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Statoil confirms connection between Aldous and Avaldsnes oil fields; possibly one of 10 largest oil finds ever on the Norwegian Continental Shelf

16 August 2011

Statoil
Statoil says the Aldous and Avaldsnes combined potential may represent the largest NCS discovery since the mid 1980s. Click to enlarge.

Statoil has confirmed communication between the Aldous and Avaldsnes oil discoveries in the North Sea. (Earlier post.) In combination these discoveries may represent an oil structure of between 500 million and 1.2 billion barrels of recoverable oil equivalent.

If the upper part of the interval strikes pay dirt, the discovery will be one of the ten largest oil finds ever on the Norwegian Continental Shelf (NCS). Statoil has a 40% stake both in licence PL 265, where Aldous was discovered, and in PL 501, where the Avaldsnes discovery was made. The discovery area is about 140 km west of Stavanger, Norway, in a water depth of 112 meters. Reservoir depth is about 1,900 meters.

Aldous/Avaldsnes is a giant oil discovery, and according to our estimates the combined discovery may make the top 10 list of NCS oil discoveries. Norway has not seen a similar oil discovery since the mid-eighties.

—Tim Dodson, Statoil’s executive vice president for Exploration

This is the third “high-impact discovery” (a total of more than 250 million barrels of oil equivalent, or 100 million net barrels of oil equivalent to Statoil) for Statoil as an operator in 2011. In April of this year the 250 million barrel Skrugard oil discovery was made in the Barents Sea, and the 150-300 million barrel Peregrino South oil field was discovered offshore Brazil.

Statoil2
Aldous/Avaldsnes. Click to enlarge.

As the company announced earlier on 8 August, a minimum 65-meter oil column has been confirmed in Aldous Major South well 16/2-8 in the North Sea. The discovery was made in Jurassic sandstone in a very good quality reservoir consisting of coarse-grained, unconsolidated sand. The well has also established common oil/water contact between the Aldous and Avaldsnes structures, and according to preliminary estimates the combined discovery in the two licenses (PL 265 and PL 501) totals between 500 million and 1.2 billion barrels of recoverable oil equivalent.

Between 200 and 400 million barrels of these resources have been discovered in well 16/2-8, with strong indications from well data of another 200 to 400 million barrels of recoverable oil equivalent in the same structure, whereas a resource base of 100 to 400 barrels previously has been estimated in the Avaldsnes structure (PL 501).

The well was drilled by the Transocean Leader drilling rig, which soon will spud Aldous Major North well 16/2-9 (PL265) to clarify the further potential and any communication with Aldous/Avaldsnes. In addition the partners plan further appraisal drilling in licence PL 265 next year to clarify the full volume potential for a future development solution.

As we said at the Capital Market Day event in New York in June, the NCS is a world-class petroleum province. The Aldous/Avaldsnes discoveries are evidence that the NCS is still attractive. Making a discovery of this size in a mature area shows that exploration is all about perseverance, creativity and obtaining new knowledge.

—Tim Dodson

Aldous Major South is located in licence 265. Statoil is the operator and has a 40% interest. The other partners are Petoro (30%), Det norske oljeselskap (20%) and Lundin (10%). Avaldsnes is located in licence 501. Lundin is the operator and has a 40% interest, whereas partners Statoil and Mærsk have 40% and 20% interests, respectively.

August 16, 2011 in Arctic, Oil, Polar | Permalink | Comments (36) | TrackBack (0)

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Oh god peak oil is coming!!!! Oh wait large new oil discovery... Oh god peak oil is coming!!!!
There is no shortage of oil, just the really cheap and easy to get oil. The incentive to find oil is directly related to demand and price. Even when peak production does occur the invisible hand will work its magic, demand will reduce as price increases, and the incentive to produce alternatives will increase accordingly. To the disappointment of some of the frequent commenters on this site, it most likely will not change life as much as they would like it to, we humans are incredible at finding ways to maintain our lifestyle. Chicken Little environmentalism only hurts the movement by showing its lack of intellect.

