VNG 'eyes tie-up' for Pil project

 

VNG Norway has not ruled out forming a collaboration on operatorship of its landmark Pil & Bue discovery in the Norwegian Sea if it decides on a standalone development of the dual find as it prepares to drill a pair of key exploration wells in the licence next year.

The overall size of the oil and gas discovery has now ballooned to between 80 million and 200 million barrels of oil equivalent after the latest Bue find last month that unearthed up to 25 million boe, according to VNG managing director Atle Sonesen.

The German operator has previously stated that it was looking at a resource threshold of around 200 million boe for a possible standalone solution entailing a new floating production, storage and offloading vessel to develop the discovery – the largest off Norway so far this year.

Alternative development options under consideration are a 32-kilometre subsea tie-back to the Statoil-operated Njord A platform or a longer 60-kilometre tie-back to Shell’s Draugen, where VNG recently came onboard as a partner after acquiring a 7.56% stake from Chevron.

Sonesen said the decision on a development concept will be heavily dependent on the results of two further exploration wells tentatively scheduled for drilling in late spring next year in VNG-operated production licence 586 using semi-submersible Transocean Arctic, with the work likely to be wrapped up by early 2016.

“We smiled when we made the Pil and Bue (Bow and Arrow) discoveries earlier this year, but we are smiling just as much at the upside resource potential in the licence,” Sonesen told a presentation at the ONS conference in Stavanger, where he also played a magic card trick on the audience picked up from a magician who performed at the company’s booth.

However, he underlined the company had to carry out lots of exploration data analysis and study work before it arrives on a final development concept and could not disclose a firm timeline for the decision.

While Sonesen said the company was “prepared to take on the challenge” of its first operated project off Norway, he admitted to Upstream that a standalone development may be a bridge too far and that it would then look to rope in a more experienced partner on the operatorship side.

“That task may be too big for us as an operator,” the VNG boss said, adding that novice operators off Norway have historically taken on smaller tie-backs rather than launching into full-blown standalone schemes.

“We would be prepared to take on a subsea tie-back but operating a standalone project would be a big step up that would be very challenging and there are probably other ways of doing that.”

He suggested options could include forging a partnership with an experienced major player, a strategic alliance or split operatorship.

Sonesen said VNG would focus on an area-wide solution to develop Pil & Bue in its core Halten terrace area, where it also has stakes in the producing Njord and Hyme fields, as well as Draugen, and the Snilehorn discovery along with other licence interests.

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