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Wintershall plays to strengths to expandGerman producer bids to maximise core southern North Sea region while looking farther afield

Germany's biggest oil and gas producer Wintershall is playing to its strengths as it expands both inside and outside its core region in the southern North Sea. The energy player has long-standing positions in Russia, Libya and Argentina, and is currently stepping up activity in the Middle East. It is also taking great strides in Norway, where the company plans to spend half its exploration budget in the coming years. Wintershall gets most of its production from the southern North Sea, where it operates 27 offshore platforms, mainly off the Netherlands.

Taps turned on

The company turned on the taps at its operated UK platform at the Wingate field last October, and is considering developing its Ravn oil discovery in Denmark, Martin Bachmann, who heads Wintershall’s exploration and production division, told Upstream in an interview in Oslo. Keeping the southern North Sea assets in production for as long as possible is a key target, says Bachmann. That is done both by exploring for new resources near the existing infrastructure, and by applying new technology to boost efficiency and “squeeze the last barrels” out of ageing reservoirs, he says. Shallow-water operations, enhanced oil recovery and extraction from tight and unconventional reservoirs are the company’s main technology areas, says Bachmann.

The company is working with its owner, German chemicals giant BASF, on developing new methods to extract more oil from depleting or difficult reservoirs. In South America, its tight gas know-how has led the company to Argentina, where it has had operations for more than three decades. Bucking the industry trend, Wintershall exited Brazil a few years ago and has no current plans to return, says Bachmann. “We are constantly looking to spread out, and Brazil is an option. But the recent activities there have been almost exclusively in deep water and we are not a deepwater operator. “We focus on a number of technology areas where we have expertise and can make a real contribution,” Bachmann says.

In Argentina, Wintershall holds shale and tight oil and gas acreage in the Neuquen basin, as well as a stake in the offshore Carina and Aries fields. The company is also exploring in Chile. Onshore gas is also the key play in Russia, where Wintershall has worked with Gazprom for more than 20 years. The companies recently started drilling at a new joint development at the Achimov formation in Western Siberia, and further expansion is likely.

Tight gas technology

“What we are going after is the difficult, deeper reservoir, where our tight gas technology comes in. That will also remain the focus in the short term, because there are still tremendous reserves to be had and to be developed in Russia,” says Bachmann. The German player is also eager to take a larger foothold in the Middle East, where it currently has no production. The company plans to spud an exploration well in Qatar in about a month, and is in final talks with Abu Dhabi National Oil Company about a sour-gas development.

A much more immature region lies in Wintershall’s own back yard. The company holds acreage in the onshore Rhine Ruhr area and is currently studying what the potential might be. Bachmann emphasises that this is at a very early stage and “there is no guarantee it will be economically viable at all.” More promising in the foreseeable future is Norway, where the group set up a subsidiary in 2006. It took a big leap forward with the 2008 acquisition of domestic independent Revus Energy, and now has interests in about 45 licences and operates several discoveries.

The German company aims to produce 50,000 boepd by 2015 off the Norwegian coast and in the northern and central parts of the UK sector, compared with 4000 boepd in 2010. The figure will keep growing with an estimated start-up of its operated Maria discovery in 2016. In common with most other operators in Norway, Wintershall was encouraged by last year’s discoveries in the Barents Sea. “This is a typical emerging area where everyone is learning now, and we want to take part in that process. The move north is unstoppable,” says Bachmann.

In Libya, Wintershall is currently working to get production back to normal after last year’s unrest. The German company is one of the veterans in the country, with a contract that pre-dates the Gaddafi regime. Libyan production is now at about 60,000 boepd, or two-thirds of its earlier output. Getting back up to pre-revolution levels hinges on practical issues including infrastructure, which is partly owned by other operators.

Transition period

Bachmann is convinced that the revolution will bring more opportunities and investment once the current transition period is over. “Libya has tremendous potential, which could never be unlocked under the previous regime. I think the people of Libya recognise that, and are looking very seriously at unlocking that potential, and I would actually expect to see a change for the better,” he says. Bachmann is confident the country’s transition council is putting the country on the right track. “We have experienced a very pragmatic approach so far. There is a real spirit of getting things done, getting moving again.”

Busy exploration year ahead for fast-growing Norwegian division

Wintershall's fast-growing Norwegian subsidiary has a busy year ahead with a number of discoveries moving towards development and new wildcats to drill, writes Beate Schjolberg. The company is a partner in several Norwegian developments, including BG Group’s Knarr, Lundin-operated Luno and Talisman’s troubled Yme redevelopment. In central and northern UK waters, which are also run from Norway, the company holds interests in the Cladhan and Catcher discoveries.

A couple of weeks ago, Wintershall spudded an appraisal well at its Norwegian Sea Maria discovery, which it operates. The results may determine whether the field will be developed with a floating production facility or as a subsea tie-back. The German player found Maria in 2010, and currently believes the discovery holds between 60 million and 120 million barrels of oil, and some gas. If the well confirms volumes in the upper end of the range, Maria will probably be large enough for a standalone development, says Bernd Schrimpf, managing director of Wintershall’s Norwegian subsidiary.

Even so, the company is already studying various host platform possibilities. The wellstream could go to either Aasgard, Kristin or Heidrun, but either option would face challenges. “We will need water injection, and we will have to handle gas, and most of the possible host facilities can only supply one of these services to us. “That makes it very complicated and it needs a lot of studies,” says Schrimpf.

In addition, other discoveries may also seek to hook up to existing production capacity in the Haltenbanken area, among them Statoil-operated Trestakk and RWE Dea’s Zidane. Though Maria is its first operated development project, Wintershall is becoming a significant player in Norway with interests in some 45 licences, about half of which it operates. Many of the licences came with the purchase of domestic independent Revus Energy in 2008. Wintershall also operates the North Sea Grosbeak oil and gas discovery, which was appraised last year. Development of this find is dependent on a wider area solution with other discoveries and operators, says Schrimpf. The company is planning a wildcat at the nearby Skarfjell prospect in PL 418 later this year, which will, if successful, be included in the area plans.

Wintershall has another two operated wildcats planned in the North Sea this year, at the Kakelborg and Asha/Noor prospects. Wintershall is also joining the trek further north, where optimism is surging after several discoveries last year, including Statoil-operated Skrugard and Havis, and Total’s Norvarg. The company holds stakes in five licences in Norway’s northernmost petroleum region, and is operator of one licence awarded last year. The plan for production licence 611, which lies about 40 kilometres west of the Norvarg gas discovery, is to shoot 3D seismic during the course of this year, says Schrimpf. Like many of its peers, Wintershall has also nominated Barents Sea blocks on the Skrugard trend for inclusion in the upcoming 22nd licencing round.

From a staff of 65 in 2010, the Stavanger-based player aims to expand its workforce to 210 people this year. More large corporate acquisitions such as the Revus purchase is likely not on the cards, says Schrimpf. Instead, the company will focus on moving discoveries into production and developing its portfolio through licensing rounds and possibly licence transactions, if interesting opportunities come along.

Source: Upstream (02/03/2012)

Contact: Verena Sattel

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