[I plan to come back and re-work this blog- give me a few days, ed.]

Oil and Gas Exploration in the Barents Sea, October 6-7, St. Ermin’s Hotel, Caxton Street, London, SW1H 0QW





October 7: Day Two
Chair’s Opening Remarks

Hans-Christen Rønnevik, Vice President Exploration, Lundin Norway AS
Lundin’s Story: How Do We Unfold Reality In A Mature Area? Lundin’s exploration activities based on 42 years of experience in the Barents sea; The Gohta oil discovery; The petroleum habitat of the Loppa High

Begins quite philosophically, about the role of knowledge. “Visions are achieved by action, not by thinking”. Fact and experience based operational knowledging (conceptual procedures). [I will have to return to post up some of Hans’s slides, which are made up of declarations which he states in a clear punctuated manner – mainly, modeling is not a method of thinking, but certainly a necessary skill] — continuously unfold reality as you interact with it – to explain broadband 3D for deterministic mapping as input to models. Gohta discovery in the Loppa high, 2013: recoverable resources 10-23 Sm3 oil/ 8-15 billion sm3 gas; 2014: Gohta 2 Environmental mapping in Barents Norway since 2007, working with NGU and FFI.

Key Note: Denis Francois, Geoscience Director, TOTAL E&P Norge AS and Dominique Roy, Western Europe New Ventures Manager¸ TOTAL E&P Norge AS: Weighing up economic implications of operating in the Barents Sea; Facing technological challenges – experiences from Novarg and Snøhvit; Managing operations in an unfavourable climate condition. Total/Fina/Elf – Yet to Find. West Barents 4.8 boe and East Barents NO 2 boe. Novarg – new venture stage: 2008 to license award 2009. Looking to set up an LNG ii train to Snøhvit.

Artem Rabey, Exploration Manager, LUKOIL Overseas North Shelf: Tectonic development, depositional environment and sedimentation; Analogies with Timan-Pechora basin; Hydrocarbon potential — two licenses in Norway.

Knut Gunnar Amaliksen, Senior Geophysical Advisor, Wintershall Norge: Predicting the good reservoir; The Importance of field work; Be brave and the rewards will come. Pre-Jurassic reservoirs. PL611 – Kvalross Analogue (Edgeøya, Svalbard).

Hot Topics discussion: Hans-Christian presents the problems — How do we form strategic alliances in rig sharing; should there be tax breaks in Barents Sea; Cost issue where 500 million barrels is appropriate development; Will Statoil’s step program build efficiency; Can the French take more Snøhvit gas to France; what about oil spill issues and environmental concerns; and local community impact on development in the region; Have we solved the problem of oil and gas, and can it be done without more exploration and what is the role of tax relief.

Cost issue: Terje Flaten, Statoil, takes the stage to present the issue — what kind of single oil pool accumulations can you have for commercial development given oil price scenarios and current cost regimes – I didn’t quite say 500 million barrels, could be distance to market, technics etc. e.g., Golath is 175 million barrels – Johan C. field, two accumulations, had they been in one single accumulation we would have been happier. Further into the Barents need to find +300 million barrels oil. Industry self inflicted upon itself a cost regime that 3 times larger than previously, and now the cost profile is [through the roof] – attempting to standardize at the High North – lower scale of cost, pushing back on prices for development because of differences in Barents versus North Sea (e.g., depth);

Gas strategy for transportation: ? from the back of the room — delivering gas to Western Europe is a political issue, that could create security in the region.

Environment: Stig-Morten Knutsen, talking about lenses and in-situ burning for oil spills. Several issues that need to be working as an industry as an issue. Other speakers focus effort on well-blow out prevention instead of on spill. When you talk about oil spill, its about optics. Also safeguarding — evacuation, getting people in and out — waiting for initiative to expand base on Bear Island or does the industry invest into creating better preparedness.

