Norway Grants Barents Drilling Permit, Postpones Goliat Production

Transocean's Spitzbergen semi-submersible (image courtesy Glamox)

By MarEx 2015-12-25 16:33:22

Austrian energy firm OMV has received permission to drill exploration wells in the Barents Sea, about 170 nm off of Norway's northernmost tip, between the mainland and Svalbard.

The Transocean semi-submersible Spitsbergen will perform the work.

Greenpeace activists boarded the same rig last year after it returned from a season of exploration drilling for Statoil in the Barents Sea. Statoil's finds were reportedly limited, and the activists described high-latitude exploration as “not worth the risk” for the amount of oil returned.

Statoil appeared to agree with that assessment in January, when it announced that it had no plans for drilling in the Barents Sea for 2015. With oil prices down in the sub-$40 range, the cost of exploration even in mild climates and accessible locations can be challenging. The short season in the remote Barents adds to expenses and complexity.

Statoil operates the only current producing field in the Norwegian Barents, its Snøhvit natural gas development off the coast of Finnmark, which supplies the Hammerfest LNG facility with gas.

Statoil also has a joint venture with Russia's Rosneft to drill on the Russian side of the Barents demarcation line the two nations laid out in 2010, but after E.U. sanctions over Russia's involvement in the Ukraine conflict, Statoil was forced to suspend its participation.

The Italian energy firm Eni intends to start production in the near future on its $6 billion Goliat project 50 nm north of the Norwegian mainland. It is two years behind schedule and 20 percent over budget, and some analysts suggest that its break-even crude price is more than twice the current level.

The most recent delay at Goliat, announced Tuesday, comes from the Norwegian Petroleum Safety Authority. The Authority announced in November that it had audited the platform and found deficiencies in electrical system safety, especially with regard to ignition sources, and the problems have not been resolved to its satisfaction. Eni now predicts that production will begin in January.