APA (Awards in Predefined Areas) licences have been awarded by the Ministry of Petroleum each year since 2000 (including the precursor North Sea rounds (“NST”)). These licences allow for new companies to explore in acreage previously held by others.
So far, each round of awards has resulted in new discoveries with recoverable resources estimated to be of around 300 MMboe (or 200 MMboe if the Johan Sverdrup discovery is excluded). The illustration below shows the discovered volume for each round of APA awards. Also shown, for comparison, are the discovered volumes from the numbered rounds in more frontier areas of the NCS, which also continue to deliver new discoveries.
APA acreage is effectively recycled all the time and allows new oil companies to test new ideas and apply new and improved seismic data and analyses whilst benefitting from past efforts by others. It is surprising how many exploration wells are explained as having been placed on the “wrong side of the fault” relative to the migration path, at least with hindsight.
The Blasto find in PL091 I, one of the top 2021 discoveries with 64-118 MMboe, is a good example of the reward still out there even though the area was licensed and drilled three times prior to drilling discovery well 31/2-22S last year.
The availability of nearby infrastructure makes it worthwhile to explore in recycled acreage even when the expected discovery sizes are becoming smaller. Many of the newly awarded licences include prospects that were already identified a long time ago but deemed too small. Now, these discoveries can utilise infrastructure already invested in, extend the lives of nearby fields and reduce investment costs.
A review of the different vintages of APA awards indicate larger volumes were discovered in the early rounds as a release of new ideas could be tested on acreage that had been previously under-explored. The discovery of the Johan Sverdrup field is the ultimate example of this, or maybe the earlier discovery of the Luno/Edvard Grieg field which helped unlock Utsira High prospectivity.
APA rounds 2012-2014, i.e., awards made between 2013 and 2015, stand out as poor in terms of volumes discovered. A key feature for these is the low share of licences being drilled, meaning a significant number was relinquished without an exploration well being drilled. The drill-or-drop decisions for these would have been in the years after the oil price dropped in 2014.
APA rounds 2015 and onwards have continued to deliver at historic average levels of volumes discovered and benefit from very positive exploration results on the NCS in the years 2019-2021. They are, however, not yet fully depleted as new wells are still planned and drill or drop decisions are yet to be made.
The APA 2019-2021 awards are only at the beginning of their exploration drilling campaigns or processes to drill or drop the licence.
Altogether, the APA awards have demonstrated the importance of recycling acreage and testing out new ideas with a diversity of oil companies. Combined, this is a recipe for the future success and value creation from the NCS.
ANDERS WITTEMANN
Wittemann E&P Consulting
