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Shale to spur Statoil output drive

Statoil aims to increase its global production to 2.5 million barrels of oil equivalent a day (boe/d) by 2020 by ramping up its unconventional exploration and its North Sea operations

The state-controlled company will produce 1.8 million boe/d this year. “Building a global portfolio of unconventional opportunities is going to be one of the things that’s important for us to deliver growth post 2020,” Katie Jackson, Statoil’s vice president of mergers and acquisitions said.

Speaking in London, Jackson said Statoil plans to drill 20 high-impact wells between now and 2014 and will continue to focus on shale exploration.

Statoil shifted its strategy to focus more on unconventional plays after the 2008 financial crisis, when Brent crude oil prices plunged as low as $53 a barrel, making some of its conventional projects economically unviable. Jackson said that in times of oil-price volatility, it was easier for Statoil to change its output and capital investment levels in unconventional plays rather than in its conventional operations.

“This (the 2008 crisis) was a wake-up call for us and we now think rather differently about unconventional (assets) and the ability to ramp up and ramp down depending on the economic climate,” she said.

Since 2008, Statoil has acquired shale-gas acreage in the Marcellus and Eagle Ford plays, as well as the Bakken and Three Forks tight-oil plays. Statoil has also taken a 49% stake in Wintershall’s Rhineland and Ruhr shale-gas concessions, in Germany.

Statoil will also rely on ramping up its activities in the North Sea to boost its production and its partnership with Germany’s Wintershall is a key part of achieving this.

In October, the two companies agreed on an asset swap in which Wintershall gained stakes in three North Sea producing fields, Brage (32.7%), Gjøa (15%) and Vega (30%). Wintershall says the areas have reserves of around 100 million boe. In return, Statoil will gain a 15% stake in the Edvard Grieg gasfield from Wintershall, part of the prolific Utsira High fairway offshore Norway, as well as a payment of $1.4 billion.

The deal allows Wintershall’s production to soar from 3,000 boe/d this year to almost 40,000 boe/d in 2013. And it allows Statoil access to what Jackson called “the last piece” of the Utsira High play, an area which is thought to contain up to 4.2 billion boe, according to figures from Statoil, Lundin Petroleum and Det Norske oljeselskap. The Edvard Grieg field alone holds 2.8 billion boe, according to Norway’s Energy Ministry. Production is expected to start in 2015.

Norway is also a key part of Wintershall’s future growth plan, the company said, and its partnership with Statoil is integral to its success in the area.

“Norway has developed into a real focus area for us in recent years. Wintershall is clearly looking to position itself ... as a local technology partner with a long-term focus as one of the leading operators in the Norwegian continental shelf,” Wintershall’s exploration and production director, Martin Bachman, said. “The industry is controlled by state-owned companies. In such an environment, the global competition for oil and gas is actually a competition for better and more effective partnerships.”

The two companies have also signed a 10-year sales agreement to deliver 45 billion cubic metres of conventional gas to German and other northwest European markets.

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