Rig alliances – [what can be created among oil companies and a rig fleet on continuous activities and a coordinated rationalized plan] – The longest lead item to carry this out is the Rig – “have an adult conversation about our needs and then approach the rig owners”. Looking for a group rig share for the 23rd license. Tax relief — 78% investment return.

Ove Tobias Gudmestad, Professor of Marine Technology, University of Stavanger; Emergency Operations, Evacuation And Rescue In The Barents Sea; The physical environmental conditions in the Barents Sea; Emergency and evacuation operations in the cold arctic seas; The geography of the Barents Sea and rescue operations – Arctic versus cold climate region (Barents region). Referring to Barents 2020 map created by DNV with step wise development into Barents area.

Stein Sandven, Vice Director, Nansen Environmental and Remote Sensing Centre
Breaking the Ice: Managing Operations in Icy Environments; Understanding different structures of ice and how to incorporate this knowledge into operations; Predicting and detecting ice to optimise exploration operations; Identifying technology to ease operations in ice; Learning from past operations in remote, ice ridden regions: case study of other Arctic regions — How do we predict and how do we detect.

October 6: Day One
Chair’s Opening Remarks
Hans-Christen Rønnevik, Vice President Exploration, Lundin Norway AS

8:58AM – Just getting started here – a hush has taken over the group of about 50 industry players and now it looks like Anna Townsend, Program Manager, is going to get us started with a quick announcement, including a welcome to Dolphin Physical, a company sponsor, and a few Russian presentations were cancelled because of visa issues, and a few other persons who may or may not be coming, and now Hans-Christen.

“Welcome to a Norwegian conference, the same hotel where Philby delivered his secrets to Russian agents, and here we are years later and with the same situation with Russians not able to obtain visas”.

Tax relief giving a new life to the Norwegian Continental Shelf (NCS). More diversity and many more companies now involved in NCS development. Amended tax regime as on the UK shelf in the 1980s led to more players. Barents opening began in the 1960s with hypothesis looking for inverted Volgian highs.

Latest – Active concession policy and new players from 2002: Johan Castberg, Wisting and Gotha results of 3D seismic and the geologists belief in the possibilities. 33 companies are cooperating on 4 broadband 3D seismic surveys for 23rd round. The truth is not determined by majority voting. Renewed interred due to oil success and large structures available.


Opening Address: The Barents Sea, A New Era
Wenche Tjelta Johansen, Head of G&G, Norwegian Petroleum Directorate
Exploration history of the Barents Sea
Undiscovered resources yet to find
Requirements for the Norwegian Continental Shelf and Barents Sea
Updates on the 23rd licensing round

78 fields in production, 60 in North Sea, 17 NCS, 1 in Barents; 13 fields being developed. Prolonging production requires enhanced recovery, opening new areas. 480 wells drilled on NCS (12 drilled 2005, lowest ever, has increased because of high prices, last year second highest exploration wells ever).

Key inputs to assessment: number of possible prospects, size distribution, probability of success, hydrocarbon phase. Statistical methods: calculated stochastically (Monte Carlo simulation), results for individual plays are aggregated to give a total quantity, presented as a probability distribution.

Creaming curve Barents Sea, based on 90 wildcat wells, last three years considerable resource growth. Optimism is back in the Barents sea and explorations wells highest in the last two years.

Barents Sea South East: NPD data aquired spring and summer for most prospective areas.Barents Sea North 2012-2014. Licensing rounds held every second year. 23rd Licensing round – January – 160 blocs nominated, 140 in the Barents Sea. 61 proposed blocks on public hearing.

Goliath production this year. Only one producing in Barents, Snovit, gas bearing. Unit costs can be reduced through cross licenses.

Q & A: How do you include in your yet to find, recent good news and bad news.
Yet to find, is updated every 2 years.
What percentage of wells drilled in the Barents are based on hydrocarbon indicators?


