Pal Haremo addressing delegates at APPEA 2014.

Pal Haremo addressing delegates at APPEA 2014.

By Lauren Barrett

NORWEGIAN giant Statoil is on the hunt for “something big” as part of its unconventional exploration push in Australia.

While Statoil has kicked off a work program on frontier ground in the Northern Territory, the company admits it is assessing other tight and shale opportunities across the country.

Statoil, which descended on Perth in April to speak on shale gas exploration at the Australian Petroleum Production and Exploration Conference, has made a big push of late into the Asia Pacific, recently securing ground in New Zealand as well as in Australia’s Great Australian Bight region, south of Ceduna.

But most of the company’s Australian focus has been on the NT’s Southern Georgina basin, having taking operatorship and a 60 per cent stake in permits EP127 and EP128, covering about 500,000 hectares. It shares the permits with Australian-listed junior Baraka Energy & Resources and PetroFrontier Corporation. The company is also the operator of permits EP103 and 104 in the basin with PetroFrontier.

Statoil vice-president of exploration Pal Haremo said the company was chasing large discoveries.

“What we are really after is something big…we are not that interested in medium-sized discoveries,” he said at the sidelines of the conference.

“Although its high risk, there’s huge upside.”

The joint venture, in which Statoil has committed to five workable wells under the exploration program, spudded its first well on 1 April. At that time, Mr Haremo said it was at a depth of 900 metres with the surface casing set to 500m. Drilling was now targeted towards the coring target.

Importantly, Mr Haremo indicated Australia would be the first country where Statoil would drill in shale prospective ground outside of the United States.

The company’s jump into Australia comes as it searches for opportunities outside of its established producing assets and its attempt at finding shale opportunities that match the quality of its US unconventional plays, which take in the Eagle Ford Shale and the Marcellus Shale.

If its recent exploration success is anything to go by, the company may have a bit of a reputation to live up to in Australia.

The company delivered the best oil and gas exploration results in the industry in 2013, measured by conventional discovered volume. It also made the world’s largest conventional oil discovery by volume last year through the Bay du Nord discovery offshore Canada.

Statoil added 1.25 billion barrels of oil equivalent from exploration in 2013, with the company completing 59 exploration wells, 26 of which were discoveries. The company is currently in a global exploration heavy push, having drilled between 50 and 60 wells a year for the last three years.

It has big hopes for the Southern Georgina basin, although given it’s still early days and a frontier region, the company is being realistic.

“These are frontier opportunities so the confidence is really low by definition…this is a situation where it’s really high risk,” he said.

Mr Haremo cited some general statistics which say suggest that in remote locations, there is less than a 5 per cent probability of a discovery.

“That means if you expect to find a big discovery you need to drill in 20 basins or more,” he said.

“It’s a wild shot.

“In the case we have success here, this could be really big.”

The South Georgina work program requires a combined capital expenditure commitment of between $20 million and $50 million, with the initial plan to plug vertical wells as part of its de-risking strategy.

The partners may then decide to do horizontal drilling, in which case additional approvals would be required.

With hopes of uncovering tight oil hydrocarbons, Mr Haremo said gas wasn’t on the top of its agenda.

In the case of finding small quantities of gas in its Southern Georgina acreage, Statoil would look at the possibility of farming out to interested smaller parties.

The Norwegian major isn’t letting Baraka’s issues over the work program interrupt its on-field activities, with the company hopeful of an amicable resolution to the dispute.

In March, Baraka started legal proceedings after Statoil issued default notices for Baraka’s alleged failure to pay cash calls. It came after Baraka voiced its dissatisfaction with the work programs on the permits and conceded it would be unable to meet the allocated $6.6 million needed to maintain its stake.

In breaking Statoil’s silence on the dispute, Mr Haremo said it was hoping to solve the issues Baraka has raised in a good manner with the parties locked in talks.

“This is something that happens in many joint ventures around the world,” he said.

“We are very optimistic that we will solve the issue there.”

Saying Statoil was impressed with how fast it’s possible to undertake field work in Australia, Mr Haremo said Statoil was moving full steam ahead with its Australian strategy and is screening the entire country.

Despite all of the high cost talk dominating the conference, Mr Haremo said he hadn’t experienced any of this in Australia yet, admitting it was too early to judge whether or not Australia was a high cost investment destination.

“We are here to listen and learn and then we will conclude later,” he said.