FEATURE: Statoil gains strength in US onshore plays and Gulf of Mexico

Houston (Platts)--2Jul2013/308 pm EDT/1908 GMT


Nearly a decade after re-entering the US Gulf of Mexico and five years into its shale play foray onshore, Statoil is now an operator in both arenas, a coup for the Norwegian company best known for harsh-environment marine operations.

Shale-wise, Statoil has taken over as operator of all the eastern Eagle Ford Shale activities in its joint venture with Talisman Energy in South Texas. That includes Live Oak, Karnes, DeWitt and Bee Counties, the company said Monday. These are located south and southeast of the city of San Antonio.

When Statoil formed the JV with the Canadian company in late 2010, it agreed to phase in operatorship of part of the acreage, Statoil spokesman Ola Morten Aanestad said.

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"The eastern part is more high pressure, high temperature, and we think this is the kind of technology approach" that utilizes Statoil's expertise around the world, Aanestad said.

Talisman operates the western part of the JV, largely in McMullen, La Salle and Dimmit Counties, south and southwest of San Antonio. Joint ownership for the total JV lands is not affected by split operatorships, said Statoil.

The company has already taken over the three drilling rigs on its operated area, said Aanestad, and by Monday had also assumed responsibility for producing wells, processing facilities, pipelines, infrastructure and a field office in Karnes County.

Being an operator was always the Norwegian company's goal, both onshore and offshore, said Aanestad, adding that is "important to Statoil."

"We have a technology focus and you can apply that technology [in a more targeted way] when you're an operator," he said.

Statoil holds roughly 73,000 net acres in the Eagle Ford, producing 20,200 b/d of oil equivalent there in the first quarter, from around 300 wells. That included 10,800 boe/d of liquids and 9,400 boe/d natural gas.

The company formed the JV with Talisman by buying Eagle Ford acreage from Denver-based Enduring Resources for $1.325 billion. In addition, Statoil acquired 50% of Talisman's existing Eagle Ford acreage and production for $180 million.

But Talisman is reportedly eyeing the sale of some Eagle Ford shale assets, although talks are said to be preliminary and any conclusive deal could take some time.

Besides the Eagle Ford, Statoil is also in two other major US shale plays -- the Marcellus in Pennsylvania and parts of Ohio/West Virginia and the Bakken in North Dakota. The company first entered US shale operations in 2008, taking a third of Chesapeake Energy's acreage there for about $3.4 billion. Statoil's net production there is 86,000 boe/d, mainly gas.

By the time the company strode into the Bakken in 2011 by buying Brigham Exploration for $4.4 billion, it had some experience under its belt; it debuted there as an operator. The company's net Bakken production is 45,300 boe/d, mainly oil.

Statoil has said it hopes to produce more than 500,000 boe/d from its North American operations by 2020.

Shale isn't exactly a harsh environment in terms of weather -- indeed, the Eagle Ford is sited in a temperate climate. But it is intensive logistically, in that multiple wells must be drilled in an operation that uses a wide range of equipment and services.

Harsher in some ways is Statoil's Gulf of Mexico deepwater operation, where it has non-operated minority stakes in several major fields and developments, among them Chevron-operated Tahiti (25%), Jack (25%) and St Malo (21.5%), Anadarko Petroleum-operated Caesar/Tonga (23.55%), Shell's Vito (30%) and ExxonMobil's Julia (50%).

Statoil has about 340 leases in the deepwater Gulf, ranking it sixth or seventh in terms of number of blocks, Jason Nye, the company's senior vice president for US offshore, said in a May industry presentation. In Q1, the company's net US Gulf production was 31,500 boe/d.

Since 2004, when Statoil re-entered the US Gulf after previously exiting in the late 1990s during an industry economic recession, "we've made this [area] a platform to build a substantial resource base," Nye said.

Statoil's 2011 Logan discovery, where appraisal work is ongoing, is the company's first operated project in the US Gulf and its deepest there. Logan, at Walker Ridge blocks 925/969 in about 8,700 feet of water, likely has "greater than" 200 million boe recoverable, said Nye.

That lease expires in 2015, so Statoil has much work ahead in order to hold it and make field sanctioning decisions. If so, first oil is expected 2018-2019, either stand-alone or in a tie-back.

Canadian independent Encana won the block where Logan is sited for about $8 million in a 2004 lease sale. Statoil acquired it the following year and now holds 55%, along with Brazil's Petrobras (35%) and China's OOGC America, (10%).

--Starr Spencer, starr.spencer@platts.com  
--Edited by Derek Sands, derek.sands@platts.com

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