Where Do Real Opportunities Lie? Investment Conditions In The Northern And Southern Barents Sea
Haakon Haaland, Executive Vice President Business Development & Exploration, E.ON E&P
Distinguishing the key players and possible future players in the Barents Sea
Understanding the status of developments in the Southern and Northern Barents Sea
Evaluating the most recent Barents Sea discoveries
Venturing into the former grey zone

Political/Commercial aspects of industry. Mix between state/private is key to what will happen in the Barents going forward. Before continuing a few facts about E.ON E&P. Current focus areas, UK, Norway, Russia, Algeria and Brazil. 14 production fields, 5 producing fields as operator, 60 exploration licenses, staff of 220 employees and 200 contractors.

Crossing the 62 median line (not so much the “Barents Area”) — was the industry ready. No secret that the Barents was Gas, not a big prospect, always looking for oil. A decisive energetic ministry combined with competent NPD – creating the right policy of exploration. Barents initiative during the 1990s, wanting something to happen, and taking decisive action to encourage exploration. In terms of a global scene, it is a well organized efficient development process (data organized and released timely, modestly costed). Goliat, Goliate-Kobbe, Johan Castberg – drilling boom.

Barent Players – Statoil still major player in Barents Sea exploration; Majors not active anymore: Exxon, Shell – Companies left the area: Mobil, Saga, Hydro; New important entrants: ENOI, Lundin, OMV Other newcomers: DF, DONG, Noreco, Repsol.

ENI, Statoil, Lundin, continues to have stamina. Barents: After more than 30 years still a frontier area. Not the North Sea, Key discoveries (Snohvit, Castberg, Havis, Goliat) conventional exploration models; Late Neogene uplift and erosion, huge area, limited data; South Barents south east total frontier zone.

Cost levels, lack of infrastructure, and too much bad news at the same time. Gas discoveries create dry spells in continued exploration. One clear risk/opportunity: Norway will reach production maturity in mid 2020s, need for new gas that will utilized this infrastructure, especially liquid gas. Connecting Barents with the Norwegian infrastructure system. Infrastructure key to value creation. In the past, private investors always had interest in constructing infrastructure, in the North sea, large anchor fields created an interest. Today, commercial entities not interested in investing 5-6% returns on pipelines to create the infrastructure required to move forward on Barents. One of the difficulties in Norway, is that politics is difficult to step out in front of projects, to be a front runner on investments, there is the debate on social distribution. Debate over whether the State and Ministry step up to create the infrastructure to unleash activity and value creation from Barents area. Another discussion on special incentives such as Snohvit, special production allowances.

Q&A How decisions can be made with several degrees of uncertainty: Priorities, driven by the ambition to replenish – but there are forces against (cash flow, investor sentiments — the most moving audience of all, because if you fail to deliver on the quarterly the CEO gets fired).

Unique cost drivers in Norway, nothing to be proud of, operating drilling more expensive than anywhere else, a need to get productivity up, no way it should take 50 percent more time to an engineering design for a semi than required. Mobilize as an industry.

To early to have the discussion about how to connect the Barents. Looking to have more exploration before any kind of determination can take place.


Keynote Session:
Will Commercial Success Follow Exploration Success In The Barents Sea?
Terje Flaten, 23R Project Manager, Statoil
Statoil’s approach to Barents Sea exploration from play validation to exploration focus
Barents Sea Southeast 3D seismic cooperation project
Development challenges and commercial hurdles

Will commercial success follow exploration success. Myths or Facts: Developing Barents Sea discoveries commercially requires — much bigger discoveries than anywhere elsewhere; massive development of new technologies; completely different methods for oi spill handling; new solutions for escape, evacuation and rescue, management of ice totally unique.

