HOUSTON—Some energy companies chasing potential hydrocarbon bounties in a region commonly known for its harsh environment, high price tags, infrastructure needs and environmental sensitivity are finding success and progressing multibillion-dollar projects.

Projects like the Equinor-operated Johan Castberg development in the less harsh Barents Sea and Bay du Nord discovery in the Flemish Pass Basin offshore Newfoundland in the Atlantic Ocean highlight the Arctic region’s potential. The region, which continues to compete with onshore areas for investment dollars, still has its challenges but has managed to attract players, according to panelists speaking Nov. 5 at the Arctic Technology Conference.

“The change for us has been increased investments and knowledge of our prospectivity,” said Doug Trask, assistant deputy secretary of royalty and benefits for Newfoundland and Labrador’s Department of Natural Resources. “Prior to the last five or six years we were not investing and the awareness was not there of how many basins we had and what the size of some of those potential discoveries were.”

Newfoundland and Labrador has more than 20 basins with lots of exploration potential, he said, noting its regularly scheduled license rounds have played a role in gaining new entrants to its offshore region. The government has also made strategic investments in geoscience, including 3-D seismic data, in advance of license rounds to help attract investors.

“Newfoundland is well positioned to play a role in supporting Arctic development. We have 50 years of exploration behind us and 20 years of production in some of the most challenging offshore environments there is characterized by icebergs, sea ice and difficult metocean conditions,” Trask said. “Today we produce about 1.8 billion barrels of oil from a number of facilities.”

The province has undertaken a 12-year plan to speed up oil and gas development offshore, aiming to drill more than 100 exploration wells in multiple basins and increase production to more than 650,000 barrels of oil equivalent per day from the current level of about 250,000 barrels by 2030.

Production from the Exxon Mobil Corp.-operated Hebron project, which started production in late 2017, is expected to help in reaching the goal. The platform, which consists of a stand-alone gravity-based structure about 350 km (200 miles) offshore Newfoundland and Labrador, will produce up to 150,000 barrels per day at its peak.

In addition, first oil is expected from the Bay du Nord project, the first deepwater project offshore Newfoundland and Labrador, in 2025.

“We’re certainly looking to continue to develop our offshore,” Trask said. But its competitiveness hinges on the success of R&D initiatives and innovation, he added. These include remote sensing, offshore training, subsea technology and other emerging areas such as digital technology, AUVs and DNA environmental monitoring.

Another challenge when it comes to Arctic developments, including in Norway’s “High North” Arctic region, is not having enough existing infrastructure.

“If you [make] a discovery in the Norwegian Sea or in the North Sea these days, you might have a host facility that you can tie back to and that will reduce the needed size of the discovery to be commercially attractive,” said Lars-Erik Aamot, director general and head of oil and gas department for Norway’s energy ministry. “So that is the key for the future in the north. We need to do more big discoveries that have standalone potential and then of course exploration success is needed.”

It helps that Norway’s Barents Sea is ice-free, a benefit of the warm Gulf Stream, during the summer.

The region has two main producing fields in the Arctic: Equinor’s Snøhvit, which provides gas for Hammerfest LNG and the Eni-operated Goliat Field, Aamot said. But more are in the works as Equinor moves forward with the giant Johan Castberg Field. The company recently said it found more oil with its nearby Skrius exploration well, further confirming the potential of the Barents Sea. Castberg is estimated to hold between 400 million and 650 million barrels of oil with startup planned for 2022.

The development also illustrates that some Arctic projects can be economic. Equinor and partners cut the costs of the Castberg subsea development, which will utilize an FPSO, from NOK 100 billion to 50 billion by changing the design concept.

Aamot added that Castberg is economically viable with an oil price of about $30 per barrel.

The “Barents Sea has grown in the last decade from low exploration activity and no producing fields to become a fully-fledged petroleum province,” Aamot said. “As long as discoveries are made they should be profitable there as elsewhere on the shelf.”

A consistent and reasonable regulatory environment is also needed to draw investment, according to a statement by Alaska Sen. Lisa Murkowski. In the statement, read in the senator’s absence by Sara Longan, executive director of the North Slope Science Initiative, Murkowski wrote about Alaska’s Arctic potential, the North Slope’s recent designation by IHS Markit as a super basin “ready for oil resurgence” and technology advances such as extended-reach drilling.

“We can now access more resources from less land than ever before and we can do that more safely than ever before,” she said.

The U.S. Geological Survey estimates that the Arctic holds more than 30% of the world’s undiscovered gas resources and 13% of the world’s undiscovered oil resources.

Velda Addison can be reached at vaddison@hartenergy.com.