NOW READ OUR ARTICLES IN 40 DIFFERENT LANGUAGES.
HOME PAGE SUBSCRIPTIONS, Print Editions, Newsletter PRODUCTS READ THE PETROLEUM NEWS ARCHIVE! ADVERTISING INFORMATION EVENTS

SEARCH our ARCHIVE of over 14,000 articles
Vol. 20, No. 47 Week of November 22, 2015
Providing coverage of Alaska and northern Canada's oil and gas industry

Statoil departs

Company follows Shell lead, abandons Chukchi Sea exploration program

ERIC LIDJI

For Petroleum News

After nearly eight years in Alaska, Statoil plans to relinquish its stake in 66 federally managed leases in the Chukchi Sea region and close its regional office in Anchorage.

The Norwegian major cited poor results of nearby exploration, which means the effects of Shell’s disappointing exploration program in the Chukchi are continuing to ripple.

“Since 2008 we have worked to progress our options in Alaska. Solid work has been carried out, but given the current outlook we could not support continued efforts to mature these opportunities,” Statoil Executive Vice President for Exploration Tim Dodson said in a prepared statement on Nov. 17. The company said it would leverage its experience in Alaska’s Arctic to improve its future operations in other “northern environments” around the world. “Our understanding of the challenges and opportunities has increased considerably over the last years. This gives Statoil a unique position and experience which the company will continue to apply going forward,” Dodson said.

Statoil will drop 16 wholly owned leases and its stake in 50 leases operated by ConocoPhillips. The leases were awarded in 2008 and would have expired in 2020.

According to Gov. Bill Walker, the Statoil decision “further emphasizes the need to develop our onshore opportunities, such as the 1002 section of ANWR (the Arctic National Wildlife Refuge).” And U.S. Sen. Dan Sullivan, R-Alaska, said he would “keep fighting to modernize our permitting process - both offshore and onshore, where there are still billions of barrels of oil and trillions of feet of natural gas - in order to bring much needed energy security to our country, and economic security to Alaskans.”

Early excitement

Even before the Chukchi Sea lease sale in early 2008, Statoil was interested in Alaska.

After a 2007 merger created StatoilHydro, the company joined the Alaska Oil and Gas Association and the Resource Development Council for Alaska, two local trade groups.

A week before the lease sale, Odd Instefjord, an advisor with the company, told attendees of the annual Meet Alaska conference, “Alaska is pretty much like Norway. So I feel like home.” Describing StatoilHydro’s global operations, including its extensive Arctic projects, Instefjord said, “I can see that Alaska is not on the map yet. So we consider, still, Alaska as one of the top priority items, I can assure you, but we are still not here.”

At the Chukchi lease sale in February 2008, StatoilHydro USA E&P Inc. bid nearly $57 million on 33 blocks, including $14.4 million in high bids on 16 blocks. Of those, Statoil had partnered with Eni Petroleum US LLC on 14 leases and held a 60 percent interest.

Even though Statoil bid on far fewer blocks than either Shell or ConocoPhillips, its arrival was intriguing. As a Norwegian company, Statoil had decades of operating experience in the Arctic and was the largest producer of offshore oil and natural gas in the world. Having cut its teeth on the Ormen Lange gas field in the Norwegian outer continental shelf, the Snohvit gas field in the Norwegian portion of the Barents Sea and the Shtokman gas field in the Barents Sea, off the northern coast of Russia, the company saw Alaska as a natural extension of its efforts. “StatoilHydro sees this as an opportunity to achieve a competitive position in a new frontier basin with long-term growth potential, while also advancing the Arctic initiative,” Halvor Engebretsen, vice president for StatoilHydro’s Arctic growth theme, told Petroleum News in 2008, after the sale.

By late 2009, Statoil was opening an office in Alaska and planning an extensive 3-D seismic survey over its leases in the Chukchi. In early 2010, Statoil greatly expanded its holdings in the Chukchi by acquiring a 25 percent interest in 50 ConocoPhillips leases.

Even though a court injunction delayed the seismic survey until the tail end of the open water season, Statoil was still able to complete its program in mid-2010. In early 2011, Statoil said the program had identified two prospects: Amundsen and Augustine.

The company said it would use the upcoming open water season to conduct a site survey in advance of wells and future pipelines and to take core samples at potential drilling sites. In March 2012, the company announced plans to begin exploration drilling in 2014.

Setbacks

By that time, though, the Chukchi Sea leasing program and the individual exploration efforts of leaseholders were embroiled in various lawsuits. By September 2012, Statoil had deferred its program until 2015, and possibly later, while it waited for resolution.

Meanwhile, ConocoPhillips cancelled its immediate plans for exploration drilling in the Chukchi, and Shell faced legal, regulatory, meteorological, logistical and technical delays before finally undertaking exploration drilling. After Shell abandoned its long-standing and expensive Arctic exploration program and the federal government cancelled planned leases sales in the region, earlier this year, Statoil apparently reached the end of its rope.



Did you find this article interesting?
Tweet it
TwitThis
Digg it
Digg
Print this story | Email it to an associate.

Click here to subscribe to Petroleum News for as low as $89 per year.


Petroleum News - Phone: 1-907 522-9469 - Fax: 1-907 522-9583
[email protected] --- http://www.petroleumnews.com ---
S U B S C R I B E

Copyright Petroleum Newspapers of Alaska, LLC (Petroleum News)(PNA)©2013 All rights reserved. The content of this article and web site may not be copied, replaced, distributed, published, displayed or transferred in any form or by any means except with the prior written permission of Petroleum Newspapers of Alaska, LLC (Petroleum News)(PNA). Copyright infringement is a violation of federal law subject to criminal and civil penalties.