The government appoints an operator for a production licence when it is awarded. This company has the job of organising the obligatory work programme.
That takes the form of preparatory geological and geophysical studies and a preliminary programme of exploration drilling. These activities will hopefully result in a discovery which will form the basis for a declaration of commerciality. This means the licensees believe that recovering the oil and gas will be profitable.
In order to take decisions on this work, the operator establishes and chairs a management committee with the necessary mandate and authority to approve the measures required.
This body comprises representatives from all the licence partners, and takes responsibility for ensuring that the work programme is on the right track. It also supports the operator with specialist know-how.
The management committee will
- play a key role in the partnership’s strategy work with a focus on goals, choice of direction and monitoring operations
- ensure a balance between strategic coordination, monitoring and control
- determine guidelines for and monitor the operator’s activities
- issue general and specific directives on the way the operator should do its work
- establish subcommittees for special defined issues and specify their mandate – these are advisory unless otherwise specified in agreements or by the management committee, and all partners have the right to sit on them unless otherwise agreed.
The original members of the Valhall management committee were as follows.
- Amoco Norway Oil Company W E Humphrey, C Walton, J Burton, F W Popp and R Turner
- Amerada Petroleum Corporation of Norway J Lynch, L K O’Bert and J E Morris
- Texas Eastern Norwegian, Inc J C Cooke, W T Kendall and F J Williams
- Norwegian Oil Consortium A/S & Co (Noco) B W Bommen, R Karlsrud, H Salvesen and J Fjære
This comprises experts in various disciplines ¬– geosciences (including drilling), engineering (including process and structural), planning, cost analyses and contract negotiations.
It will not only provide advice but also check that the technical solutions are good and that estimates and plans accord with agreed rules.
Many of the same personnel served on both committee during the early stages of a licence period, and this was also the case with Valhall.The technical committee for this field comprised the following.
- Amoco Norway Oil Company Morrow, Humphrey and Popp (chair)
- Amerada Petroleum Company of Norway Reed and O’Bert
- Texas Eastern Norwegian, Inc Cooke and Jacobs
- Norwegian Oil Consortium A/S & Co (Noco) Bommen, Fjære and Salvesen
Planned drilling programme
Petroleum resources located on the Norwegian continental shelf (NCS) must be explored for and proven before they can be recovered. Exploration activity is an important indicator of expectations about future production.
It generally takes a number of years from the decision to explore for resources until possible discoveries can be brought on stream.
A period of 15-20 years is not unusual in frontier areas. On Valhall, for example, it took 17 years from the award of the production licence on 17 August 1965 until oil began to flow on 2 October 1982.
Drilling a well represents the only way to establish with certainty that petroleum is present in a structure, and how much might be in place.
If the geological studies indicate an interesting structure, a drilling programme will be prepared. This must cover:
- where to drill
- how long the well will take
- an assessment of pore pressure and when casing should be set
- programme for acquiring wet assays
- how the logging programme is to be conducted
- the coring programme
The work programme imposed in connection with the award of production licence 006 states that
“the Licensee has undertaken to carry out a work programme which will be completed in its entirety by 1 September 1971. The following provisions apply to this work programme and its implementation.
The Licensee will drill four wells with the purpose of finding oil and gas in the licenced areas covered by production licences 004, 005 and 006. At least one well will be drilled in the blocks covered by this licence.”
Award drilling contracts
The converted Drillship vessel was chartered to conduct the planned drilling programme, with the first well – 2/8-1 – spudded on 11 June 1967.
After a series of interruptions, the well was abandoned after almost exactly a year without having reached its goal. Drilling was frequently interrupted, since neither equipment nor crew were not up to the standard which the North Sea proved to require (see the article on Torshøvdi).
The Valhall field presented challenges for the geophysicists and geologists. Large volumes of gas – a gas cloud – encapsulated in chalk and clay 1 500 metres down gave false (delayed) seismic signals which confused the specialists.
Data from the centre of the field structure were so distorted that they could not be interpreted, and the experts concluded that no reservoir existed there.
Such an assessment of the seismic results meant that the oil was thought to lie in a fairly narrow oval ring – dubbed the “doughnut” – almost out to the edges of the reservoir’s footprint.
Although comparable chalk rocks were found in the neighbouring Ekofisk area, the seismic disruption on Valhall were so much greater that a similar structure was not detected.
Drilling a first well in this doughnut was accordingly the natural choice. The 2/8-1 well from Drillship never reached the reservoir, and the longed-for oil was not easy to locate.
The first positive signal came in the autumn of 1969, when the explorers got a whiff of Valhall in the far south-western corner of the field.
Well 2/11-1, spudded by the Orion rig on 14 July, encountered an oil zone about 10 metres thick at a depth of 2 700 metres. When the well was completed on 3 October, the optimists were being proved right.
Although far from being commercial, this “discovery” was nevertheless a milestone because it represented the first trace of oil and gas in a chalk formation on the NCS. In that respect, it was a precursor of the Ekofisk find later the same year.
When hydrocarbons are discovered, the samples must be analysed. Many factors have to be taken into account, with quality and quantity as the most important.
According to the Norwegian Petroleum Directorate, acreage can be relinquished to the government after the work obligation has been completed without discoveries. The licence group must also agree on this course.
Should the licensees want to continue with their work, the production licence moves into an extension period when development and production can take place.
The production licence awarded in 1965 actually expired on 31 August 1971. Because of what were regarded as promising results, however, Amoco wrote in 1969 that it wanted an extension for 75 per cent of the original area.
This application was granted on 28 August 1971, with the licence extended for 40 years until 31 August 2011.
The next exploration well, drilled in 1972, was intended to test a structure identified by seismic surveying in PL 005. Later named Tor, it extended into PL 004 operated by Phillips Petroleum.
Tor was developed with a single platform and became part of the Ekofisk complex. However, the relatively thick zone which had aroused expectations proved to contain a larger aquifer than expected along with the oil.
Exploration well 2/8-4 was drilled in 1973 and yielded traces of hydrocarbons, but the samples taken from this well were once again less than encouraging.
It was realised during 1974 that the relationship between hydrocarbons and indications on seismic maps could be crucial for assessing how chalk formations on the NCS should be drilled.
As a result, seismic data for the whole Valhall/Hod area were reassessed. Zapata Explorer drilled well 2/11-2 in November and December 1974. Oil in commercial quantities was now indisputably to be found in this area.
That encouraged Amoco to re-investigate block 2/8. Waage Drill I began drilling well 2/8-6 during April 1975 in 68 metres of water – about the same depth as on Ekofisk – with promising results.
The Tor formation – a soft chalk structure from the Late Cretaceous – proved to contain a 100-metre-thick zone saturated with oil.
This well was drilled to a depth 2 669 metres, where the temperature was 83°C, and plugged on 30 June. But more appraisal wells were required to be certain that the discovery was commercial.
Wells 2/8-7 and 2/8-8 were accordingly drilled the following year, and their results showed that the find could be produced profitably. Both Valhall and Hod were thereby commercial.
Rasen, Bjørn, LF6A (2007) pp. 59-60