First oil production will be at Goliat. Exploration conventional seismic and mapping early discoveries. Periodic and underexplored

Steps to commercial success in the NCS/BS — (1) Big discoveries (high resolution seismic acquisition solution; triassic reservoir presence and quality): How big is big — 150-300 million barrels represents the threshold; key issues is how to build out hubs and field centers. (2)Political acceptance and license to operate: Trust, transparency (distance and temperature, people in extreme cold; robust oil spill contingency – barriers to recover spilled oil and barriers in the well to prevent oil spill) (3) new technology: Horizontal drilling in shallow reservoirs (time and cost, overburden stability, happening in Hoop, Bjarmeland, BSSE); handling of produced water (clean water discharge, everywhere); new sub-sea solutions (incremental development needed. Away from North Sea Standards where they are not needed) (4)industry cost level: Positive oil price development – however more expensive reserves erode returns. Cost per barrel increasing. Restoring the returns: Standard solutions adapted to sub-surface and surface conditions: drilling costs and efficiency, leaner facility concepts, replicated and standard packages, wider industry co-operation, reuse. Last decade – oil price tripled, development costs doubled.

Cooperation: BSSE 3D Group Shoot: Authority guidance;encouragement, attractive business model, equal and low costs (no volume disc out, fair price differentiation between EP and LP, room for different company strategies and prioritization); Involvement in decision making and survey design.


“Business Card Exchange”
“Take advantage of this networking opportunity to introduce yourself and exchange business cards with other conference delegates. Start with the people closest to you and then move around the room to learn more about other attendees and their companies and projects.”


The Role of Structural Geology In Success-Failure Analysis – Examples From the Barents Sea
David Jackson, Global Manager Multi-Client New Ventures, Dolphin Geophysical
Understanding the present day architecture of the petroleum system
How has the petroleum system developed through time
Understanding the role of key tectonic events in changing the petroleum system
The communication of geological understanding and rationale to non-geologists


Understanding the Barents Sea’s Unique Petroleum System: Source Rocks
Tommy Samuelsberg, Exploration Manager Barents Sea, North Energy
Understanding the unique petroleum system in the Barents Sea
Exploring which source rocks exist in the Barents Sea
Underlining the quality and nature of source rocks in the Barents Sea
Play models in the Barents Sea

Exploration history of South-Western Barents Sea; Play models in the Barents Sea (Permian, Triassic, Jurassic, Late Cretaceous/Paleocene); Petroleum systems. First discoveries 1981 (Alke South, askeladden); Albatross (1982) and Snøhvit (1984) – 8th rounds..


Networking lunch break


Ice, Erosion and Broken Plates: Unravelling the Tectonothermal Effects on the Barents Sea’s Petroleum System
Ebbe Hartz, Chief Geologist, Det Norske
Late Cenozoic uplift and erosion in Barents Sea’s petroleum models
The geodynamic challenges of deposition, uplift and erosion of the assumed overburden
The different petroleum models that result from reducing erosion estimates by considering the effect of glaciation and continental break-up. Hans introduces Ebbe as a ski champion – “I will speak without using the microphone, and will do so until they fix the computer [PPT – there was some issues with PPT earlier on during the day]…. using Heriksen and friends from Statoil’s Slides to make the presentation.

Ice probably caused significant compaction, thus erosion estimate stop high; Paleo heat suggest less erosion, and may partially have come from break up. Break up hear probably uplifted Svalbard, erosion enhanced this process; Thus, implementing ice loading highly effects petroleum models for the Barents Sea.


Unleashing the Untapped Potential: Reserve Estimates for the Barents Sea
David Poole, VP Exploration & Deputy CEO, Spike Exploration
How can we use resource estimates as a predictive tool in the Barents Sea?
What are the lessons learnt from more mature areas on the Norwegian Continental Shelf and how can these be applied in the Barents Sea?
Applying resource estimations to future strategies and ensuring return on investment, from a Spike perspective

“Back to strategy” – Focus on using historical data in mature basins as predictive tools in the Barents Sea; Analyses of historic exploration performance in UK and Norway used to highlight trends in exploration and yet to find for the different basins; Sources of information includes: exploration wells and NPD.

Early entrance action.