@jayson,

Why do you assume the primary reason why we should make oil part of a basket of energy carriers is environmental?

Ralph

@jayson,
No one here is claiming that the sky is falling! But, everyone (but you) knows that the oil reserve is falling, while demand for oil is climbing still. Yet, alternatives to oil will take decades to capture significant market, even if we are working full speed toward that goal.

Meanwhile, our economy will be tanked over and over again by repeated Oil Shocks, one after another, due to unrelated world-wide events or politics. The sensible thing to do is to start the transition to renewable energy as soon as possible, while oil is still plentiful, so that we can maintain our standard of living now and forever. Otherwise, our standard of living and our economy will be seriously disrupted over and over again with oil prices going up and down the roller coaster!

The potential for solar and wind energy is so vast that our standard of living will actually improve once we get out of our dependency on oil and other fossil fuels. There will never be energy shortage again, as long as the sun will shine.

Jayson

the fact that they mention the discovery of a 1Billions Barrel oil field indicate that there is a problem, do you know with your brilliant intellect what one billion barrel represent ? I guess you don't : 2 weeks of world consumption. So please educate yourself a bit before being so opinionated.

I have not tried to assess how this find would change the statistics but the peak of North Sea oil was already passed a couple of years ago. This is not a joke; even statistics from the oil companies confirm this fact. With the fast decline of current fields and a reasonable lead time for getting the new discovery in full production (while the decline is continuing), I cannot understand how this would change the fact already mentioned, i.e. the North Sea had its peak a couple of years ago and in the future, we will have a continuous decline. Some may not realize (lack of intellect?) that we have a problem until the price at the gas station starts to increase (it has not yet…) but we soon have to accept that peak oil is a reality. Presumably, the peak is more like a plateau and we are right there now.

BTW, thank for the clarification, Treehugger. It explains a lot..

Who benefits from 'peak oil propaganda'?

@HarveyD
Who benefits? You perhaps (who promote electric cars)... and it is not propaganda, it is a fact. One oil market analyst wrote in a comment (in my translation): “This giant find could slow down the decline in Norwegian oil production.” I hope this is clear enough, i.e. the decline will be slower than before the find. Sure, but that does not help very much… Scientific peak oil analysts also take such undiscovered oil wells into account. There are ways to estimate this unknown factor, as well as many other variables. Oil companies seldom challenge these scientists any more. Instead, they tend to spread information about their “giant” (such words in this context make me laugh…) finds to news media, with the purpose of (perhaps) increasing the stock value of the company and… it works! In the process, they will also mislead a lot of laymen.

Eventually, I realize that there is no consensus about peak oil, as with, e.g. climate change and evolution. Some people even think that the earth is flat. As I have found, it is impossible to change those people’s minds with facts.

I am actually a trained economist, so education is not really lacking. The problem I see is that most people who are environmentally minded are not educated in finance or economics. I realize that the stated reserves of this field are a drop in the barrel of world consumption, but in concert with discoveries such as Brazil, ever-advancing extraction technology, and the likely reserves in the arctic there is small probability for a crisis. The reason we use oil as our primary transport fuel is that it is the most cost effective alternative at this point in history. When it no longer is there will be a transition. Who benefits from peak oil lies? The folks who wish to force via mandates and laws their social engineering ideas on the rest of society. The rent seeking for grants and subsidies in "green energy" that cannot be sustained by the market benefit as well. Look at Germany and solar power. That boondoggle only exists because of distorting subsidies. Wind is kind of a joke, look at the money spent on the offshore wind power in Great Briton the cost the power produced is more expensive than nuclear! Along with the fact that we will still need just as much base load power production as the sun only shines at most half the day and the wind is not constant while demand is. I stated that peak production is possible, but the invisible hand of the market will be our salvation. For the record, I do believe that there are negative externalities that are underpriced in fossil fuel production. I also believe in the greenhouse effect, the earth is round, and evolution.

@jayson
Your "economist" thinking is beyond repair. Your statements are problematic in so many ways that its is hard even to start correcting them.

