The Arctic May Save Norway's Oil Industry

[phantom power]

The bar for "phenomenal" seems lower every year.

Statoil thinks the find—now called Skrugard—as well as surrounding areas might eventually yield 500 million barrels of oil. That is not a huge discovery, but it has sent a frisson of excitement through the industry. "It is phenomenal; it confirms that the Barents Sea after so many disappointments is worthwhile," says A. Bjarne Moe, the lanky, bearded director general of the Norwegian Ministry of Petroleum and Energy.

Skrugard comes as a huge relief, since Norway's status as one of the world's great oil producers is under threat. Oil production has fallen by 48 percent from its 2000 peak as old fields found decades ago are depleted—bad news for an industry that accounts for about one-quarter of Norway's economy.

The last great find was a gas field called Ormen Lange in deepwater off the craggy west coast in 1997. With shallow waters unlikely to produce major finds, explorers have been moving out into deeper waters and harsher territory in the Barents and the western part of the Norwegian Sea. Highest hopes have been for the Barents, a vast vaguely defined body of water shared by Norway and Russia and named for the 16th century Dutch navigator Willem Barents. The government forecasts that 5.9 billion barrels of oil and gas will be found there.

Until now, the search for those billions has been disappointing. Malcolm Dickson, a research analyst at Wood Mackenzie in Edinburgh, figures that 74 wells drilled in the Barents prior to Skrugard have produced only two commercial developments: Snohvit, a Statoil-operated liquefied natural gas project, and Goliat, an oil and gas field being developed by Italy's ENI.

http://www.businessweek.com/magazine/content/11_19/b4227010706283.htm

[aquart]

1. Oh, what great news for the Barents Sea.