UPDATE 3-Big Statoil Arctic find revives Norway’s oil future (Reuters)

April 1st. 2011, Reuters, Original article here

* Skrugard holds 150-250 mln boe recoverable reserves

* Potential upside for total 500 mln boe

* Most significant off Norway in last decade

* Nearby prospect could also have big potential

* Statoil shares to three-and-a-half-year high

(Adds environmental concern, updates shares)

By Gwladys Fouche and Henrik Stoelen

OSLO, April 1 (Reuters) – Norway’s Statoil (STL.OL) has made a big oil find in the Arctic North, the firm said on Friday, breathing new life into Norway’s declining oil prospects and lifting the company’s shares to a 3.5-year high.

The company said the 150-250 million barrels of oil equivalent Skrugard discovery in the Barents Sea could potentially hold up to 500 million barrels and is the most significant off Norway in the last decade. It said a nearby prospect also looked promising. “This is fantastic, a breakthrough for us in this section of the Barents Sea,” Gro Gunleiksrud Haatvedt, Statoil’s head of exploration off Norway, told Reuters.

“This find will lead to a new boom in exploration in the area,” said Magnus Smistad, an analyst at Fondsfinans. “This is an exciting area and the potential could be even bigger.”

Statoil shares were up 2.2 percent to 156.7 crowns at 1612 GMT while shares in Italy’s Eni (ENI.MI), which has a 30 percent stake in the licence, were up 1.85 percent to 17.65 euros.

Norway is the world’s fifth-largest oil exporter and the second-largest for gas but its oil output has been declining since 2001 and oil discoveries have become ever smaller.

In January Norwegian authorities slashed their estimates for offshore undiscovered oil and gas resources by 21 percent to 16.4 billion barrels of oil equivalent, making the country less attractive to oil majors — until today. [ID:nLDE70B1MD]

“This discovery is the missing element needed to develop the Barents Sea into an oil province over the long-term,” Norwegian Minister of Petroleum and Energy Ola Borten Moe said in a statement.

Finding oil in the Barents Sea has been tough. More than 80 exploration wells have been drilled there since 1980 but only two discoveries have been made — Statoil’s Snoehvit gas field and Eni’s Goliat oilfield.

Discovered in 2000, Goliat was the biggest oil find made in the Norwegian Barents Sea until now, with an estimated 240 million barrels in oil equivalent.

The find could lead to renewed concern about the impact of oil activity in a remote part of the Arctic, following the BP (BP.L) oil spill in the Gulf of Mexico.

Before drilling on Skrugard began last year, the Norwegian Polar Institute expressed worries about the potential impact of oil leaks that could get trapped in the Arctic sea ice, which extends to within some 150 kilometres (93 miles) north of Skrugard.

Haatvedt said Statoil would drill another well at Skrugard next year, which is about two-third oil and one-third gas, as well as another well at a nearby prospect.

“The other prospect has big potential, with a strong upside,” the executive said, declining to offer more details. The third partner in the license is Norwegian state-owned firm Petoro, which holds a 20 percent stake.

“It takes between 5 to 10 years from making a discovery to production, so we are planning for the future now … “We want to start production as soon as possible,” Statoil said, adding that it saw possibilities for a stand-alone production installation for Skrugard.

(Editing by Richard Mably and Jason Neely)

New Norwegian oil minister open to Arctic drilling

March 4, 2011 | 08:07
Reuters Original article here
Norway replaced its oil and energy minister on Friday, appointing a rising politician who is more open than his predecessor to the prospect of drilling in a pristine Arctic archipelago.

Terje Riis-Johansen, who personally opposed drilling in the Lofoten region, resigned after months of criticism of his handling of a costly and delayed carbon capture facility and a plan to build power cable across a scenic fjord.

He was replaced by fellow Centre Party politician Ola Borten Moe, a 34-year-old farmer who is the grandson of former Prime Minister Per Borten and a rising star in Norwegian politics.

The oil industry has said that only by allowing drilling off the Lofoten Islands, a region rich in fish and unique cold-water reefs, can Norway prolong its oil boom as output from North Sea oilfields dwindles.

“Under certain circumstances I would not exclude the opportunity (of drilling in Lofoten),” Moe told Reuters after being presented to the King as the new oil minister.

Norway is the world’s No. 5 oil exporter and No. 2 gas exporter, although its oil output, now about 2 million barrels per day, has dropped by a third since peaking in 2001.

Moe said his position was consistent with the Centre Party view that no formal impact assessment of drilling off the Lofotens should be allowed during this parliamentary term, which ends in 2013.

The Labour-led coalition government is discussing whether to carry out such a study, largely seen as a stepping stone to opening the region for oil exploration.

Moe has said previously three conditions would need to be met for him to support drilling: Norwegian oil firm Statoil would need to show greater efforts on safety and the environment; oil spill preparedness must be improved; and jobs would have to be created in northern Norway region.

Moe told Reuters he was in favour of building gas power plants in Norway, a controversial topic in a Nordic country whose electricity is generated by hydroelectric power, although their emissions should be captured by carbon capture and storage.

Prime Minister Jens Stoltenberg said his government’s energy policy would remain largely unaffected by the minister. “(Moe) stands on the same political foundation as the whole government,” Stoltenberg told Reuters.

“Everyone who is interpreting things should take it easy.”

Aside from environmental controversies, Riis-Johansen has taken heat over revelations that his ministry awarded power generation concessions to two publicly-owned companies that made illegal donations to his agrarian-backed Centre Party.