When the Norwegian energy company Norsk Hydro explored a prospective oil well in the North Sea in 1992, it found only an estimated 6 million barrels of crude, then abandoned it. Now Norway's energy giant Statoil says it's found more than 10 times that amount in the well.
Statoil announced Oct. 21 that it has found between 30 million and 80 million barrels of recoverable oil at the site, named Well 25/8-18 S, off the southwestern coast of Norway. What makes the discovery more attractive is that it's close enough to the Grane oil field – just four miles away – that the two can share some drilling resources, making extraction less expensive for Statoil.
"These [newly discovered] barrels are very profitable," Trond Omdal, an analyst with Pareto Securities, told Reuters. "You can use the existing installation [at Grane] and extend the life of it." In its announcement, Statoil said it is considering doing just that.
May-Liss Hauknes, Statoil's vice president for exploration in the North Sea, said in a statement that the discovery "is a result of a recent reevaluation of the area" by means of "new seismic and improved subsurface mapping."
"We are pleased with having proved new oil resources in the Grane area," Hauknes' statement said. "It provides high-value barrels that are important for extending the production life of existing installations."
The Norwegian Petroleum Directorate says the Grane field, which has been in operation since 2003, was the country's third most productive oil field in 2013 at about 95,000 barrels per day.
Grane is in the Utsira High area of the North Sea, the site of Norway's biggest oil find in decades, the Johan Sverdrup oil field. Statoil is in charge of operations at Grane.
Statoil owns 57 percent of Grane, while the Norwegian energy licensing company owns 30 percent and ExxonMobil Corp. has a 13 percent share. The Norwegian state-controlled company found as much as 33 million barrels of oil in the same formation in a neighboring license in 2013.
The discovery of plentiful oil in Well 25/8-18 S could help shore up Statoil financially. Like other energy companies, stock in Statoil has been taking a beating recently.
Part of the reason for this decline has been a weakening global economy, a rise in the value of the U.S. dollar and a glut of oil and natural gas, thanks in large part to burgeoning American production due to new extraction techniques, including horizontal drilling and hydraulic fracturing, or fracking.
Of particular concern are weakening economies in countries including Germany and China, whose industrial bases have lagged recently, putting further downward pressure on the prices of crude and gas.
The announcement of the contents of Well 25/8-18 S, though, immediately pushed Statoil's shares up by 0.2 percent in early trading.