Wind is more expensive than nuclear? Really? What a surprise. I suppose your "economist" calculations include all hidden or externalized costs like decomissioning nuclear power plants?

Eh, never mind!

Jayson

I tend to agree with soltesza... really you beleive in the "magic invisible hand" of the markets that will self-correct everything ? the ability of markets to self-correct is only valid for limited fluctuations, we have seen that markets can not self correct major externalities like major resource exhaustion or environmental limitations or major crisis, worse they can even self-destruct themselves by inventing product that turn into poison.
The problem of economist is that they use theories that have been build as if the world was infinite, they are unable to take into account environmental degradation or limits or resources constraint system. Most economist agree, economic theories have to be reviewed to includes these factor but so far nobody knows how.
There is many flaws in modern economics and markets, therefore relying solely on their ability to self-adapt is a deceptive illusion.

@Jayson
It is easy to find peer-reviewed publications about peak oil. The easiest source to search for this information is via ASPO (http://www.peakoil.net/). Could you give me an example of one single peer-reviewed publication that shows that the peak oil theory is wrong?

In an attempt to further illustrate what Treehugger already mentioned, I will give an example about how resource scientists and trained economists think. Suppose that you have ten coins (the oil resources) and that you are inside your confined apartment (the earth). Then, you throw these coins around the apartment. The conclusion of the resource scientist is that if you search long enough, you will find all the ten coins (all oil resources). The trained economist will not agree. In his (or her) opinion, it is all about supply and demand; if you search long enough, you will find the 11th coin (and, of course, many more after that…). Believe in whatever theory you want. You cannot change facts; the earth is round and the oil resources are limited!

Actually economics exist because of scarce resources and unlimited desires for resources. Economics goal is to study and advise the most efficient use of these scarce resources. The hypothetical economist in your world would agree that there are only 10 coins, but would believe that the likely increasing marginal cost to find the final coins would precipitate an increase in the market price of the resource (coins) leading to the exploration of alternative resources to coins. It would likely end up that the final coin('s) may never be extracted due to the high marginal cost, and the use of alternatives. Please look into economics; it is defined in the field as the study of the allocation of scarce resources to a world of unlimited desires! While there is a finite amount of oil in the ground at this time, I do not believe we will ever "run out" of oil. Just as in the example I cited above the marginal cost and suitability of alternatives will make exploration and extraction of these final reserves uneconomical. So fear not petroleum lovers we will never "run out".

@Jayson
Well, you agreed, there are only 10 coins. Some progress here... most economists do not even agree on that. Good start! I can also agree with you that the 10th coin might be difficult to find and use. But then you revert to the same mantra I have heard so many times before from economists. Rubbish! I do not even bother to comment on that. Finally, I never did get the peer-reviewed report from you, which shows that peak oil scientists are wrong.

This 'giant' oil field is less than 1/100th of the world's largest oil field; Ghawar in Saudi Arabia.

The Peak Oil theory readily accounts for new oil fields being found, even large ones.

It has been a couple of years since I followed the PO debate, but I seem to remember that there was some consensus among both PO believers and oil companies that the total estimated oil ressource is around 6,000 Gbbl (billion barrels), also called 'original oil in place'. At present, humanity has consumed about 1,000 Gbbl. Recoverable ressources at this point is around 2,000 Gbbl, defined as proven and probable ressources at present economical value. This value could probably be increased to ultimately 3,000 Gbbl by sticking straws in every tiny pocket that can be found (at a cost of around $300M a pop) and increase the recovery rate significantly. This estimate assumes vast increase in investment in the oil sector, which will no doubt be warranted. When our cars go 200+ mpg, no-one will sneeze at 20+ $/gallon oil prices.

Increasing the 'area under the curve' from 2,000 to 3,000 Gbbl does not postpone the midpoint (where all kinds of bad things are supposed to happen) by very many years. And a significant departure from the bell curve production profile is not realistic under any scenario, and most certainly not desirable!

