwegian explorer’s recent success exploration success. “We have discovered, through the drill bit, more than 3.9 billion boe net to Statoil. That’s a billion barrels a year,” he said.

“Nobody found more conventional hydrocarbons than Statoil in 2013,” Averty said. “It’s a good time to be working in exploration in Statoil.”

Statoil is betting that its east coast Canada portfolio, where the “ground-breaking” discovery Bay du Nord was made in 2013, will pay big dividends. Bay du Nord is inside the Flemish Pass basin, off Newfoundland, Canada, and is located southwest of discovery areas Harpoon and Mizzen, and just north of the oil-producing Jeanne D’Arc basin. According to IHS data, Bay du Nord was the largest conventional oil discovery by volume of 2013 at 400MMbbl. Statoil estimates that Bay du Nord holds 300-600MMbbl of recoverable oil equivalents. “We believe there’s more to come,” Averty said. “A lot more.”

Offshore Newfoundland and Labrador contains an estimated 6 billion bbl of oil and 60Tcf of natural gas (See “Global exploration prospects: 2014 and beyond” from OE Jan 2014).

Last June, Statoil announced a light, high-quality oil discovery at its Harpoon prospect (EL 1112), located 500km northeast of St. John's and about 10 km southeast of Statoil's Mizzen discovery. The West Aquarius drilled the Harpoon prospect in approximately 1100m of water. Discovered in 2010, the Mizzen discovery is estimated to hold between 100-200MMbo, and was drilled by the semisub Henry Goodrich in 2009.

Statoil operates Bay du Nord and Harpoon with a 65% interest. Its partner Husky Energy holds the remaining 35% stake. Canada’s Husky also operates the White Rose field and its three satellite developments in the Jeanne d’Arc Basin, approximately 350km (210 mi.) east of St John’s. Jeanne d’Arc Basin is home to three major oil projects off the Newfoundland coast: White Rose, Hibernia and Terra Nova.

Statoil is very excited about what the future of the Flemish Pass will bring. Along with Harpoon and Mizzen, Statoil has proven half a billion of oil recoverable in the Flemish Pass, Averty said.

“We have identified multiple opportunities, similar-sized structures to Bay Du Nord,” he said. “Some we believe will have impact potential.”

Averty says Statoil’s future plans include firming up values and volumes of Bay du Nord, and proving additional resources. The company will do this by shooting 3D seismic in the Bay du Nord area this spring. In addition, Statoil will also move the Seadrill West Hercules from Norway’s Barents Sea to east coast Canada to begin an 18-month program commencing in either 3Q or 4Q 2014.

“Bay du Nord and its associated prospects represent high value barrels,” Avery said. “The water depth is moderate (1100m), the reservoir quality is good, the oil quality is good, and the development of production technologies are largely proven.” The oil at Bay du Nord is a light crude with 34°API.

The next move for Statoil is to agree on a development plan. Averty said the company has assembled a multi-disciplinary task force to assess the feasibility of a Bay du Nord development. Part of that task force’s assignment is to identify prospects further to the north, and push the play into the northeast, and into deep water, he said.

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