No oil for Statoil in Barents Sea well

May 13, 2005 02:00 AM

A closely watched wildcat exploration well in Arctic waters that Norway hopes will be its new oil frontier turned out to be another disappointment, the national petroleum agency said.
The dry well was drilled at the Guovca prospect in the Barents Sea, some 115 km (70 miles) off Norway's far northern coast, by the state oil company Statoil.

The oil industry is keenly interested in Barents Sea drilling because it is the last unexplored area of the Continental Shelf of Norway, the world's third-largest oil exporter after Saudi Arabia and Russia. Norway, with a capacity of about 3.2 mm bpd of oil, needs to find more oil to shore up for declining production from older fields in the North Sea. And the market is hungry for oil, with crude prices around $ 50 per barrel, near record levels.
"Even though no oil or gas was proven on Guovca, we still have great expectations for the Barents Sea, and we firmly believe in the potential for new discoveries in the north," said Tim Dodson, Statoil's senior vice president for exploration off Norway.

Despite the dry well, the Norwegian Petroleum Directorate also expressed confidence that the Barents Sea will produce oil and natural gas strikes. The well showed a sandstone layer of oil reservoir quality, even though there were no hydrocarbons. The well was drilled to a depth of 1,270 meters (4,166 feet) below sea level by the floating oil rig Eirik Raude.
Norway shares the Barents Sea with Russia, and the Nordic country's sector alone is estimated to have 8 bn barrels of oil equivalents, which is a measure of the energy content rather than the volume of petroleum.

However, oil companies have faced repeated disappointments in the far north, drilling 62 costly wells with only three wells hitting hydrocarbons, all at Statoil's Snoehvit natural gas field. In March, another Norwegian oil company, Norsk Hydro, said its latest Barents Sea well, drilled by the same rig Eirik Raude, was also dry.
This year's Arctic drilling has also been plagued by spills from Eirik Raude, in violation of strict environmental protection rules for the Barents that allow no emissions from oil rigs into the ocean. That is because the Barents Sea is rich in fish stocks and has a fragile cold water ecology.

So far this year, the rig had one spill, of hydraulic oil, while drilling for Statoil, and two while drilling for Hydro, none of which damaged the environment. However, The Norwegian Petroleum Safety Authority shut down the rig until operators presented a credible plan for stopping the spills. It resumed drilling on May 10.
Statoil, with a 50 % share, managed the latest drilling operation on behalf of its project partners Norsk Hydro, with 35 %, and the Norwegian division of the Italian ENI group with 15 %.

Statoil, founded by the government in 1972 to oversee Norway's petroleum interests, employs 24,000 people in 29 countries.

Source: Associated Press
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