Wintershall AG, BASF SE’s oil unit, said it may be able to increase resource estimates for its Skarfjell find in the North Sea after drilling two wells in the coming year.
The company started drilling two weeks ago to uncover a possible extension north of Skarfjell, Chief Executive Officer Rainer Seele said today. A second well is planned in 2014.
“We are very, very optimistic,” Seele said in an interview in Oslo. “We do see really a substantial, bigger potential coming with the project. If I look into our portfolio, there are two self-operated projects of Wintershall that bring a light in my eyes, and this is Maria and Skarfjell.”
Wintershall, which owns 35 percent of Skarfjell, is optimistic that reserves could end up in the upper range of its 60 million barrel to 160 million barrel estimate. Maria, a Norwegian Sea find 50 percent-held by the company, has an estimated 120 million barrels of recoverable oil and as much as 3 billion cubic meters of gas.
Wintershall, based in Kassel, Germany, is investing in Norway to expand output and turn exploration prospects into producing assets, benefiting from oil prices that have more than doubled in four years. Its interest reflects broader efforts to revive the energy industry in the Nordic country, where crude output has dropped by half since peaking in 2000.
The company last year agreed to pay $1.35 billion in a swap deal with Statoil ASA, the country’s biggest energy company, to take over operatorship of the Brage field and stakes in two other oil and gas deposits.
Wintershall is seeking to boost Norwegian output to 40,000 barrels of oil equivalent a day from 3,000 after the Statoil deal is completed this year. It also plans to start output in Britain, reaching combined U.K.-Norwegian production of 50,000 barrels a day in 2015 after investing as much as 2 billion euros ($2.7 billion), Seele said. The company expects to begin production at Maria in 2017; Skarfjell won’t start before 2018.
Norway has sparked renewed interest since Statoil made its Johan Sverdrup oil discovery in the North Sea, potentially the country’s largest since the 1970s with as much as 3.3 billion barrels. Investments in the nation’s oil and gas industry are forecast to rise to a record 208 billion kroner ($38 billion) this year, according to the state statistics bureau.
Wintershall, which spent about half its exploration budget on Norway in 2011, plans nine wells there this year, of which it will operate four. The company is taking part in Norway’s 22nd licensing round, and won three permits last month in a separate round for mature areas.
The Norwegian Petroleum Directorate said last month it’s concerned that capacity constraints on rigs and construction yards may boost costs and delay field development as the country struggles to extract more from aging deposits.
“The probability has increased that your timing may not be as perfect as you would like to see it,” Seele said. “It’s not really affecting us today, but I don’t want to exclude that this might have an impact tomorrow.”
Rising costs could result in fewer wells than planned at the expense of smaller projects, according to the CEO, who said he sees no signs at the moment that rig rates will fall.
Wintershall also produces oil in Libya, where it’s pumping 80,000 barrels a day on average. Seele was unable to forecast when the company would return to the 100,000-barrel-a-day level it had before the 2011 armed conflict, saying the “technical condition of the infrastructure is the limiting factor.”
BASF shares closed 2.1 percent lower at 71.36 euros.
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