Their hunch has paid off in significant oil discoveries. In recent months, for instance, Aker BP has located a series of troves, known collectively as Omega Alfa, that may produce more than 130 million barrels of recoverable oil, the largest find in Norwegian waters this year.
“It was an intense summer for most of us,” Hanna Tronstad, a drilling superintendent, said while monitoring screens at the control center for the exploration work in a former hotel in Trondheim, a Norwegian port city.
In making the discoveries, Aker BP’s explorers not only tested intellectual concepts, but also pushed physical limits, drilling horizontal wells nearly 7 miles long, a record for Norway.
Norway supplies roughly 30% of Europe’s natural gas demand and around 15% of its oil, according to Wood Mackenzie, a consulting firm. Those volumes help give it great strategic and economic importance, especially with reduced energy flows from Russia because of the war in Ukraine.
Despite more than 50 years of production, Norway’s overall output of oil and gas has held relatively steady for the past three decades. “It’s kind of amazing how you see projected decline not happening,” said Egil Tjaland, an associate professor of geoscience at Trondheim’s Norwegian University of Science and Technology, where many oil industry professionals have studied. Avoiding decline in the coming years will require ingenuity as well as investment, analysts say.
“The easy discoveries have already been made,” said Daniel Rogers, a Norway analyst at Wood Mackenzie. “It’s now about pushing the boundaries in terms of new technology, new ways of drilling and thinking a bit outside the box.”
Norway also maximizes the amount of oil and gas available for exports by keeping its own petroleum consumption to a minimum by relying heavily on electricity from dams and other water power. It is also in the vanguard of electric car adoption.
The Aker BP explorers were going against conventional wisdom when they decided to look for oil in a field that had been abandoned.
One of the explorers, Torstein Skorve, said that thin layers of oil could often be found in the rocks below those that hold natural gas, but sometimes there is not enough to make it worth the cost of extracting it.
But this field, called Frigg, sprawled over nearly 40 square miles, potentially adding up to a lot even though the oil layer was thin.
“When we did the calculation on that oil, it was really, really huge volumes,” said Skorve, who is a project manager for Omega Alfa.
A predecessor of TotalEnergies, a Paris-based company, developed part of Frigg in the 1970s, and Skorve said the company likely was aware of the presence of oil, but the industry did not have the ability to drill the long horizontal wells that now make tapping such deposits more feasible.
Just how much oil is present can be determined only by drilling, which was performed by a giant rig called the DeepSea Stavanger riding over the field in the North Sea.
The explorers described months of long days and nights monitoring banks of screens showing the progress through the rock and directing the drillers by video where to steer their bits.
Advanced technology allows the drillers to see up to 100 feet into the rocks around the well bore. In an indication of the precision now possible, these explorers were steering miles down a hole through an oil zone that is only roughly 30 feet thick.
What’s helped in making these discoveries, the explorers say, is that the group is relatively young, ranging in age from 35 to 40, and amenable to an open-minded, risk-taking approach not always common in the oil industry.
“We fell in love with staying outside the comfort zone,” said Aasmund Olav Lovestad, a geophysicist.
Aker BP’s management also allows them to try their ideas even though drilling is expensive and comes with a high chance of failure. This summer’s work, for instance, cost an estimated $120 million. “They’re incentivized to test out the frontiers,” said Karl Johnny Hersvik, the company’s CEO.
Aker BP plans to tie the Omega Alfa finds into Yggdrasil, the largest oil project under development in Norway with a $17 billion price tag. Yggdrasil is a kind of field of the future for Norway, tying several deposits together that will eventually be operated from land, rather than by people on platforms, to lower costs and risks.
The Omega discovery will bring Yggdrasil’s resources to around 800 million barrels. With more exploration in the works, reaching 1 billion barrels, a sizable field, now looks realistic, analysts say. Aker BP leads the project, and Equinor, the Norwegian energy giant, is a partner.
The find also raises questions about market perceptions of the Norwegian oil industry. These have been of “maturity, low reserve lives and decline, rather than growth,” Irene Himona, an analyst at Bernstein, the Wall Street research firm, wrote in a recent note.
Figuring that future opportunities would be scarce, some international oil companies have dialed back their activity in Norway or pulled out.
When Aker BP was created in 2016 through combining the Norwegian unit of the British energy giant BP and a separate Norwegian company, streamlining was at least part of the plan. Aker BP’s shares are listed on the Oslo exchange.
Hersvik forecasts more upside for the Norwegian industry. “I hear people talk about that we reached the peak and all of that stuff,” he said. “I don’t get that to compute with what I’m seeing on the ground.“
One reason for his optimism is a tax system that, while stiff, has been relatively stable and allows large write-offs for investment.
Rogers of Wood Mackenzie noted that the Omega discoveries occurred just across the maritime border from Britain’s North Sea where a complex tax structure and resistance to approving new projects has sharply reduced activity.
Around 40 exploration wells are expected to be drilled in Norwegian waters this year compared with just one in Britain, he said. “We’re talking about very, very different approaches to exploiting the same resource,” he said.
Norwegian energy executives say they hope that their country’s approach continues. “We just have to work together and have a lot of dialogue to make sure that we are able to set up the world for the next generation,” said Hege Faero-Finnvik, a senior vice president at OKEA, a Trondheim oil company.
This article originally appeared in The New York Times.
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