Halliburton Co.
,
Aker
Solutions ASA and other
companies supplying the oil industry may be the ultimate winners in
Norway
’s
push for producers to spend more to keep its aging offshore oilfields alive.
The government is urging producers such as
state-controlled Statoil ASA and ConocoPhillips to improve recovery rates from
the country’s oil deposits. Output has almost halved in the past decade after
40 years of pumping oil and natural gas from fields such as Ekofisk, Oseberg
and Troll.
Statoil aims to spend 8 billion kroner ($1.4 billion)
on upgrading installations this year, while Conoco is planning more platforms
at
Ekofisk
,
Norway
’s
largest oilfield. The Petroleum
Directorate estimates 54
percent of crude in existing fields may be left underground if companies fail
to improve recovery by speeding up drilling for harder-to-reach deposits.
The government push “is definitely positive for the
oil service companies,” said
Frederik
Lunde
, an analyst at
Carnegie ASA in
Oslo
,
who upgraded Aker Solutions to outperform last month. “We’ve got big projects
at Ekofisk coming, as well as contracts for Gullfaks, Oseberg and Troll.”
Norway
started output in 1971 at Ekofisk in the
North
Sea
, and oil revenue has propelled the nation
of 4.8 million people to become the world’s second-richest per capita.
Norway
’s
output fell to 1.99 million barrels of oil a day last year from about 3.12
million a day in 2000. About 8.2 billion barrels remain in producing fields.
Lot
of Talk
The government says producers need to act quickly to
make sure that production isn’t lost. When first drilled pressure forces oil to
the surface. After peak output is reached, extracting crude becomes harder,
costlier and less profitable. The amount of oil recovered from wells in aging
fields can be as much as 50 times less than a decade ago, denting
profitability.
“Time is running out and soon you won’t have any
investment opportunities left on the aging fields,” Roy Rusaa, project head at
Petoro AS, the company that oversees the state’s oil and gas portfolio, said in
an interview in Stavanger. “There’s a lot of talk, but I miss a sense of
urgency.”
Statoil’s 8 billion kroner in spending this year on
aging installations will benefit fields such as Gullfaks and Snorre, according
to spokesman Eskil Eriksen. Total SA said in November it will invest as much as
10 billion this year in
Norway
, up
by about 20 percent from 2008, in part on Ekofisk. The French company owns 40
percent of Ekofisk.
Halliburton, the world’s second-biggest oil service
provider, says
Norway
will remain a strong market. “Halliburton will maintain a high activity level
here for many years,”
Jorunn
Saetre
, head of the Norwegian unit, said
in an interview.
Raised Recovery
ConocoPhillips has raised the recovery rate at Ekofisk
to more than 50 percent from about 18 percent in 1971, said spokesman Stig
Kvendseth. The field produced about 178,000 barrels of oil day last year, down
from a peak of almost 300,000 a day in 2002.
“We’re working all the time to extract as much as
possible from Ekofisk,” Brage Sandstad, head of ConocoPhillips in
Norway
,
said in an interview. “We have six drilling operations and five well service
operations. We can’t achieve a higher level of activity on the field than what
we have now.”
Aker Solutions,
Norway
’s
biggest maker of oil platforms and equipment, has contract opportunities for as
much as 43 billion kroner this year, of which at least 13 billion kroner would
be for projects on mature fields in
Norway
,
according to Carnegie.
“We see this as an exciting evolution,”
Jannik
Lindbaek
, a spokesman for Aker Solutions,
said on the phone. “We work with technology and services that make it possible
to recover more from the reservoirs and to do so efficiently.”
Schlumberger, Baker Hughes
Statoil this week extended contracts with a combined
estimated value of 2.5 billion kroner a year with Schlumberger Ltd. and Baker
Hughes Inc. for drilling services in
Norway
.
“Industries tied to modifications and drilling will
see a high level of activity,” said Rusaa. “Everything that has to do with
drilling of wells, mapping of reservoirs and maintenance will do well. The big oil service companies stand to
gain.”
The directorate set a 10-year goal of adding 5 billion
barrels to reserves by 2015, of which two-thirds were expected to come from
enhanced recovery. An increase of 1 percent in the recovery at the 10 largest
fields would add almost 377 million barrels of oil reserves, the agency said
last year. Oil is classified as reserves when it’s approved for production.
“
Norway
I
think will be a strong market for a long time to come,” Schlumberger Chief
Executive Officer Andrew Gould said today in an interview in
Oslo
. “But
to a certain extent it’s going to depend on the extent new exploration is
allowed and to what extent new exploration is successful.”
Statoil plans to invest 20 billion kroner over the
next five years on its Troll field, which holds
Norway
’s
second- biggest oil reserves after Ekofisk, Statoil Vice President Sverre
Serc-Hanssen said on Jan. 26. Projects include drilling more wells and
injecting gas to maintain pressure.
“We need an all-out effort to ensure that the most
critical resources in the big fields don’t go to waste,”Bente Nyland, head of the petroleum
directorate said Jan. 15. “It costs money, requires big investments, but the
revenue potential is enormous.”
(
from
Bloomberg)