Aker BP's Contrarian Approach Yields Big Oil Discovery in Norway

Strategic Insights -

A Norwegian energy company, Aker BP, has made significant oil discoveries in an abandoned natural gas field, defying conventional wisdom. The explorers, who are relatively young and open-minded, drilled horizontal wells nearly seven miles long, a record for Norway. Their hunch has paid off with the discovery of over 130 million barrels of recoverable oil, the largest find in Norwegian waters this year.

Key Takeaways:

  • Aker BP's explorers drilled horizontal wells nearly seven miles long, a record for Norway, to find oil in an abandoned natural gas field.
  • The discovery of over 130 million barrels of recoverable oil is the largest find in Norwegian waters this year.
  • Aker BP's open-minded and risk-taking approach, led by a team of young explorers, has paid off in significant oil discoveries.
  • The company's management has allowed the team to try innovative ideas, despite the high cost and risk of drilling.
  • Aker BP's discovery will be tied into the Yggdrasil project, the largest oil project under development in Norway, with a $17 billion price tag.
  • The Omega Alfa discoveries will bring Yggdrasil's resources to around 800 million barrels, with potential for reaching a billion barrels.
  • International oil companies have been pulling back or exiting Norway due to perceived maturity, low reserve lives, and decline, but Aker BP remains optimistic.
  • Norway's tax system has been relatively stable, allowing large write-offs for investment, which has incentivized companies like Aker BP to continue exploration.

Statistics:

  • Over 130 million barrels of recoverable oil discovered in the Omega Alfa field.
  • The Omega Alfa discoveries are the largest find in Norwegian waters this year.
  • Aker BP drilled horizontal wells nearly seven miles long, a record for Norway.
  • The Yggdrasil project has a $17 billion price tag.
  • Aker BP expects to tie the Omega Alfa finds into Yggdrasil, bringing resources to around 800 million barrels.
  • Norway supplies around 30 percent of Europe's natural gas demand and 15 percent of its oil.

Sources:

  • Wood Mackenzie, a consulting firm, citing that Norway supplies around 30 percent of Europe's natural gas demand and 15 percent of its oil.
  • Egil Tjaland, an associate professor of geoscience at Trondheim's Norwegian University of Science and Technology, stating that it's "kind of amazing how you see projected decline not happening."
  • Daniel Rogers, a Norway analyst at Wood Mackenzie, stating that "it's now about pushing the boundaries in terms of new technology, new ways of drilling and thinking a bit outside the box."
  • Aker BP's chief executive, Karl Johnny Hersvik, stating that "we just have to work together and have a lot of dialogue to make sure that we are able to set up the world for the next generation."
  • Hege Faero-Finnvik, a senior vice president at OKEA, a Trondheim oil company, stating that "we just have to work together and have a lot of dialogue to make sure that we are able to set up the world for the next generation."
  • Thomas Ekström for The New York Times, various photographs.