Barents Sea newcomer Chevron has latched on to its first exploratory acreage in Norway’s 19th oil and gas licensing round, the first such offering since 1996 opening new frontier areas to drilling in the Arctic waters of Norway’s continental shelf.
However, while awarding Chevron and 16 other companies new Barents and Norwegian seas production licenses, Norway also set new rules prohibiting exploration and production within a 31-mile zone near Norway’s coast, including the Lofoten islands, until at least 2010.
Norway’s long-awaited offshore management plan was viewed as a compromise between pro-industry members of Parliament and a new coalition of left-leaning political parties that gained power in Norway’s September 2005 national elections.
The coalition, known as the Socialist Left Party, vowed to halt oil and gas development in environmentally sensitive offshore areas such as the Barents Sea, a major Norwegian fishery.
“Within the framework of sustainable development and ecosystem based resource management, consideration to the different industries has been balanced,” Odd Roger Enoksen, Norway’s petroleum and energy minister, declared March 31.
Chevron picks up six blocksMeanwhile, U.S.-based Chevron, through its Norwegian subsidiary Chevron Norge AS, picked up the exploration rights to six blocks awarded in Norway’s 19th licensing round, the company announced April 5.
The award marked Chevron’s entry into Norway’s portion of the Barents Sea, an under-explored Arctic region that extends into Russian territorial waters and, thus far, has produced mixed drilling results.
“Our successful bid for exploration acreage reflects Chevron’s intention to pursue attractive growth opportunities in the region and furthers our strategy to achieve superior exploration success from a focused, high-impact exploration program,” said John Watson, Chevron’s president of international exploration and production.
Under terms of the license award, Chevron received a 40 percent interest in the six blocks, with Norway state-controlled Statoil serving as operator with a 40 percent interest. RWE Dea Norge AS holds the remaining 20 percent interest.
The blocks are located in the Nordkapp East basin of the Norwegian Barents Sea, about 155 miles north of the coast of Finnmark in about 800 feet of water. PL 397 license specifically includes blocks 7230/2, 3, 4, 5, 6 and 7231/4, according to Chevron.
License PL 397 was applied for jointly with Statoil under a long-term Area of Mutual Interest agreement signed between Chevron and Statoil in November 2005.
Norway issues 13 new licensesIn total, Norway issued 13 new licenses to 17 companies covering 33 whole or partial blocks located mainly in the Barents Sea. In addition to Stateoil, Chevron and RWE Dea, licenses were offered to major Norwegian operators Norsk Hydro and ConocoPhillips, Norske Shell, ENI Norway and DNO, but also to Amerada Hess, BG Group, Talisman and Total, as well as Idemitsu, Gaz de France, Revus Energy, Discover Petroleum and Noreco.
Work programs for the licenses include at least four exploration wells, one appraisal well, seven “drill or drop” decisions on allocated acreage, and the collection of a minimum of 9,860 square kilometers of 3-D seismic data.
Companies resumed drilling in the Norwegian sector of the Barents Sea in early 2005 for the first time since 2001, after the previous government ended a moratorium on drilling activity in the Arctic against protests by environmental groups.
The number of applicants in the 19th licensing round was up from 18 in the 2004 round and up from 13 in the 17th round, reflecting increased industry interest in the Barents Sea, despite the region’s harsh Arctic climate and political risks.
“It is a positive that the new government has decided to stick to the original schedule for the 19th round,” Norsk Hydro said in a statement.