(Reuters) – Efforts to find new oil off Norway are expected to double in 2018, preliminary company plans show, with activity rising in more mature areas after this year’s disappointing Arctic campaign.
The pressure to deliver is growing as 2017’s poor exploration results were partly to blame for a drop in interest in Norway’s latest licensing round.
Around 45-50 exploration wells, including wells to delineate previously made discoveries, could be drilled in 2018 on the Norwegian Continental Shelf (NCS), up from around 26 wells this year.
“We do not rule out that the number of NCS exploration and appraisal wells may increase by 70-100 percent year-on-year in 2018,” said analyst Teodor Sveen-Nilsen at Sparebank 1 Markets. Higher oil prices and lower drilling costs are driving appetite for exploration and supporting a recovery of the offshore drilling market.
“We are seeing appetite to global exploration returning, and Norway is a big part of that,” said Neivan Boroujerdi, a senior analyst at consultancy Wood Mackenzie.
He expects a total of 40-45 speculative “wildcat” and appraisal wells to be drilled off Norway in 2018, with uptick driven by activity in the North Sea and the Norwegian Sea.
Drilling activity off Norway could return close to the levels seen in 2013, when Brent crude LCOc1 traded at above $100 a barrel, Sparebank 1 Markets estimates showed.
On Friday, North Sea oil traded at $64.7 a barrel. Statoil (STL.OL), Lundin Petroleum (LUPE.ST) and Aker BP (AKERBP.OL) are expected to drill most of the wells.
Statoil alone plans 25-30 wells, including six wells in the Barents Sea, up from around 16 wells in 2017.
Statoil last week announced a deal costing up to $2.9 billion to boost its presence in Brazil as it seeks to add new barrels which are becoming more difficult to obtain closer to home.
Other explorers in Norway include Italian Eni (ENI.MI), Britain’s Centrica (CNA.L) and DEA, the energy group owned by Russian billionaire Mikhail Fridman.
Out of 26 exploration wells drilled of Norway this year, only eight proved oil and gas, and all were fairly minor discoveries, BMI Research, a Fitch Group Company, said.
“The result of this appears to have dampened investor interest in Norway’s 24th licensing round, which only saw 11 companies apply for production licenses,” it added.
While the Barents Sea remains Norway’s best prospective region, it had failed to deliver high expectation this year, analysts said. Only one out of five Statoil’s wells drilled in the Barents Sea this year proved oil, while the biggest hope, the Korpfjell well, showed only a small presence of gas.
Statoil plans to drill a new well at Korpfjell in 2018, and Aker BP will target a prospect at the Fedynsky High lower south.
Norwegian Petroleum Directorate plans to update 2018 exploration on Jan. 11.