Dana has long held a considerable position on the UK Atlantic Frontier; however, perhaps only now is the company in a position to realise value from that position, which has just been further reinforced with acreage awarded by DECC in the 27th UK Offshore Licensing Round.
“We are one of the largest net acreage holders in the West of Shetland sector,” UK MD Paul Griffin told Energy.
“The area is strategic for us but one where you obviously take a long-term view of bringing hydrocarbons to production.
“Clearly, if you look at the Central and Northern North Sea, infrastructure-led exploration will yield earlier barrels than will West of Shetland because there is little infrastructure, which makes it quite exciting.
Dana has held substantial position WoS for many years, both directly and indirectly via its stakeholding in Faroe Petroleum.
Griffin considers the company to be well placed with its portfolio and relationships.
“We have good positions, primarily with Dong and OMV with an emphasis on the more northerly and eastern areas of West of Shetland, as well as a smaller position with OMV out towards the west in the Foinaven and Schiehallion area.
“We’re at the start of a drilling campaign that will run over the next three to four years. It won’t be continuous.
“We’re drilling with Dong this year (targets are Cragganmore and Glenrothes) and then with OMV, mostly likely in 2014. The tally will likely be four wells, all are exploration.”
Indeed the drillship West Navigator has just spudded the Cragganmore well on block 208/17-C.
The well is located about 80km to the north-west of Shetland and around 95km from the UK/Faroe median line. The water depth is some 670m.
This will be followed immediately by the Cragganmore prospect on nearby block 208/17.
The targets lie just to the north-east of Dong’s existing Glenlivet discovery and are expected to take about 45 days each to drill.
Griffin regards WoS as still in its infancy and gas prone. Activity is gradually gathering pace, with both Dong and OMV stepping up their commitments. For Dana, its contribution is still in budget planning for next year.
The pressure is increasing out there in terms of the number of wells different companies are seeking to drill. However, none of the acreage held by Dana is under pressure from DECC, according to Griffin despite some having been held for a significant period.
“There are a few licences that we have to make decisions on but I think we’re pretty much there on most of them,” he said. “We’re not under any undue pressure, but the challenge for us is not to sit back and get comfortable.
“We need to drill the acreage that we have within sufficient timeframe to make an educated decision as to what we want to do with it . . . whether we’re fortunate to make discoveries and therefore move into appraisal, or relinquish. Hopefully that’s not where we’ll end up.
“We have just shot more seismic, it will be processed and we expect to have some of that in towards the back end of next year.
“We have a notional ongoing programme that will take us through 2014 and 15, but those are more leads and prospects to this point. What we intend to do is mature those leads into hopefully drillable prospects.”
The fact that Dana is owned by Korea National Oil Corporation is making it easier for Griffin to pursue WoS prizes, though he says the level of technical rigour applied remains the same.
“KNOC is encouraging us to look out to 2020 and beyond. Clearly that makes it easier with this sort of province (WoS),” he added.
Griffin said too that WoS has to fit in with other UKCS priority areas for Dana and that it therefore receives a similar level of attention to other areas of the North Sea, but the nature of what is done is different.
“West of Shetland is a key part of our strategy because it is the under-explored area of the UK Continental Shelf and therefore if one is looking for a new province to open up then we have it.”