ConocoPhillips is considering pressing ahead with development of a challenging gas discovery off Norway, with recent changes to the country's tax regime a significant factor behind the US independent's renewed interest in the project.

Multiple sources within the partners at the licence hosting the Victoria gas discovery told Upstream that the Houston-based operator, Anglo-Norwegian independent Aker BP and Poland's PGNiG are optimistic about their chances of getting a development off the ground for the gas discovery, which is pegged at between 20 billion and 90 billion cubic metres.

Norway’s generous temporary tax relief package — approved by Parliament in June and which ensures the state must cover 90% of costs, while only receiving 78% of potential return — has reduced the downside risk for the project partners.

Industry sources said the partners were, before the Covid-19 outbreak, interested in potentially developing the discovery but that it would likely have been shelved during the pandemic without the tax package.

Time of the essence

A final investment decision must be made within 2022 in order to take advantage of the tax relief package, leaving ConocoPhillips and its partners with limited time to decide on a development concept.

A ConocoPhillips Norway spokesman declined to comment on the matter when contacted by Upstream.

Upstream understands from industry sources that several development concepts are being considered, with CO2 separation and reinjection among the main challenges.

One source said that potential concepts involve an unmanned solution, either subsea or a floating unit, which would be tied back to existing infrastructure in the area.

With reservoir temperatures of around 200 degrees Celsius and formation pressure higher than 800 bars, Victoria is a challenging high-pressure, high-temperature (HPHT) discovery.

It was relinquished by Total in 2018 after the French supermajor — renowned for its HPHT expertise — failed to mature the resources to a field development.

In addition to high temperature and pressure, the reservoir is partly tight, while there is a high level of CO2 at 10%.

ConocoPhillips, Norwegian Aker BP and PiGNIG were awarded production licence 1064 — which hosts Victoria — and surrounding licences in Norway’s 2019 Awards in Pre-defined Areas (APA) round.

Size matters

Discovered by Total in 2000, Victoria was thought to hold almost 90 Bcm. However, in 2009, after an extensive appraisal project, estimated volumes at Victoria was reduced to between 20 and 60 Bcm of gas. There is likely a significant upside if technological challenges with the tight reservoir are solved.

ConocoPhillips and PGNiG are currently exploring another HPHT gas prospect on neighbouring PL 1009. The Warka well was spudded on 12 August and local exploration sources have said they expect that Transocean’s semi-submersible Leiv Eiriksson has already reached its target depth of 4589 metres below the seabed.

The well has a second target, called Warzawa, at 4825 metres.

A discovery at Warka would strengthen the likelihood of a new gas development in the Norwegian Sea.

A ConocoPhillips Norway spokesman said the company would not comment on ongoing drilling operations as it is customary in Norway that the Norwegian Petroleum Directorate announces exploration results.

Field Development

ConocoPhillips eyes Norway gas field development amid tax breaks