Norway offshore oil production reaches a plateau

Life in the Norwegian sector of the North Sea is quite different from what it was just a few short years ago.
Coming to terms with change
from: Offshore Engineer
by: Rick von Flatern
Sunday, August 01, 2004

For the opening salvoes of this month’s Scandinavian special, OE’s US editor Rick von Flatern recently returned to Norway to check out the changes at first-hand and assess industry reaction to them.

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As is true in much of the world, oil and gas production offshore Norway has reached a plateau and it is a matter of time before it begins to decline. But as longtime industry watchers know, this inevitable progression does not signal the oil province’s end but only a midlife change. And as long as it learns to adapt, the future of the arena is no less exciting for its entry into maturity.
And all indications are the sector is indeed learning to live with its new life-style. Norwegian Continental Shelf operators which once wrote budgets centered on giant fields like Ekofisk and Troll are today focused on finding ways to squeeze the last economic barrel of oil from maturing fields. At the same time, smaller, quicker independents capable of turning healthy profits from deposits too small to concern majors are making their way there to do just that.

Strategies in the new Norway are driven by two quite similar categories of increased oil recovery (IOR) and tail end production. IOR is the practice of adding reserves in existing fields by accessing deposits bypassed during the fields’ initial development because they were deemed uneconomic or technologically too challenging.

Tail end production, while similar, is aimed at recovering more hydrocarbons from primary reservoirs. Capturing additional hydrocarbons is not dependent on tapping virgin zones, but on extending the life of producing zones through more efficient recovery practices.

The good news for service companies and contractors is that the success of both goals is dependent primarily on technologies developed during the years following the initial phases of offshore exploration and production, of which they have an abundance that operators have heretofore been slow to take up.

‘We went through all the fields that we operate to see what kind of methods we need to improve recovery,’ says Norsk Hydro’s head of increased recovery Robert Nygard. ‘Not unexpectedly we found that technology was the most important issue for increased recovery.’

Looking over its list of additional wells to accomplish its IOR goals, Hydro discovered that half the plans involved branched wells and less than 20% were what might be described as ‘conventional’ well bores. That is due in some measure to the fact that Hydro, like most offshore Norway operators, is slot constrained and so there is no room to spud new wells from existing infrastructure.

And as the target formations are by definition relatively small, they cannot economically justify new topsides. Also, the current wells are still producing and even though they may be approaching their economic limit, operators are loath to kill them in exchange for only the possibility of another target.

As a result, Norsk Hydro, ConocoPhillips, Statoil, BP and others on the Norwegian shelf, large and small, are turning to multilateral wells and re-entering existing wellbores to kick off and drill sidetracks that remain within the relatively thin zones common to Norway’s continental shelf.

Aided by rotary steerable drilling systems equipped with highly accurate and increasingly sophisticated real time control and monitoring tools, operators are able to expose considerable amounts of new pay while leaving the producing zones below the kickoff point in place. And when that drilling capability is combined with increasing multilateral competency, the result is the exposure of tens of thousand of meters of new formation from existing wellbores.

Where multilateral wells might be described as a macrostrategy, other technologies are also drawing the attention and the NOK of Norwegian shelf operators. Smart well technology is being used to control flow and injection in order to optimize production while avoiding the risk and cost of intervention. Likewise operators in Norway are quickly embracing remote operations and remote monitoring including the use of real time operations centers. And BP has broken new ground in 4D seismic technology by transmitting immense volumes of seismic data to the beach in near real time from its ‘Life of Field Seismic’ (LoFS) array entrenched in the ocean floor.

The invasion of the NCS by aggressive independents also means more activity and more technology-based strategies. Canada-based Talisman, for instance, first entered the Norwegian North Sea just over a year ago when it purchased the Gyda field from ConocoPhillips and almost immediately announced plans to drill three new wells in 2004 and between three and six wells in the next two to four years. They have already announced the discovery of new reserves in the Gyda field as a result of employing new technology.

More than necessity is driving the Norwegian oil industry to adapt technology. In a white paper released in May, the government disappointed many operators by refusing to adjust its notoriously high tax rate on production, telling operators instead they should look to technology to improve their bottom line. The paper even singled out ConocoPhillips’s real time operations center as a prime example of how to do just that.

The Norwegian government also has perhaps the most stringent HSE policies in the oil and gas industry. As such, almost by default, the sector has led the movement to keep workers out of harms’ way and to replace human error with mechanical precision through rig automation, including the use of automated pipe handling and stabbing and makeup tools and other robotic devices.

That is not to say everyone in Norway is rushing to embrace technology. It is still the oil industry and as such many of its members have a cultural bias against change. But according to oil professionals around Stavanger and elsewhere in Norway, the days of the naysayer may be numbered. ‘It is the middle layer between the visionary at the top and young technology enthusiasts that is holding it up,’ says one young Stavangerbased drilling engineer of his company’s use of new technology. ‘It is time for them to get out of the way.

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