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Defining raw resource potential is only the first step in a decision process that, as it evolves, pits technical risk against reward as geological concepts are tested and drilling capabilities are challenged in the drive to deliver hydrocarbons in a safe and environmentally friendly manner, in what are becoming increasingly hostile and costly environments. To take on such challenges the prize must be substantial.

The most recently published government figures (MMS, 2006) for undiscovered technically recoverable reserves estimate that the OCS (offshore continental shelf) of the Gulf of Mexico holds 52% of the remaining oil in the offshore USA. Indeed the 45 BBO (billion barrels oil) mean estimate for the Gulf of Mexico combined with 27 BBO mean estimate for the OCS of Alaska, of which 23 BBO are estimated in the Arctic basins of the Chukchi and Beaufort Seas, make up 83% of the undiscovered conventional offshore oil resources in the USA. Similar studies by the USGS estimate that 28% of the remaining technically recoverable oil resources in Canada are located in the Arctic Beaufort Sea, the Canadian East Coast Basins, including the Labrador and West Greenland conjugate margins. Based on these published estimates the total mean undiscovered recoverable oil reserves in the offshore areas of North America that fall under the exploration remit of the Statoil North America business unit is in the range of 50–80 BBO. The rapid growth of Statoil in North America reflects our belief that the offshore, deep-water margins of North America offer a significant prize that will help Statoil reach its objective of developing into a leading global exploration company that can deliver production above 2.5 million BOED by 2020.

Presently Statoil is one of the major lease holders in the deep water Gulf of Mexico, possessing a portfolio that covers multiple geological plays and extends from the Wilcox deep-water play in the western Gulf through to the Norphlet dune play and Mesozoic carbonate margin plays of the eastern Gulf. In the Grand Banks area of the east coast of Canada, Statoil has increased its acreage position by an order of magnitude in the last two years as a consequence of the Mizzen discovery in the Flemish Pass. In the North American Arctic, a similar growth pattern is seen as Statoil has, by means of lease sale activity, taken a position in the Chukchi Sea and, through farm-in activity, the Canadian Beaufort. Having a strategy focused on early basin access at scale, development and application of technology and skills, and fast track drilling of impact wells Statoil has developed a strong position in North America’s offshore basins as it strives to grow towards its corporate ambitions as a leading global exploration company

But to fully assess the potential of such a wide range of opportunities requires more than just sound geological models and finding common denominators across such a diverse area is difficult; deep water may be the only ever present feature. Beyond that, differences in geology, geography, climate/environment, and local regulatory conditions present many, and often significant, challenges. To realize the potential of the offshore basins of North America a number of challenges must be met:

  • Climate and environment: from tropical storms and hurricanes in the Gulf of Mexico to sustained summer fog in Canada, to ice movement in the Arctic,

  • Regulatory and permitting: balancing technical work and data acquisition with well planning and permitting strategies within limited lease periods

  • Drilling and technical: ability to drill successful and safe high pressure and high pressure/high temperature wells in deep-water and Arctic environments

  • Geophysical: requirement for more sophisticated seismic acquisition, processing, and imaging strategies to increase image quality in complex geology and provide higher resolution in more conventional geology

  • Geological: complex velocity fields, such as those seen in the deep water Gulf of Mexico, required impact data frequency and amplitude ranges so that the data are unsuitable for reservoir definition and characterization, creating increase production uncertainty.

With challenge comes cost. More sophisticated seismic acquisition strategies means a significant increase in cost. Furthermore the complexity of the geology in areas such as the deep water of the Gulf of Mexico requires significant reimaging efforts post-delivery of spec data. This is not just a monetary cost but is also an opportunity cost in such a competitive basin, where yearly lease sales see significant acreage turnover and the fidelity of the image can impact not only whether a bid is made but also the size of bid.

At a larger scale safe drilling operations in the deep water requires access to modern 5th and 6th generation semisubmersible and Enterprise class drill ships, which in a competitive market need to be tied to medium or long term contracts to ensure availability to execute drilling strategies. Emergency, hazard, and response measures are also a requirement for operations and depending on location and environment this can have very difficult cost implications for a project. In the Gulf of Mexico, the Marine Well Containment Corporation provides a number of operating companies with a long-term solution for containment and well control services. In the Arctic no such corporation exists and to meet government regulations a requirement for a standby rig to undertake relief operations means that operators need to develop joint drilling strategies or shoulder the extra cost of a second rig within their project economics. The situation in areas such as the Beaufort Sea which are ice-locked for large periods of the year can be even more expensive as there are few qualified ice-class drill ships and the drilling and open seaway seasons for conventional rigs are short, such that mobilization and demobilization costs are significant.

Despite these challenges and costs, Statoil has made a commitment in accessing the offshore basins of North America and is currently drilling a number of impact prospects. As part of the overall exploration strategy, research and technology initiatives have been put in place that are designed to increase our ability to predict basin sweet-spots and define impact prospects, with the goal of increasing drilling success. Execution of these initiatives within that strategy also increase access success, as improved data and concepts lead to better geological models, understanding, and ultimately successful lease sale results; as seen in the 2011 East Coast Land sale in Canada and the 2012 CLS 222 in the Gulf of Mexico.

Over the last eleven years Statoil has returned as a significant offshore exploration force in North America, However, it will be the coming decades that reveal the merit and worth of our effort and strategy as we test our current portfolio, increase our knowledge, and adapt and develop new portfolios based of our increasing experience.

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