Having grown its portfolio through acquisitions, mergers and other asset transactions in recent years, Norway-based Aker BP is stepping up its exploration game with plans to drill 15 wells this year in hopes of adding resources.
That’s up from ten last year and marks the most the company has ever drilled in a single year, according to Evy Glørstad -Clark, senior vice president of exploration for Aker BP.
“Aker BP is known for basically growing their resource base by inorganic growth not organic growth. We’ve done mergers and acquisitions for years now. Looking at the market from 2013 and onwards, it was cheaper to buy than to find oil,” said Clark. “But the trends are changing. And in 2018 it was actually cheaper to explore for oil and gas instead of buying.”
Speaking during Aker BP’s recent capital markets day, Clark spoke about some of the notable wells the company plans to drill near existing infrastructure, or so-called infrastructure-led exploration (ILX), as well as growth opportunities that could become stand-alone developments if there is exploration success.
Exploration budgets across the oil and gas industry took a hit during the latest downturn. But as market conditions improve, companies are looking to add barrels through exploration as they work to meet the world’s growing energy needs. Many like Aker BP are drilling near existing infrastructure, a move that keeps costs down, while also venturing into new areas in search of new growth opportunities.
Aker BP plans to spend about $500 million on exploration in 2019, up about 40% from last year.
The amount falls to $88 million when the roughly $312 million tax effect and $100 million for field evaluation are factored into the equation. The company aims to continue bringing down costs, including further lowering finding costs to less than $1 per risked barrel.
Clark described one well Aker BP plans to drill as a “potential game changer.” The Norwegian Sea prospect, called Vågar, has a predrill resource estimate of between 62 million barrels of oil equivalent (MMboe) and 128 MMboe. The company believes the Permian carbonate play prospect has a moderate chance of success.
Aker BP is also planning to chase potential hydrocarbon resources at the JK and Hornet & Freke-Garm prospects. JK, which is located near the Johan Sverdrup discovery, has a predrill resource estimate of between 100 MMboe and 420 MMboe. If Aker BP makes a discovery here, the company says it could become a stand-alone development.
Hornet & Freke-Garm is a potential cluster development. “Hornet is a pure exploration prospect,” Clark said. “Freke is a small discovery and we’re testing the upside of this discovery.”
The list also includes ILX opportunities such as the Froskelår Main, which is in the same injectite complex as the Frosk discovery in the North Sea; Rumpetroll, a sand injectite complex also near the Frosk discovery; and Hod Deep West, a play test in the Norwegian sector of the North Sea. The latter, Clark said, is an extension of a production well testing deeper plays near the Valhall discovery. “It’s low exploration cost with the potential for great value addition to the Valhall asset,” she said. “This is how we like to work with our producing assets.”
About 60% of the wells Aker BP plans to drill are near existing infrastructure, and most are in the North Sea. The company is pulling back this year on exploration in the Barents Sea after unfavorable well results. Permian play tests have been delayed until 2020.
“We’re taking a step back and we’re evaluating where we are,” Clark said after pointing out Aker BP participated—albeit not as operator—in almost every well drilled last year in the Barents Sea. “It doesn’t mean that we’re giving up. We’re still looking into how we can unlock the potential of the Triassic play.”
Most of the yet-to-find resources on the Norwegian Continental Shelf are in the Barents Sea, and half of this is in the Triassic succession where the company and its partners have not cracked the code.
“It’s a tight reservoir and the resources are spread over large distances. But we have now strategically acquired quite a few licenses in the same trend to really see if we can unlock this potential,” Clark said. “Is there something we can do with technology to get these resources out of the ground? Is there something we can do with imaging so we can see the stratigraphic traps we still haven’t been able to identify?”
Undiscovered resource potential in the northern part of the Barents Sea is 9 billion barrels of oil equivalent (Bboe). The southern half of the Barents has nearly as much potential with an estimated 7 Bboe, according to Aker BP.
Velda Addison can be reached at firstname.lastname@example.org.