January 31, 2007 03:13 pm
Canadian oilpatch keen shoppers of Norwegian licences
Shaun Polczer, CanWest News Service
Published: Wednesday, January 31, 2007
CALGARY-Canadian-based companies went to town Tuesday in Norway's offshore oil and gas licensing round, snapping up 13 of 49 parcels offered in the world's third-largest petroleum exporter.
Petro-Canada led the way by gaining interests in seven blocks; Nexen Inc. had four and Talisman Energy Inc. came away with two.
Half a world away, local analysts said the Norwegian North Sea offers potentially big discoveries for homegrown players operating in a mature oil and gas region.
In that sense, the region is similar to Western Canada, where retreating majors have left the field to a new generation of nimble independents, said Alan Knowles, an international oil and gas analyst with Haywood Securities in Calgary.
``Norway is significantly under-drilled compared to the U.K.,'' he said. ``Certainly, Norway is seeing a growing international focus.''
According to the American government's Energy Information Administration, Norway is the third-largest oil exporter behind Saudi Arabia and Russia.
The country produced about 2.8 million barrels per day (bpd) in the first half of 2006, down from a peak of about 3.5 million bpd in 2001.
In addition, Norway is Europe's second largest natural gas exporter behind Russia, sending about nine billion cubic feet a day to European Union members.
Though the state oil company Statoil controls about 60 per cent of the country's production, Norway has been liberalizing its fiscal regime to offset declines and attract new exploration.
Knowles compared it to competition between the governments of Alberta and Saskatchewan to attract drilling dollars in their respective jurisdictions. ``The same kind of thing happens between the U.K. and Norway.''
Fuelled by a royalty holiday on new discoveries, the European North Sea has become a hot spot for Canadian companies operating abroad.
Earlier this month, Talisman submitted a proposal to redevelop the Yme field on the Norwegian continental shelf. Talisman said its Norwegian properties could add 40,000 bpd to its production profile by 2009.
``Talisman has built a significant North Sea business by consolidating and reworking the smaller pieces the majors have sold off,'' Knowles said. ``It's significant.''
Likewise, Nexen this month announced first oil from the billion-barrel Buzzard field, which has been touted as the biggest North Sea oil discovery in more than a decade.
The company expects to ramp up production to 200,000 bpd by mid-year.
Petro-Canada, which holds a 30 per cent interest in Buzzard, also has assets in the Dutch and Danish sectors.
In the fourth quarter, Petro-Canada produced about 60,000 bpd offshore Holland and the U.K.
The company opened up an international office in Norway last May, when it was awarded exploration blocks in the 2006 licensing round.
``We've been in the North Sea for quite a while. It's one of our core areas,'' said spokeswoman Michelle Harries. ``It's fair to say we're increasing our presence there.''
Petro-Canada will team up with British utilities giant Centrica PLCon four of the licences and Norwegian exploration and production outfit Revus on the remaining three.
Other partners include ConocoPhilips and Faroe Petroleum PLC, an independent Scottish oil and gas explorer.
Investors responded positively to the news, sending Petro-Canada shares a buck higher, to $45.89.
Talisman gained 54 cents to $20.70 while Nexen lost $1.20, to close at $77.54.[email protected]
© CanWest News Service 2007