This Could Become The Most Promising Arctic Oil Basin
I described last month how one country on the planet recently bucked the trend of declining petroleum drilling: Ireland, which saw a record number of bids for offshore acreage in November.
And this week, one of the neighbors of that rising oil and gas hotspot turned in another strong bid round.
That’s offshore Norway. Where a slew of majors, plus some big first-timers from the international sector, turned out to bid for acreage in what may be the world’s most intriguing frontier basins. As reported by Offshore Magazine, Norway’s 23rd offshore licensing round drew bids from 26 oil companies — including BP, Shell, Chevron, and ConocoPhillips.
The bid round also drew in Kuwait’s Kufpec and Japan’s INPEX as first-time participants in Norway. So why is a mature territory like this getting so much attention from big players? Especially at a time when offshore drilling is being pared back globally?
Because of a major new play that’s emerging here: the Arctic waters of the Norwegian Barents Sea. A full 34 of the 57 licenses available in Norway’s current bid round are located in the southeastern Barents Sea — a location that was previously off-limits to drillers because of a border dispute between Norway and Russia.
But that disagreement is now resolved, paving the way for the Barents acreage to be taken up by E&Ps — and marking the first time in 20 years that new petroleum acreage has come available in Norway. And the prize here could be huge, according to petro-experts Wood Mackenzie. Who predicted this week that Norway’s new Barents Sea acreage could hold up to 2 billion barrels of oil and gas.
Wood Mackenzie also said that a lack of sea ice in the Barents makes this “the least severe operating conditions of any Arctic basin” worldwide. With the firm noting that, after Norwegian tax breaks for drilling are factored in, the cost for a well here could be 20 times less than a similar drill in Alaska.
That potential for lower-cost, major discoveries makes this a play to monitor. Watch to see which firms are awarded licenses here, with final announcements from Norway’s government expected before the summer of 2016.