Swedish independent Lundin Petroleum has unveiled plans to spend US $4.3 billion (NOK 25 billion) over the next four years ramping up its exploration and production activity in the mature Norwegian North Sea, with the fast-growing company already reaping the rewards for its bold organic growth strategy.

The capital expenditure figure is more than double the total spent by the company in the period between 2004-11 when the amount totaled $1.76 billion (NOK 10.2 billion).

On the opening day at the Offshore Northern Seas (ONS) conference and exhibition in Stavanger, Norway, it was Lundin that grabbed the early headlines by announcing the successful Geitungen oil discovery, operated by partner Statoil. Statoil’s Gro Haatvedt, senior vice president of exploration in Norway, said in a company release that the new discovery “reinforces Statoil’s faith in the exploration potential of the Norwegian Continental Shelf (NCS) and demonstrates that we deliver on our strategy of revitalizing the NCS with high value barrels.”

Preliminary calculations of the size of the discovery by the operator are put at between 140 million bbl and 270 million bbl of gross recoverable oil. The find lies just three km north of the major Johan Sverdrup discovery in the Norwegian North Sea. Geitungen well #16/2-12 is in communication with the Johan Sverdrup discovery, which was made by Lundin in 2010, according to the company.

Lundin also went on to confirm on Aug. 28 that an appraisal well (16/2-13S) on Johan Sverdrup has been completed by its wholly owned subsidiary Lundin Norway AS in Production License 501 (operated by Lundin) on the northeastern part of the field. The well is located 2.5 km northeast of discovery well #16/2-6 and 6.5 km southeast of well #16/2-10 in PL265, and was drilled by the Transocean Arctic semisubmersible rig. The main objective of well #16/2-13S was to determine depth to top of the reservoir, reservoir quality and thickness, and oil-water contact in the northeastern part of the field.

The appraisal well hit a 25-m (82.5-ft) gross oil column in Upper and Middle Jurassic sandstone reservoir with a comprehensive logging and coring program successfully completed that confirmed excellent reservoir properties, it said. The well will now be sidetracked 1,250 m (4,125 ft) towards the north to investigate the depth to top of reservoir, lateral thickness and property variations of the Jurassic reservoir as well as to establish an oil-water contact. The sidetrack will take approximately 30 days.

The extensive appraisal program on Johan Sverdrup is currently in full swing with the Ocean Vanguard rig (which drilled the Geitungen probe) to now drill two further appraisal wells on the discovery in PL265 (operated by Statoil).

Ashley Heppenstall, Lundin’s president and CEO, said in a briefing at ONS that the company’s view is that the Greater Luno Area contains excellent exploration potential and that “further discoveries will be made in the region.” The company, as a minority partner, is also planning to participate with operator Statoil on a probe on the Luno II prospect in PL359, he added.

In the meantime, it is already underway with an exploration well targeting the Albert prospect in PL519. The main objective of well #6201/11-3 is to test Cretaceous and Triassic age sandstones of a multiple-target structure. Lundin estimates Albert could contain unrisked, gross, prospective resources of 177 MMboe. Drilling is expected to take 25 days.

Heppenstall said of the company’s overall growth strategy in recent times that “every third year we have been able to make a major discovery,” which backed up its plans to grow via the drillbit, while also maintaining production from its existing and emerging developments. On top of this, Lundin would continue to leverage its organizational knowledge, and design a yearly balanced exploration drilling portfolio in relation to frontier breakthroughs, growth, and mature tie-ins.

He also stressed the importance for Lundin of applying and developing data and fact-driven subsurface models, based on appreciation of the limitations of data, tools, methods, and theories “available at any time,” as well as applying new emerging technology and methods.

His colleague, Hans Christen Ronnevik, head of exploration in Norway at Lundin, highlighted the company’s ambitions in the frontier Barents Sea where the company is currently drilling a wildcat well on the Salina prospect in PL533. The probe is on trend with the Skrugard and Havis discoveries and has gross unrisked prospective resources of 500 MMboe.

Lundin is also planning to drill a wildcat on the 335 MMboe Juksa/Snurrevad prospect before the end of this year, he added.

In the ONS briefing, Lundin also flagged up the ongoing development of its Brynhild project in PL148, which it operates with a 70% stake. The 20 MMbbl recoverable reserves field will be tied back cross-border to Shell’s Pierce field FPSO (Haewene Brim) in the UK sector of the North Sea. Plateau production is forecast to be around 12,000 boe/d, with first oil by the end of 2013.

A larger project is its Edvard Greig development in the Utsira High Area, another Lundin-operated discovery that is due to come onstream by October 2015. The field is expected to flow at around 100,000 boe/d via a fixed production platform with the capital costs forecast at $4.1 billion.

Nearly all the main contracts have now been issued for this development, said Lundin, with the main winners on the Edvard Greig project being:

• Jacket contract (value NOK 1 billion, US $172.9 million) - the jacket will be built by Kværner Verdal under an EPC contract awarded in May 2012, with delivery by March 2014;

• Topside contract (value NOK 8 billion, US $1.4 billion) - an EPC contract for the whole topsides was awarded to Kværner Stord in May this year, with delivery in April 2015 fully tested and commissioned;

• Jacket/topside transport and installation contract (value NOK 505 million, $87.3 million) - a contract for transport and installation of the jacket in 2014 and the topsides in 2015 was awarded to Saipem of Italy;

• Flotel contract (value NOK 380 million, $65.7 million) - a contract has been awarded to Prosafe for supply of a newbuild flotel in summer 2015;

• Export pipelines contract (plan for development and operation budget of NOK 3 billion, US $518.7 million) – the export pipelines will be installed by Statoil with no contract yet awarded; and

• Drilling contract (value NOK 2 billion, US $345.8 million) - a contract has been awarded to Rowan companies, starting in Q2 2014.

Contact the author, Mark Thomas, at mthomas@hartenergy.com.

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