What I think many fail to recognize is that the ability of supply to keep up with demand (at a reasonable price) stops quite a while before the mid point. The first third or so of the bell curve is roughly exponentional - like the natural increase in demand. From the 1/3 point until the halfway point, the daily output does not increase too much and the world experiences supply restrictions of increasing magnitude, since the natural demand increase is still exponential. Clearly, we are somewhere between the 1/3 point and halfway point right now.

What got me really tired about the PO debate (aside from the fact I felt I had learned as much about it as I wanted) was that debaters were usually entrenched in name-calling and typical dislike across the political spectrum. Nobody with any understanding of physics can deny Peak Oil, but the timing and what to do about it is the source of debate.

Should we anticipate PO and try to mitigate its consequences, or let the free markets play out and have price signals change consumer behaviour and gas mileage? I tend to err on the side that thinks we should anticipate the effects and aim for a soft landing. Long-time followers of this site will recognize that changes are happening to fuel economy, but not as fast as some would like. The big auto industry - the one that matters (forget about the Fisker cars) - has a 5-10 year time lag between market trends and mass production of technology. On top of that, there is the technology lock-in of the existing fleet which mostly hits the less affluent people who get stuck with their gas guzzler trucks and their payments. That is why I think it is a good idea to start practicing lower oil consumption. Since no-one will do this voluntarily, political action is required, althoung not a draconian one. Just enough to let people know and get used to the fact that the era of cheap oil is over! We will undoubtedly see short term drops in oil prices but short of a world economical meltdown (actually not as unrealistic as one might wish) they will be short-lived.

Anyway, this new oil field is great news for Norway but it does not change anything regarding Peak Oil.

jayson, if you think PO proponents think that oil will "run out", then you really don't get it! We all know there will be oil production for another 100 years or more - as stipulated as a central part of the PO theory. We are worried about being caught with our pants down if supply starts dropping faster than we can react to without significant economical consequences (considering that number of oil consumers to split the pie is rapidly growing).

I was trying to get a discussion going not about the validity of peak oil, but rather about the scare tactics used by some in the movement. I never stated that peak oil hypothesis was wrong, in fact I believe that we will hit it and maybe soon. I was blindsided by the very low level of understanding of economics however. To say that most economist do not believe that almost all resources are finite is waaayyy off base. I do not believe that we will run out, nor do I believe there will be huge social upheaval due to the decline in oil. The beauty that is the price signal will move us to the next best alternative in the most orderly and efficient way possible. Just as we had peak whale oil we will have peak dinosaur juice. Just as we transitioned in the past, we will in the future. As to the invisible hand, yes I do believe that all of us following our own self-interest will lead to the most efficient transition from petroleum to whatever replaces it. The price signal will cause us to conserve, and will motivate the entry of new technologies that are as efficient into the market. I am against the use of government to distort incentives be it for the production of petroleum or for “green energy”. I am all for government support for research, as it is a public good and would be under produced without subsidies.

I am actually a trained economist
But it appears you have no training in physics, chemistry, the history of technological transitions and especially psychology. These are crucial.

Economists have barely progressed beyond models assuming that all market participants are rational and have perfect information (aka "assume perfectly spherical horses..."). We know that US consumers are NOT rational actors, because they keep buying fuel-guzzling vehicles which are unaffordable to feed in conditions of very recent memory. We know that they don't have perfect information, because their expectations of fuel prices have been badly off.

How can a market dominated by such actors create the demand for the products that will actually be economical, not just when they're purchased (which is years after their design specs are set and production plans finalized), but over their 17-year lifetime? Having to scrap vehicles before they're worn out because they cost too much to run is stranding assets. That's what we're looking at for a large fraction of the US fleet.

The only solution we've got for that problem is policy. CAFE regulations, taxes, special-use permits, vehicle production and inventory restrictions (not allowing mfgrs to build lots-full of vehicles they can't sell in a fuel crisis), these are ways to address the issues of irrational actors and imperfect knowledge.

The economist's reaction to a shortfall in food supplies is "people will starve". Maybe they will, but they'll steal and riot first and cause large losses. If that's not in your model, your training in economics isn't worth much for understanding this problem.

