World drilling stagnates yet oil companies move into arctic

By
Published: Friday, 08 December 2017

The biggest offshore project of the year has been announced by Statoil, potentially opening up new markets for oilfield minerals.

Global drilling rates have been stagnating in recent months after a rapid recovery earlier this year, but a new push into the Arctic by Norway and the US could open up new markets for oilfield minerals such as barytes and bentonite.

International drilling rig numbers, released by Baker Hughes on December 7, showed the total number of rigs outside North America was at 942 in November. This is down 9 from October, but up 17 from last year.

The offshore rig count is currently at 911, down 21 on an annual basis and 28 month on month.

In the US, following the fracking boom earlier this year, rig numbers were up a considerable 331 from November 2016, but down 11 from October. 

Norwegian expansion

Norwegian state-owned energy company Statoil gave the go-ahead to a massive Arctic development on December 5.

The Johan Catsberg project, to be located in the Barents Sea north of Tromso, is the largest offshore project to be approved this year, Statoil said, at an estimated 450-650 million barrels.

Offshore drillers traditionally require high-purity barytes for use as a weighting agent in drilling muds.

Industrial Minerals assessed  barytes prices, unground lump, API, bulk, SG 4.2, fob Morocco, at $70-88 per tonne.

The project, as currently put forward, would require capital spending of NKr49 billion (£4.4 billion), delivering a break even price of less than $35 per barrel. Brent crude oil is currently trading at around $63 per barrel.

Arne Sigve Nylund, Statoil’s head of development and production in Norway, suggested that further investment in new assets would follow.

"The field will be the backbone of further development in the oil and gas industry in the North," she said.

US eyes Arctic expansion

Norway's Statoil is not the only oil producer that has its eyes on an expansion in the Arctic.

On December 2, the US senate passed legislation to allow drilling in a 1.5 million acre area of the Arctic National Wildlife Refuge in Alaska, potentially opening up new oilfield activity in a region that has long been off-limits to oil companies.

The legislation, which has been rolled in with a larger tax reform bill, will face opposition in the lower house from Democrats and from a number of dissident republicans, who are concerned about the environmental impact and effects on indigenous communities it will have.



More like this