Norwegian energy giant
Statoil ASA
(
STO
) is all set to boost the recovery rate of the oilfields in the
Norwegian Continental Shelf (NCS) by an added 10% as it has started
building the country's biggest research center.
This center − located near the company's existing research center
at Rotvoll in Trondheim, in the north of Norway − will cost around
$42 million (NOK 240 million) to the company. It will assist
Statoil to maximize output at fields where it remains the operator
or co-partner both on the NCS and worldwide.
The unique 2700 square-meter center will comprise four floors that
will prioritize areas of technology such as drilling, reservoir
mapping and advanced injection techniques. It will be well equipped
with an industrial CT scanner that is 100 times more potent than
its medical equivalent. This center is expected to be completed by
the end of 2013.
Increased oil recovery (IOR) is considered as the money-spinning
method of generating reserves already in place with the help of
existing production infrastructure. Hence, this results in
substantial revenue gains. Presently, Statoil employs about 3000
people for working on developing a range of 300 IOR activities.
At August end, the company stated that it was targeting a 60%
average oil recovery rate from its NCS fields. The world's largest
offshore operator − Statoil − already holds the leading position in
oil recovery with a recovery rate of 50% last year compared with a
global oil recovery rate of just 35%. It also marked a 1%
year-on-year rise in oil recovery for Statoil. The 1% rise in oil
recovery equates to 327 million barrels of oil or more than NOK 200
billion at an oil price of $100 per barrel. Statoil is also
deploying nearly half of its annual research and development
(R&D) budget of $490 million (NOK 2.8 billion) for testing and
developing technology for IOR.
Recently, Statoil announced the start of spudding of the appraisal
well 16/2-14 in PL 265 in the Norwegian North Sea. This new
appraisal emphasizes Statoil's belief in the exploration potential
of the mature region of NCS.
We have a favorable outlook on Statoil's long-term production
growth, given the company's growing upstream presence in the
emerging basins of the Barents Sea, West Africa and the deepwater
U.S. Gulf of Mexico. We also believe that the growing share of
natural gas in Statoil's NCS volume mix and its extensive interests
in infrastructure assets strengthen its leadership position in the
European natural gas market.
Statoil, which recently contracted
Schlumberger Limited
(
SLB
) for electric wireline logging services on the NCS, carries a
Zacks #2 Rank, which translates to a Buy rating for a period of one
to three months. Longer term, we maintain a Neutral recommendation
on the stock.
SCHLUMBERGER LT (SLB): Free Stock Analysis
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STATOIL ASA-ADR (STO): Free Stock Analysis
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