Lundin is set to tender more than $1billion of new field development contracts in the Norwegian sector of the North Sea over the next two to three years.
Three projects are in the pipeline: Luno with gross 2P reserves of at least 95million barrels oil equivalent; Nemo with expected reserves in the range 20-25million boe, and Krabbe, also with 20-25million barrels.
Mapping out the company’s development and exploration plans at Offshore Northern Seas, Lundin’s Norway MD, Torstein Sannes, said the projects would collectively deliver a major boost to its production over the period 2012-14. Currently, the Swedish group’s Norwegian business unit accounts for some 70% of gross output.
Detailing each of the three projects, Sannes indicated that Lundin’s already strong presence on the Norwegian Continental Shelf would be reinforced by this investment. Moreover, he signalled significant upside, especially for Luno, whose current reserves estimate “will definitely be increased”. He said Lundin would be drilling in the area for some time to come, based on an innovative approach to exploration that had already demonstrated significant success.
Focusing on Luno, Sannes said concept studies were ongoing, but still in flux in terms of the best development option – perhaps a floating production unit packaged with subsea infrastructure, or perhaps a steel jacket platform, or maybe a hybrid between the two classic approaches.
A further option on the table is a possible joint development of Luno with the nearby Draupne project operated by DNO.
Reserves are said to be around 150million barrels. However, Draupne’s development has also been linked with Hanz and West Cable (aggregate reserves 110million barrels).
The capex commitment will depend on the development option chosen. However, it is certain to be north of $1.5billion, bearing in mind that the estimated capital spends for Nemo and Krabbe are up to about $450million each.
The export route for Luno has also not yet been decided, although the two main options appear to have narrowed to direct oil loading to shuttle tankers and an export pipeline to the nearby Grane field, plus gas export via the Sleipner system.
Sannes signalled that he expects a decision on the best way forward during Q1 next year. He said Aker Solutions and Aibel were closely involved with front-end engineering work for Luno.
On the drilling requirement, he said: “There is no question that a substantial number of wells will be required.”
Nemo will be a subsea tieback based on three wells, with a formal development submission expected over the next few months. Among the tieback options under consideration is to the UK-sector Pierce field, just 37km distant.
“The serious tendering for Nemo will be during Q4,” said Sannes.
Krabbe, too, will be a three-well subsea tieback. Concept studies are ongoing.
Sannes said Lundin had a busy exploration programme, with nine wells programmed in for the current year and 10 forecast for 2011. He claimed an above-average commercial discovery rate of 44% over the period 2004-10.
The company is currently drilling on the Avaldsnes prospect on Norwegian block 16/2-6.
Sannes said he expected an imminent result from the well, which is targeting 127million barrels oil equivalent (gross unrisked).
The Apollo prospect is next in the queue. This will examine the possibility of the Draupne discovery extending into licence area PL338.
Sannes indicated that a portfolio of further targets was being matured, including a number in Arctic waters.