[ed. space of humor- geologist sparring with statistician]


Where Does The Technology Gap Begin In The Barents Sea?
Stig-Morten Knutsen, Head, Roald Amundsen Petroleum Research
Addressing the unknowns of the subsurface and the surface
Knowing how to detect and handle ice
Overcoming environmental and technological risk and uncertainty

What’s with the Barents Sea”
Circum-Arctic setting
Challenges
Data and subsurface

Technology: The application of scientific knowledge for practical purposes especially in industry. Five Norwegian Partners in Roald Amundsen: U Tromsø, U Stavanger, IRIS, Norut, Akvaplan-niva.

Proven plus probable discovered Arctic resources (2P) – Barents – A far north area without some of the extreme far north issues. Barents: as a step stone to the circum Arctic (offshore).

Subsea challenges – Temperature. Hydrates and flow assurance. Topside challenges (drilling rigs are more expensive due to winterization features).

Seismic affect on mammals in Greenland – Big discussion when you get to ice affected waters how marine mammals are affected by seismic acquisition AND who oil spill will be looked at; emergency evacuation.

Contemporary 3rd and 4th wave of Barents development having to do with knowledge and information. First wave, Snøvit; Second wave during the 1990s up to 2000 discovery of Goliath.

Referring to Nansen — sometimes the model is important, sometimes the data is important.


Roundtable Discussions
Moderated roundtable discussions to allow in depth discussion and debate around a variety of topics. Delegates will choose one roundtable and use this opportunity to ask questions and discuss the key exploration challenges of operating in the Barents Sea.
1. Exploring for gas and the lack of infrastructure in the Barents Sea. A catch 22?
Led By: David Poole, VP Exploration & Deputy CEO, Spike Exploration
2. What are the key technological obstacles the industry needs to overcome to make developments in the Barents Sea?
Led By: Stig-Morten Knutsen, Head, Roald Amundsen Petroleum Research
3. How does exploration in the Barents Sea differ to exploration in other regions?
Led By: Denis Francois, Director Geosciences, TOTAL

Closing Remarks from the Chair

Close of Conference Day One and Networking Drinks

9/21: The day following the end of the LNG Global Congress, I met over lunch with interfax energy reporter Tom Washington. At the journalist’s suggestion we met near the Thames river, at Brasserie Blanc. The day prior, we had chatted briefly over lunch at the LNG gc Congress and I had so many questions that I implored him to meet with me for lunch the very next day.

As Tom explained, journalists play a role in determining prestige among firms and spokespersons. Energy journalists are interested primarily in numbers. Through numbers (annual production, forecasts on production, revenue) they aim to tell a story about the fortunes of industry.

Since they are reporting and not editorializing, they specifically employ a quote by an expert in order to fashion a particular interpretation.

That is, a quote gives surface legitimacy to their interpretation of the story based on what they understand the numbers to convey.

As an example, consider Tom’s reporting on the Yamal discussion at the LNG gc event in his article that came out several hours after our lunch titled Yamal LNG affirms its faith in China for financing.

We talked for some time of Tatiana Mitrova, who I met at Skolkovo in the outskirts of Moscow, just prior to her ascendance at Russian Academy of Sciences.

Her presentation at LNG gc was instructive as always, discussing the evolution of Russian gas policy, describing the industry’s shift from traditional contract (subsidizing economy and low taxes for production – protection from the state, monopolistic structure of market without question) to New Deal, where prices are reaching Henry Hub level for industrial consumers, while taxes are increasing, and more players, Novatec/Rosneft are “hungry to reduce Gazprom’s share”.

I should just mention that other persons of note in attendance at the LNG gc included Ralf Dickel, who I first met in Moscow during his deliver to the oil and gas congress when he was director of European Energy Charter, and then last year at the Energetics Conference in St. Petersburg.

9/18: Just off the coffee break and now listening to Takao Kasumi, Deputy General Manager, Paris representative of Tokyo Gas. In the post Fukushima landscape, LNG (liquified natural gas imports) are a big issue in Japan. What is perhaps more unexpected is the high expectations of shale gas imports from the United Sates.