@engineer-poet

I believe that your interpretation of consumers being irrational by their vehicle purchase may be incorrect. They simply value thing differently than you or I. Perhaps they value the signaling, or the utility, or some other attribute more than the fuel cost differential between a large vehicle and a small vehicle. By and large people are mostly rational. There is however a branch of economics that looks at seemingly irrational behavior and attempts to better understand the psychology behind it, behavioral economics. Physics and chemistry training I do lack, however my 10 years in the automotive field working on gas, diesel, hybrid, and light electric vehicles before I got into finance and economics does give me some insight to vehicle technology. That is why I find this site interesting.

As to the history of technological change, economics it built on the backs of men who lived during the largest technology change in human history, the industrial revolution. Adam Smith, Ricardo, Malthus, Marx and many others who were the fathers of the field were doing so to understand the role of humans and technological change. I do agree that some of economics does suffer from the Ricardian vice of holding too many things constant, and slavishly adhering to limited models, but that is mostly due to the influx of math and physics majors masquerading as economists as the field has attempted to give itself the patina of science. If you look at advanced (phd) level econ, you would see math on the level you took for and engineering degree.

The policy prescriptions you have proposed are a very mixed bag. Command and control designs have more often than not failed. CAFE is the worst possible way to move automakers to more efficient vehicle production. Taxes to correct market pricing failures due to negative social/public externalities is the least distorting and least likely to promote rent seeking behaviors and in my opinion should be used. The increase in the market price has already caused more of a transition than CAFE ever did, look at sales of smaller vehicles and v-6 powered pickups. Did you ever think you would see the day when Ford was selling more v- 6 powered pickups than v8? 10 years ago did you think there would be such a crush of 35+ mpg vehicle entering the market place? Most people did not. The price signal works and should allowed to continue working.

As to your idea of what “the economist’s” reaction to food scarcity would be I believe you are incorrect. From my training the most common response would be an increase in the price of food causing self-rationing and a signal to producers to increase the use of planting area to take advantage of the high prices. The cure for high prices is high prices. That being said it is the role of the government to have proper regulation to not allow manipulation of the market, something it fails at all too often. I as a person not and economist believe that we as the more fortunate through the government as they are the most efficient actor in the role should assist the least able to obtain food and other basic human dignities.

Thank you, Jayson, for explaining your position clearly. I do agree with you that CAFE regulation is not as good a policy in comparison to a policy of guaranteeing a gradual increase in petroleum retail prices about 7% yearly. I further agree with you that the government's micromanagement of the economy often will lead to disaster, and so has proven the Soviet-style centralized planning to be disastrous. Free-market competition has proved to be the best way to obtain both quality and value, but must be protected from market manipulation and monopolistic, anti-competition practices.

The current administration of health care (ObamaCare) and welfare administration will also lead to disaster. Health care delivery via third-party payor violates free-market principle, and has contributed significantly to our (US) budget deficits and increase in US manufacturing cost due to escalation in cost of health care delivery. The complexity of ObamaCAre soon will make things worse and may bankrupt this country (USA). Likewise, the complexity in CAFE law won't do as much good for anyone except the bureaucrats!

@Jayson
I wonder if the man who cut down the last tree on Easter Island also was an economist, like you. I presume that they had developed a whole economy based on utilizing this resource when they had cut down ~50% of the trees. This was the peak in production rate. I can also imagine that Easter Island economists, like you, then assured people not to worry, since they still had 50% of the resources left. What happened at the end? Well, without wood, they could not build boats and catch fish, so at the end, they became cannibals. The problem we face with peak oil is so great that it is beyond comprehension. It has to be taken seriously! Do we want to repeat the case of Easter Island?

Command and control designs have more often than not failed. CAFE is the worst possible way to move automakers to more efficient vehicle production.
I agree with you, but C&C is about the only politically-feasible measure in the USA. I've been an advocate of higher taxes in lieu of CAFE since the 1980's, and gotten nowhere. Michele Bachmann is stating that she will cut gasoline prices below $2/gallon, to an apparently good reception among devoted Republicans. If you can't do the right thing and get re-elected, pols won't do it.
The increase in the market price has already caused more of a transition than CAFE ever did
A trend I applaud, but it's subject to reversal when gas prices go down (American consumers have the long-term memory of goldfish) and don't come close to preparing for even the midway point of such vehicles' 17-year average lifespan.

