According to Wintershall CEO Mario Mehren, with an annual production target of 190 MMboe by the year 2018, in addition to the pressure on prices, it is becoming increasingly difficult to develop conventional reservoirs.

This operational environment is demanding the highest level of technological expertise from energy companies. “That’s the new reality, and that’s something we have to accept,” said Mehren, who was recently appointed CEO. “We are now tasked with working efficiently and profitably even when the prices are low and the conditions are not ideal.”

Over the past decade Wintershall has increased its oil and gas production by an average of 4% per year. By way of comparison, global production has grown by just 1.8% over the same period.

Wintershall’s output was expanded in 2014 by an impressive 3% to 136 MMboe, but despite the increased production it also was able to raise its proven reserves by a healthy 17% to 1.7 Bboe.

Core Areas Targeted

Now the company is looking to boost oil and gas production from its core areas, which include Russia, Norway and the North Sea, while expanding its emerging activities in Argentina.

Wintershall will invest US$4.4 billion (€4 billion) over the next four years to reach its targets, Mehren said. “Wintershall is pursuing promising projects. These include the ongoing development of the Achimgaz project in Siberia; the Norwegian fields Edvard Grieg, Maria and Aasta Hansteen; and the Vega Pleyade gas project off the Argentinean coast at Tierra del Fuego.”

One of Wintershall’s main focus areas is Argentina, where it is not widely recognized that the company has been producing hydrocarbons for 35 years. It holds stakes in 15 oil and gas fields and produces 25 MMboe there annually.

It is closely examining the potential of unconventional reservoirs in the vicinity of the Vaca Muerta Formation in Neuqúen Province. Since 2014 Wintershall has held a 50% share in the Aguada Federal block and started drilling the first vertical exploration well on its acreage in March. A second exploration well also is planned.

The company is working with Total and Pan American South to develop the new Vega Pleyade natural gas field in the Argentinean Sea off the coast of Tierra del Fuego. New production wells have been sunk in the neighboring Carina Field since May 2014, which also should lead to a production increase in the short term.

Focus On Norway

Wintershall board member Martin Bachmann told E&P that Norway will remain a major area of focus for the company.

“In the last five or six years in Norway we have grown from basically no equity production to now more than 60,000 bbl/d equity production, with one major platform being operated at Brage and a major subsea development being operated at Vega [Vega South], which is producing very well,” Bachmann said.

Wintershall recently handed in the plan for development and operation of the Maria development, its first operated project in Norway, while it also plans to develop the Skarfjell oil discovery.

The company has taken an active role in monetizing some of the assets it holds in the area. It sold off a 15% stake in the Maria development as well as stakes in four nonoperated fields—Knarr (20%), Veslefrikk (4.5%), Ivar Aasen (6.4615%) and Yme (10%)—to Tellus Petroleum, a subsidiary of Sequa Petroleum, as it looks to rationalize its portfolio.

“We want more operatorships, and we’re going to grow further through the projects we have in the pipeline. Norway is a major part of our strategy next to major places like Russia, the southern North Sea and Argentina,” Bachmann added.

Meanwhile, Robert Frimpong, managing director of Wintershall’s Netherlands business unit, said that the southern North Sea would remain a significant area for the company.

“Denmark is a continuing part of our innovative growth story,” Frimpong said. “We are currently in the middle of the development phase on the Ravn project. We have installed the platform, and we still have to drill the first two wells as part of the Phase 1 development, which is progressing. There are a number of challenges we have had to overcome with that set of wells being drilled with the Ensco 121, but we hope to have production by year-end.”

The field is being developed via a minimum facilities platform with dry tree wellheads.

He said exploration was continuing in its acreage in the southern North Sea, while development options also are being considered for the 30 MMbbl-plus Rembrandt oil discovery in the Dutch sector, where appraisal work is continuing.

Russian Energy Reality

Russia remains a core area for Wintershall, with Mehren saying, “Europe will only have energy security with Russia. These aren’t geopolitical but geological facts, and that’s why Russia will remain an important part of the energy provision for Western Europe.”

Wintershall and Gazprom have been working together for the last 25 years. “Achimgaz is a prime example of efficiency, performance and innovative strength,” Mehren said. He pointed out that in 2014 production from the Achimgaz joint venture (JV) with RAO Gazprom increased by more than 40% to 3.4 Bcm (120 Bcf) of natural gas.

The JV produces natural gas and condensate from the Achimov horizon in Block IA of the Siberian Urengoy reservoir, situated about 3,500 km (2,175 miles) northeast of Moscow.

“Our Russian joint ventures produce a total of 28 Bcm [988.8 Bcf] of natural gas each year. To put that in clear terms, that amount corresponds to one-third of the annual requirement in Germany,” he said.

To maintain this level, Wintershall is planning to invest around US$549.5 million (€500 million) in the existing Achimgaz, Yuzhno Russkoye and Volgodeminoil projects in Russia until 2018. “Russia is and remains Wintershall’s most important core region,” he said.

Biopolymer EOR Technology

Closer to home, Mehren said the groundwork for the company’s technological expertise and success has been laid in Germany.

“The domestic production levels in Germany forced us to become efficient. The production between the North Sea and the Alps requires endurance and costeffectiveness coupled with technological competence and innovative strength. We have raw material expertise in Germany that dates back 120 years. That provides the basis in forging a competitive edge in the global arena.”

Along with its parent company BASF, Wintershall is developing Schizophyllan biopolymer technology for EOR. The project aims to increase oil production with the help of the Schizophyllum fungus. When the fungus absorbs starch and oxygen, the split gill fungus then generates the Schizophyllan biopolymer, which can then be used as a thickening agent for oil production.

According to Wintershall, the substance thickens water being injected into the reservoir and boosts the oil production rate. First testing has been ongoing at the onshore Bockstedt Field near Barnstorf since year-end 2012 to assess the substance’s suitability for EOR and, if successful, it will be utilized both in Germany and further afield.

Despite these technological advances and the ramp-up in production, however, Wintershall expects a decline in earnings in 2015 due to the continuing lower level of oil prices. “We must live with the low oil price. We cannot compensate for it despite the increasing production,” Mehren said. “Our future success requires three things: continuous investment, innovation and excellent cost management.”

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