I asked earlier, actually, of Senior Analyst Javier Diaz, Bentek Energy, a unit of PLATTS, whether all this US gas would potentially come from Alaskan efforts to commercialize North Slope natural gas. His response provided before everyone and sundry was that the project (announced recently in Alaska news as going forward) was totally uneconomic, without even a projected time horizon of delivery. The 45-60 billion dollar project no longer is talked about in terms of 10 to 20 year time frames rolling into the future.

Anyway, back to Takao who just finished, and we are moving on to Jose Ramon Arango, Leader of Liquid Bulk Segment, Panama Canal Authority, who will be speaking of everything [except the tariff rates].

LNG [liquefied natural gas] Global Congress, London

Global LNG Pamphlet


Panama. The transshipment center for the Americas since the 1600s. A lot of impressive photos presented both on current development in widening the canal, but also computer graphic imagery depicting how it will appear when completed.

Andrew Clifton, General Manager, SIGTTO — talking about achieving a level of reliability that makes LNG shipping “almost invisible”. US, UK, France, were the three main developers of LNG vessels, and responding on the French achievement is Jean-Francois Castel, Manager Business Development, Gazocean GDF Suez.


US LNG vs. Russian Pipe Gas: who wins. Will Russia remain the lowest cost producer in Europe? by Theirry Bros, European Gas & LNG, Global Research & Strategy, Societe Generale. A lower overall European gas price will make Chinese extract low cost gas from Russia. But Russian production costs are very low. Apparently, Russia is observing US export of LNG, watching the potential terminal buildup for exporting to Europe, wanting to keep a threshold beyond which would destroy price stability.

Yamal LNG Update, Will Yamal LNG be cost effective for European Supply? Christophe Malet, Deputy Director Marketing & Shipping, Yamal LNG. Multiple candidates of super giant natural gas fields across the northern peninsula of Yamal. Production company moving toward production and trade entity.

Envisioning utilizing Northern Sea Route during the Arctic Summer (June through September) — within two weeks distance to eastern markets making it comparable distance to middle east. During winter, Yamal would go west to Europe across Norway to transfer gas onto conventional vessels that would then provide shipments to the East.

Total investment cost of project, 27 billion dollars for the three trains. Requirements of an Arctic fleet + a conventional fleet to transport from lower latitudes + condensation infrastructure. Arctic vessels around 2015.

Port of Sabetta, Yamal. Malet shows actual photos of the development of the location, indicating 3000 persons at the site, a commercial air strip being constructed, “it’s beautiful”. [fabulous photographs, ed.]

“As Tatiana [Mitrova] highlighted this morning, sanctions have created uncertainty in Russia these days”…”Yamal has significant momentum to date because its shareholders had a pre-committment and show continued support for handling the new uncertainties, whether over technology transfers or access to financial markets”. The fundamentals of the Yamal are very strong and valuable proposition – for asian markets, and European markets. A project that will bring a constant flow besides Europe, which is ideally located to access additional production.

Now up: John la Rue, Executive Director Port of Corpus Christi providing update on the US LNG Exports. Shows the US gas transmission lines. Talking about various projects with an opportunity to “see 10-12 billion dollars going into the ground” per project.

An interesting discussion about flaring – burning natural gas – and the attempts to cut back on flaring from days to hours.

In one of my favorite books, Ancient City, Fustel de Coulanges builds lifeworlds around the smallest bits of data. I always think of it when looking at photographs, especially poor images like the one above that I took with the photobooth camera on macbook.

If we take just one fragment from this image, we can see quite a bit about the nature of what constitutes the staging of verification in energy knowledge at this particular event.

In this case, the “pleated” blue cloth-like folds that conspicuously hang down from the elevated “stage” onto the carpet, indicating excess and heightened sensation of a location titled floor or ground, where people walk, and the elaborated distance from which people speak or address those on the ground floor.