A recent North Sea oil discovery may be the world's biggest so far this year, Norway's Statoil said on Tuesday, breathing new life into a mature oil region largely written off by the majors and lifting the company's shares.
Statoil announced Aug. 8 it had struck oil in the Aldous Major South prospect in the North Sea and estimated its size at between 200 million and 400 million barrels of oil equivalent (boe) and that it may be connected to the Avaldsnes discovery made by Sweden's Lundin Petroleum .
On Tuesday, Statoil confirmed the two prospects were connected and estimated the size of the discoveries together at between 500 million and 1.2 billion barrels of recoverable oil equivalent (boed).
"This is probably the biggest oil find in 2011," Tim Dodson, Statoil's head of exploration, told reporters.
In June Exxonmobil said it had made three finds in the Gulf of Mexico totalling 700 million boe, while in April Statoil made a find in the Barents Sea estimated to hold at least 150 to 250 million, with considerable upside.
The latest find will help Statoil achieve its goal of hiking its annual production by a third by 2020 to 2.5 million boed, Mr. Dodson said, but would not change its production estimates for the next few years.
Statoil has struggled with declining oil production in recent years and has often revised downwards its future production estimates. Last year it produced 1.89 million boed, down from 1.96 million boed in 2009.
"Aldous/Avaldsnes ... may make the top 10 list of [Norwegian continental shelf]oil discoveries," Mr. Dodson said in a statement. "Norway has not seen a similar oil discovery since the mid-eighties."
Norway's two biggest oil discoveries were Ekofisk and Statfjord, with more than 3 billion boe each, which were both made in the 1970s and are still in production.
Statoil said there were strong indications that Aldous Major South was twice as big as the numbers announced last week, with estimates standing now to a potential 400 to 800 million barrels.
There could be more potential in the area, Statoil said, with a nearby prospect, Aldous Major North, expected to hold some 100 to 300 million barrels. The firm said it would have more results from that licence within a month.
Shares in Statoil were up 0.33 percent at early trading, outperforming an Oslo benchmark index down 1.25 per cent, while Det norske's were up 26.5 per cent.
Lundin shares were up 6.9 per cent while the Stockholm benchmark index was down two per cent.
The oil production of Norway, the world's eighth-largest oil exporter and the second-largest for gas, has been on the decline for the last decade.
Oil majors such as ConocoPhillips , BP and Exxonmobil have largely written off the Nordic country as a region for oil and gas exploration, focusing instead on areas such as the Gulf of Mexico, Brazil or Angola.
The new estimates for Aldous Major South showed the North Sea remains interesting after four decades of drilling, analysts said.
"This is incredibly positive. They are doubling the resource estimate for the latest discovery, and there is also additional upside both in the Aldous and the Avaldsnes discoveries," said Handelsbanken analyst Daniel Raavik.
"It shows that the North Sea has more potential than anyone had thought."
Statoil's Mr. Dodson said it could take six to eight years before production starts at the new discovery, adding the recovery rate could be at least 50 per cent.
Statoil has a 40 per cent stake in the Aldous Major South prospect and a 40 per cent stake in the Avaldsnes prospect, operated by Sweden's Lundin Petroleum .
The other partners in the Aldous Major South prospect are Det norske oljeselskap with 20 percent, Lundin 10 per cent and Norwegian state-owned firm Petoro 30 per cent.
"This illustrates in a good way the enormous potential of the Norwegian Continental Shelf," Chief Executive Erik Haugane of Det norske oljeselskap told reporters.
At Avaldsnes, Statoil holds 40 per cent, operator Lundin has 40 per cent and Denmark's Maersk Oil holds 20 per cent.
With files from Victoria Klesty in Oslo