RogerPham,
How would you increase petro prices 7%/yr? thru taxes? I agree this might be better than CAFE but if you look at historical data, Cafe has worked. Perhaps not as efficiently as other methods but it has had an impact on U.S. fuel consumption (waste).

@danm,
It is likely that petrol price will increase by itself (market forces) on average 7% yearly in the next 10 years, without any increase in petrol tax. In that case, the gov. will just sit back and observe.

However, in order to stimulate private investment in alternative fuel developments, this gradual price increase must be predictable and guaranteed. Otherwise, given the past history of wide fluctuation in prices of petrol, many potential investors will get very nervous and won't invest in alternative fuel developments. Predictably, the economy and our standard of living and social stability will be severely degraded when petrol shortages will occur without alternative-fuel vehicles and infrastructures.

These alternative-fuel vehicles and infrastructures will take decades to gain market share, even when technologies for these are already available today, so we should start NOW, without any waste of time. Our current joblessness and budget-deficit crises will depend on these PRIVATE investments as part of the solution.

TAX is very dirty word in politic, and SHOULD NOT be mentioned at all. Instead of taxation, we could use the concept of a "Price-Adjustment Fund" (PAF) to sell this petrol-price-guarantee idea.
This is how it works: The public will be explained that if and when the wholesale market price of petrol goes down, the gov. will collect the $ different per gallon and put that in a public fund, so that when the wholesale price of petrol will go up, the fund (PAF) will be used to REDUCE the price of petrol to avoid disruption in the economy.

Recall that a major factor in precipitating the economic crash of 2008 was the sudden doubling in price of petrol, causing a cascade of economic downturn and layoffs, leading to defaults in loan payments...you know the rest of the story.

If CAFE really worked, we should have seen a major reduction in petrol consumption per capita in the USA from 1982 to 2006. In 1982, LDV's averaged may be 15 mpg, while in 2006, thanks to CAFE, LDV's averaged 27 mpg. Yet, from 1982-2006, the per-capita daily petrol consumption have been hovering around 2.56 gallons/day. People drive more! However, when the oil shock occured in 2008, the per-capita daily petro consumption took a nose dive immediately, without any change in CAFE...but consumption was reduced drastically when people have to pay $4 for a gallon of gas!

See the following link for details:

http://static.seekingalpha.com/uploads/2010/6/17/saupload_monthly_average_gallons_finished_oil_products_supplied_per_us_resident_per_day_jan_1982_mar_2010.png

The problem with a PAF scheme is that it would amplify price swings in the price of crude, pushing it down in times of surplus and up steeply in times of shortage. The former would have adverse effects on supply, the latter probably feeding speculators.

We don't need fuel prices to be stable to encourage conservation and supply-shifting, we just need them higher. Using fuel taxes to allow e.g. a deductible on Social Security taxes would be a revenue-neutral measure which would nevertheless push conservation. (It would also tax under-the-table workers, which we urgently need to do.)

@E-P,
U R probably right about the unintended effect of the Price Adjustment Fund (PAF) concept. However, directly raising fuel tax will not be politically feasible, unless followed by a deduction on SS taxes, which actually is quite a good idea. Likewise, an increase in sale taxes followed by deduction on SS taxes would have the same effect of taxing those underground workers.

However, transportation businesses will not like fuel taxes increase, because it will greatly affect their business and profits. They would prefer predictable pricing of fuels so that they can better plan their businesses and invest in the right equipments for long-term planning. Our economy is so dependent on transportation fuels that a price stabilization mechanism will promote much better economic stability.

Furthermore, E-P, if you raise petrol prices during surplus, then you would prevent over-consumption during glut, and thereby preventing future shortages. If the rate of consumption is moderated and gradually reduced, it is likely that future shortages, if will ever happen at all, would be very mild.

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