The Barents Sea ConundrumArek Socha via Pixabay.

The Barents Sea Conundrum

Looking at the present-day creaming curve, it will take up to 100 years to find 7 billion barrels. If these barrels are there to be found in the first place.

Lundin has recently drilled two dry wells in the Barents Sea (7224/4-1 (Polmak), 7219/11-1 (Bask), whilst Equinor has drilled one dry well (7018/5-1 (Spissa)).

In other words, once again it has been proved that finding new resources in the Barents Sea is not an easy task. Several explanations may be offered, such as an insufficiently diverse exploration toolbox, or – even worse – explorationists targeting the wrong plays.

In my view, however, there is good reason to believe that the real explanation for lack of success is lack of resources.

This is not how the Norwegian Petroleum Directorate (NPD) sees it. In their view, broadcasted last fall (NPD 2020: Profitable exploration on the Norwegian shelf), there is still some 7 billion barrels of oil equivalent (boe) to be discovered in the Barents Sea South. With the current creaming curve, it will take more than 50 years, possibly 100, to get to this level. Meaning that 7 billion barrels will never be found.

NPD has a monopoly of publishing resource estimates, no other oil company come close to reveal their thoughts about the NCS resource potential.

The only exception to this is Lundin Energy. In their most recent investor presentation, the successful company demonstrated that they fully believe the NPD estimate for the Barents Sea.

Lundin Energy’s Barents Sea portfolio of projects and plans for the future. Source: Lundin Energy 2021 Capital Markets Day presentation, 28th January 2021.

Is this the case also for other oil companies that have sufficient data and resources to do their own estimates? The smaller companies are obviously not qualified, that’s OK, but we do need the larger ones to challenge NPD and get a discussion going. Politicians need diversified input when planning for the future.

Indirectly we have received signals from the oil companies that their belief in the Barents Sea is dwindling.

Only three licenses were awarded in APA 2020, only 1 licence is in a frontier basin, all of them operated by Vår Energy: two east and southeast of the Goliat field in the mature Hammerfest basin (PL1131), and one where the Tromsøbassenget, Senjaryggen, Veslemøyhøyden and Sørvestnaget basins meet (PL1132). While the two licences in the Hammerfest basin classify as near-field exploration, the licence in the Barents Sea West is typically frontier exploration.

Following the forthcoming 25th round (application deadline is February 23), we will certainly get a better idea if the Barents Sea has gone from a hot spot to a cold spot.

Have a nice weekend!

HALFDAN CARSTENS

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