Denmark is a small Scandinavian kingdom located north of Germany. It covers an area of 16,600 sq miles (43,000 sq km) and has a population of 5 million people. Denmark has until recently mainly been an agricultural country but with strong maritime traditions going back to the Vikings. The main player in the Danish oil and gas industry is the Maersk Group with maritime roots as a major ship owner in Denmark.
Internationally the Maersk Group is also known as the owner of the Maersk-Sealand line. Today Denmark is the only European Community country with a net export of oil and gas.
The Danish oil and gas history is relatively new. In 1935 the entire area of Denmark was licensed for oil exploration to Danish American Prospecting Co. The license was in 1939 transferred to Gulf Oil, and in 1957 Gulf Oil sold the license to Exxon (Standard Oil). In 1959 Exxon gave up without finding oil, and the license was returned to the Danish state.
At the same time the German oil company Deusches Erdoel AG (DEA) applied for a license covering the Danish area near Germany. As it was only 15 years after World War II and the German occupation of Denmark during the war, German companies were not popular in Denmark. The Danish ship owner, A.P. Moller decided that his company should apply for the license. He approached the Danish government to explain that it would be a bad idea to give the license to a German company. Moller made it clear he was willing to take over the license together with competent partners. In 1962 Moller was granted the license and formed the basis for the Danish exploration via the Danish Underground Consortium (DUC). DUC was formed as a partnership with Gulf Oil and Shell.
The initial exploration activities in DUC took place onshore, but in 1966 DUC started exploring for oil in the North Sea west of Denmark. Oil was discovered in the first attempt in 1966, and further discoveries were made in 1967. This was the first oil found at all in the North Sea, but the discoveries needed to be further evaluated. In 1970 the discovery made in 1966 was declared commercial, and production facilities were ordered for this discovery. The discovery was later called the Kraka field.
In 1971 the Dan field was discovered about 120 miles (200 km) off the Danish west coast,
|Dan field producing oil via a mooring buy to a tanker in the 1970s. All associated gas was flared. (Photo courtesy of ISC A/S)
nearly halfway between England and Denmark. It was decided to develop this field instead of the discovery from 1966. From Brown & Root three platforms already had been ordered for the Kraka field: a wellhead platform, a treatment platform and a flare platform. The fast decision was to locate the three platforms on the Dan field instead of the Kraka field as originally planned. The platforms were installed in 1971 and 1972, and the field came in production in July 1972 as the first field producing oil from permanent facilities in the North Sea.
In the beginning Gulf Oil operated for DUC, but by 1962 Dansk Boreselskab A/S (later renamed Maersk Oil & Gas AS) was formed as a 100% Moller-owned operating company. Maersk Oil & Gas AS has since the late ’70s been operator for all DUC platforms in the Danish North Sea.
There was a problem regarding the borders in the North Sea. Most borders were drawn in the sea between Denmark, Norway and England in the mid 1960s. The border between Denmark and Germany in the North Sea was drawn in 1971 after the discovery of the Kraka field. When the line between the Danish and German shelves were drawn, the Kraka field should have been on the German side. But due to the fact that it already had been discovered by Denmark, it was agreed that the area near the Kraka field remained Danish territory. Shortly after this agreement, the Dan field was discovered by DUC in the same area.
Later in the 1970s two additional wellhead platforms were added to the Dan field.
DUC/Maersk Oil brought a number of new oil and gas fields on stream during the 1980s and 1990s. Further pipelines to the Danish shore for stabilized oil and for dry export gas were commissioned. The gas pipelines are connected to the European gas grid.
Maersk Oil developed in the 1980s a low-cost minimum concept platform (STAR) which has been a prototype for a number of unmanned minimum concept wellhead platforms in the Danish North Sea.
The majority of the Danish oil fields are producing from formations of very tight chalk. Originally the recovery factor for the Dan field was only 6%. Many attempts have been made to increase the recovery. Maersk Oil early on developed a combined technology with very long horizontal wells (up to 6 miles or 10 km long), acid stimulation and sand fracturing of wells as part of the well completion and water injection phase. Although water injection is not easy in such tight formations, Maersk Oil made the first tests with water injection in 1986, and today many of the Danish offshore installations produce with water injection. The recovery factor has meanwhile increased to about 24%, and other enhanced oil recovery methods are being tested as well with the aim to bring the mean recovery factor up to more than 30%.
In 1999 two new operators, Statoil and Hess Denmark, brought offshore installations into production. Later the Statoil license was sold to DONG E&P, now operating the Siri field.
In 2007 the Danish area is producing from 46 platforms and 3 subsea installations. Eleven of the platforms are normally unmanned remote wellhead platforms. The oil production peaked in 2004 with a yearly production of 142 MMbbl (22.6 million cu m) of oil (daily production of 390,000 bbl). The gas production peaked with a yearly gas production of 407 Bcfg (11.523 billion cu m) in 2005. The oil and gas production has decreased a little since, but no major changes are foreseen in the years to come.
After 35 years as oil producer, Denmark has been self-sufficient with energy for the last 10 years and will remain self-sufficient for many years into the future. Presently the total self-sufficiency is about 150%, which means that more than half the production of hydrocarbons is exported, as Denmark imports coal for production of electricity.
It should finally be mentioned that the Faeroe Islands and Greenland are Danish dependents and part of the kingdom, and possible future oil/gas activities in these areas will partly be Danish activities.
Editor’s Note: This article is based on information from books and booklets in Danish by Lars Sondergaard and the book “A.P. Moller and the Danish Oil” by Morten Hahn-Pedersen.