Statoil investigates development off west coast

STATOIL, the Norwegian oil company which acquired Aran Energy for £198 million last year, has spent over £38 million on an oil…

STATOIL, the Norwegian oil company which acquired Aran Energy for £198 million last year, has spent over £38 million on an oil rig which will carry out a "development programme on the Connemara oilfield off the west coast.

Statoil's exploration director for the UK and Ireland, Mr Jacob Sannes, confirmed that the Norwegian group had issued a letter of intent to the American group Reading & Bates "to execute a development programme for Connemara at a cost of $58.9 million (£38.3 million).

This programme will involve 11 wells, probably beginning in early 1997.

This is a more extensive programme than had been indicated at the time of the Aran acquisition last year.

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Mr Sannes said: "Obviously this is a very significant step forward for Connemara and we are very keen to press ahead with this project."

Statoil will begin acquiring detailed three dimensional geophysical information on the 26/28 block next month ahead of the detailed programme, he added.

Mr Sannes said that this programme did not necessarily mean that the 200 million barrel Connemara oilfield would be developed.

The Department of Enterprise & Energy said that no application for a petroleum lease had yet been sought by Statoil, although the current lease undertaking hallowed the Department to award a petroleum base if Connemara's commercial status was established.

The 19 month programme will involve at least 11 wells but, significantly, these wells will include detailed drill stem testing with the aim of establishing the rate at which oil will flow from the Connemara reservoir and exactly howl much of the 200 million barrels of oil can be commercially produced.

If a decision is ultimately taken to develop the Connemara oilfield, it will be Ireland's first producing oilfield although the Kinsale Head field has been producing natural gas for the best part of 20 years.

"Clearly this takes the Connemara project to a much more advanced stage, it's a step beyond appraisal drilling and sets the stage for possible development.

"We will drill 11 wells and review the situation on a well by well basis before taking a decision on applying for a petroleum lease.

"We will keep in contact with PAD (the Petroleum Affairs Division of the Department of Energy) at all times. We will want to keep all our options."

Mr Sannes would not be drawn on when oil would actually be produced, but Statoil vice president Mr Rolf Magne Larsen said last year during the Aran takeover battle that Statoil would hope to have oil flowing by the end of 1997 when the current lease undertaking expires.

At that stage, Mr Larsen envisaged a seismic exploration programme and one appraisal well in 1996 - before moving to a more extensive programme in 1997.

Industry sources said that by embarking on this detailed "development programme", Statoil will be able to move into a development and production phase very quickly if the Connemara find is deemed commercial.

The purchase and upgrade of the Reading & Bates semi submersible drill rig, J.W. McLean suggests that this rig would be adapted for oilfield development as well as the 11 well drilling programme.

Connemara is situated in deep water and the oilfield structure is thought to be heavily faulted, making development more difficult.

Advanced oilfield technology has, however, made even relatively small deep water oilfields commercial, and a moored production system for Connemara: would be relatively simply to put into place despite the 1,000 feet water depths in this area of the Porcupine Basin.

Statoil is currently developing an oilfield in the North Sea which has reserves of only 35 million barrels, so size is not the only factor.

"What the wells will actually produce and the cash flow are more important than the actual size of the field," Mr Larsen said at the time of the Aran takeover.