Important value – complicated geologyThe Shrek oil and gas discovery is located almost five km southeast of the Skarv field, which was found in 1998 and came into production 15 years later.

Important value – complicated geology

PGNiG’s discovery East of Skarv, on the NCS last autumn is a typical example of near field exploration giving «high value barrels».

Not much mentioned in the press, but with a relatively large portfolio, defined by a good mix of exploration licenses, development projects and production, is the brief summary of the Polish oil company PGNiG’s role in Norway.

More precisely, we can state that Polish PGNiG participates in 30 licenses on the Norwegian continental shelf (NCS), produces approx. 20 000 barrels per day from 5 fields, while oil and gas reserves at the end of last year amounted to 169 million barrels of oil equivalents (o.e.) from 5 fields and 6 discoveries.

In Poland, PGNiG is, with 25,000 employees and sales of $ 11 billion, a major player in the upstream, midstream and downstream business. The company’s total production reached 108,000 barrels last year per day, and reserves were 858 million barrels o.e. The state owns 72 percent.

It was the oil and gas discovery Shrek that made PGNiG a part of the Norwegian news scene last year. In their very first self-operated well on the NCS, the company made an interesting discovery just east of the Skarv field outside Mid-Norway. Interesting because it can prove to provide very good profitability for both the operator and the two partners Aker BP and Lime Petroleum.

Large uncertainty span

-It was in this very area that we started our business when PGNiG came to Norway just over ten years ago, says Chris Dart, Exploration Manager in the Polish company’s Norwegian department, with reference to the Shrek oil and gas discovery on the Mid-Norwegian Shelf.

Chris Dart (left), Exploration Manager of PGNiG Upstream Norway AS since 2014, and Torleif Reiersen, Chief Geophysicist, PGNiG Upstream Norway AS. Photo: Halfdan Carstens

At that time, BP was the operator of the Skarv field, but the company had limited ambitions to search the east side of the Skarv field. This opened up for other companies to grab this opportunity, and PGNiG jumped on it. Thus, in APA 2015, the company applied for an area east of Skarv and ended up becoming operator of PL 838, with DEA ​​and Tullow Oil as partners. Later, Aker BP has taken over Tullow Oil’s share, and Lime Petroleum took over DEA’s share just before the discovery well was started late last summer (Norwegian article – GEO 07/2019: “Looking for oil ONLY”).

With its exploration well on the mid-Norwegian shelf last fall, PGNiG hit what may turn out to be the jackpot. In an article in GEO 08/2019 (“Best year since 2011“) Anders Wittemann cites 6507 / 5-9 (Shrek) as one of the most profitable discoveries on the NCS last year.

We are probably talking about around 28 million barrels of recoverable oil equivalents (o.e), with a 35 percent share for PGNiG, but since it is so close to the oil and gas field Skarv, it can quickly come into production and has great value. This refers to the slogan “high value barrels” that Equinor used to describe the profitability of another discovery last year (Echino South).

In the press release from the Norwegian Petroleum Directorate, the recoverable resources were estimated at between 20 and 40 million barrels of oil equivalents. The uncertainty span immediately seems quite large, but the figures were published shortly after the well was completed. At that time, the operator had not had enough time to evaluate all the information from the two well paths.

Tectonically complicated

– We are constantly working to reduce uncertainty and expect to be able to provide a much more accurate answer in August this year. At that point, we must make a Decision on Concretization (BoK). The next step will then be to prepare a Resolution (BoV) and Plan for Development and Operations (PDO), Dart explains.

Seismic image from the Shrek prospect. Illustration: PGNiG / PGS

– Now we are also busy writing the Final Well Report which is to be completed six months after the well was completed (i.e mid-April), he adds. The uncertainty in the resource estimate is primarily related to the interpretation of the seismic data. Located just west of the Nordland Ridge, the structure is very complicated tectonically speaking.

– It is therefore difficult to correlate horizons over the prospectus, Torleif Reiersen, Chief Geophysicist at PGNiG’s Norwegian office, points out.

– Another uncertainty is the depth conversion. We are working on this to get control of the volumes.

The de-risking of the prospect before drilling was mainly done with AVO analyzes. Reiersen says that the size of the prospect was considered too small for the use of EM, and he believes the proximity to the Nordland Ridge, with salt at shallow levels, is a complicating factor in the interpretation of any EM anomalies.

After the first well, survey well 6507 / 5-9 S, PGNiG drilled appraisal well 6507 / 5-9 A «back to back». According to the Norwegian Petroleum Directorate’s press release “both the gas / oil and oil / water contacts in the appraisal well came in at the same depth as in the discovery well”. This means that the two wells gave good answers, and Dart does not think it is necessary to define the discovery further with several wells.

The two exploration wells drilled last autumn both showed that oil-water contact looks identical across the entire structure. Illustration: PGNiG / PGS

Mostly interested in gas

PGNiG is committed to supply gas to the “Baltic Pipe”, which will be filled with gas from the Norwegian continental shelf via Denmark and to the Polish market. This pipeline is to be completed in 2022. At the NCS Exploration Strategy conference in November last year, Chris Dart stated that the company therefore has a strategy to increase gas production from the Norwegian shelf from 0.5 to 2.5 billion m3 per year from 2022.

This means that both exploration (organic growth) and transactions (M&A) are part of the company’s operations over the next couple of years, where the main emphasis will be on increasing gas reserves.

Skarv – nearest neighbor

The Skarv field produces gas and oil from sandstones of the Tilje, Ile and Garn formations. The Garn formation has good reservoir quality, while the Tilje formation has relatively poor quality. The reservoirs are divided into several fault segments and are 3300-3700 meters deep. The Ærfugl segment (west of Skarv) consists of gas in sandstone of Cretaceous age in the Lysing Formation. The original Skarv reserves amounted to 382 million barrels of oil equivalent. About 60 per cent of the resources in the field were gas. PGNiG holds 11.9175 percent of the field.

Source: norskpetroleum.no

Short distance: the Shrek field is so close to the Skarv field that the infrastructure in place from 2013 can be used for start of production. PGNiG is partner in Skarv. Photo: Rolf Rydningen

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