DONG’s gas production of strategic significance
DONG Energy lately has been increasing its production of gas to gain stronger control of the chain of values from exploration to customer contact. Its 10% ownership of the Norwegian gas field Ormen Lange is a step in that direction, and increased exploration – especially in the area between the Shetlands and the Faroes – should provide DONG with more gas in the future.
DONG’s exploration and production of oil and gas are run by DONG E&P concentrating the majority of its activities in two areas: the North Sea producing from Danish and Norwegian fields and the Atlantic producing from mid-Norway, Ormen Lange and the area west of Shetlands, where DONG has some 20% of the known reserves of gas.
At the end of 2006 DONG E&P was in possession of 68 licences in Denmark, Norway, the UK and the Faroes. Production was some 38,000 BOE per day and known reserves accounted for 20 years of production.
Map of DONG E&P exploration licences, discoveries and fields in the North Sea and the Atlantic.
Optimising mature area
DONG E&P started up in the Danish and South Norwegian North Sea where it got its first jobs as an operator and is now producing oil and gas. It is a relatively mature area where production from its most important field, the Siri, culminated several years ago.
Lately, the planning for this area has focused on optimising production by extending the life of installations and maturing nearby commercial discoveries in order to utilize the infrastructure of Siri. DONG is expecting that Siri – comprising the two Stine-segments and Nini and Cecilie – in this way can produce for another ten years.
DONG is trying the same at the South Arne area comprising the fields South Arne, Amalie, Lulita and Hejre as well as the Norwegian fields Trym and Mjølner. In South Arne Amerada Hess is the operator, while DONG E&P is the drilling operator.
In the 6th Danish concession round DONG E&P was awarded operatorship of two of the 14 licenses and a share of an additional two. The four licences cover areas close to Siri and South Arne. DONG is expecting a lot from its new exploration activities and is planning to spud its first well end 2008.
DONG’s share of Norwegian fields Ula, Gytna, Tambar and Glitne contributes by 40% of the oil and gas production of the concern.
The Atlantic increasing its importance
During the years to come the Norwegian share of DONG Energy’s production will grow – especially when gas production from Ormen Lange is started up this year. Depending on production in Norway DONG E&P may soon triple its production.
“The decision to buy BP’s 10% share of Ormen Lange and a similar share of the gas pipeline, Langeled, from Norway to the UK is of vital importance to our strategy of a significant increase of our resources, and almost all downstream gas companies in Europe are now concentrating on increasing their resources. Ormen Lange will be DONG’s major investment till 2012, and it looks as if we have made a pro-fitable investment. We get consolidated in the strategic market of Northern Europe, and other players have had to pay more per oil equivalent for later purchases, so we are quite pleased with Ormen Lange,” states Exploration Director, DONG E&P, Jan Terje Edvardsen.
Exploration Director Jan Terje
Edvardsen: “We consider the area
West of Shetlands most promising.”
High risk – high profit
DONG E&P has been active in the adjacent Faroese area for the latest ten years. A single discovery, Marjun, has been made, but exploration has been most challenging. DONG is expecting very large amounts of hydrocarbons to be found, but it is extremely difficult to get reliable seismic data from strata hidden under the volcanic basalt.
“Our geophysicists and geologists have grown more and more competent in interpreting such data, but like Greenland the perspective in this area lies in the far future contrary to the area west of Shetlands. In our long-term strategy such high risk areas play an important part, as we can collect a substantial profit if they turn into a success.”
