Weekly Cover | Making it easier to export gas from the Barents Sea would make oil operations there more profitable
Kevin McGwin
Norway’s sputtering efforts to turn the Barents Sea into a profitable oil and gas province would get a shot in the arm if it increases capacity to transport natural gas to markets in the south, according to that country’s pipeline operator.
While building a new pipeline, the preferred option suggested by Gassco in an assessment issued Monday, would cost a projected 12.5 billion kroner ($1.4 billion), proven gas reserves in the southern part of the Barents Sea are large enough that such an investment would be worthwhile, since it would stimulate new exploration and make existing operations more profitable.
Currently, five of the six most advanced production operations in the Barents Sea are oil fields, but Oljedirektoratet, the national petroleum authority, which helped compile the report, agrees that building gas-export infrastructure will make them more profitable, while at the same time promoting development of new fields, according to Kjell Agnar Dragvik, an official with Oljedirektoratet.
“An early capacity increase will facilitate more rapid development of proven gas resources, and at the same time lay the groundwork for more optimal production of oil with associated gas,” he said.
Associated gas is the small amounts of natural gas that is found in oil wells. Being able to sell that gas, rather than pumping it back into the ground for storage, as is the case with Goliat, or burning it, would help to make drilling operations more lucrative.
Also worth studying, according to Gassco, is construction of a second on-shore liquefication plant, at a cost of between 5.9 billion and 9 billion kroner. Currently, There is a single plant, located in Melkøya (pictured above), near Hammerfest. The plant processes gas from the Snøhvit field, but it is likely to reach capacity by 2050, as gas production in the Barents Sea increases.
The current findings are reversal of reversal of the conclusions of previous studies, which concluded that that there was no basis for expanding export capacity.
Likewise, Oljedirektoratet’s annual production review, issued on January 10, seemed to cast further doubt on the potential of the Barents Sea to pick up the slack before production in the North Sea began to decline.
Despite containing more than half of Norway’s estimated remaining reserves, just one discovery was made in the Barents Sea in 2019, compared with 10 in the North Sea and six in the Norwegian Sea. Similarly, expectations for the the southern part of the Barents Sea were lowered after a number of potential finds failed to pan out.
At the same time, though, Oljedirektoratet raised its estimates for the central part of the Barents Sea, after on-going prospecting and improved mapping showed evidence of more oil there than previously thought.
Mapping of the northern part of the Barents Sea continues, but Oljedirektoratet reckons the region contains the largest portion of Norway’s remaining reserves.
The Weekly Cover is The Rasmussen’s main story of the week. These articles will sometimes look ahead at one of the more important or interesting topics of the coming week, or they may provide insight and analysis about a current issue.
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