Under an agreement, Equinor will also take over the operatorship from A/S Norske Shell. The acquisition, conditional on the approval of the Norwegian authorities, is expected to close in the first quarter of 2024, the company said in a recent news release. The financial details of the deal were not disclosed.
The Linnorm discovery in the Norwegian Sea was proven in 2005 and is the largest undeveloped gas discovery on the Norwegian Continental Shelf (NCS). Linnorm is estimated to contain around 882.86 billion to 1.06 trillion cubic feet (25 billion to 30 billion cubic meters) of recoverable gas resources, which is more than the remaining reserves in the producing fields of Aasta Hansteen, Martin Linge, and Gina Krog, according to the release.
“Through this acquisition, Equinor will deepen our position in the Halten area, in line with our strategy to optimize our portfolio on the NCS”, Kjetil Hove, Equinor’s executive vice president for exploration and production in Norway, said. “We know this area well, where we already have producing hubs and still see attractive opportunities”.
“A lot of good work has already been done to mature Linnorm. Together with our partners, we will build on this and develop the Linnorm gas resources for the European market”, Hove added.
“We are proud of our efforts to mature Linnorm and are pleased that we were able to find a solution which opens for it to be developed with an aligned partnership”, Marianne Olsnes, managing director of Shell in Norway, said. “This does not impact our ambition to maintain a material upstream position in Norway and contribute to the development and transition of the Norwegian Continental Shelf”.
Equinor said it will continue to evaluate a tie-back for Linnorm to the Equinor-operated Kristin or Åsgard B installations.
According to the release, 6406/9-1 Linnorm is a discovery in the central part of the Norwegian Sea, 31 miles (50 kilometers) northwest of the Draugen field and in a water depth is around 1,640 feet (300 meters). The discovery was proven in 2005 and delineated in 2007. The reservoir, which contains relatively dry gas with high carbon dioxide content, is a complex and challenging reservoir with high pressure and high temperature. It is located in the Ile, Tofte and Tilje Formations of Early to Middle Jurassic age, with variable quality.
Currently, A/S Norske Shell operates PL255 with a 30 percent stake, while Equinor Energy has 20 percent. Petoro holds a 30 percent stake and TotalEnergies EP Norge AS owns 20 percent.
In other recent NCS news, OKEA’s acquisition of a 28 percent working interest in PL037, or the Statfjord Area, from Equinor Energy AS for an initial fixed consideration of $220 million has been postponed from the original target completion date of November 30.
OKEA said in an earlier statement that it received updated information that indicated a reduction in 2P and 2C volumes of 10 to 15 percent over the lifetime of the acquired assets compared to the 2023 revised national budget, which is a required report by all oil companies to the Norwegian Petroleum Directorate. The updated information also implies an increase in costs, the company added.
Preliminary assessments of the updated projections “indicate a material reduction in fair value”, OKEA said, noting that “a significant impairment may therefore likely be required following completion of the acquisition”. The company said it was in discussions with Equinor regarding the next steps to be taken.
In March, OKEA announced it was acquiring a 28 percent working interest in PL037, composed of a 23.93123 percent working interest in Statfjord Unit, a 28 percent working interest in Statfjord Nord, a 14 percent working interest in Statfjord Øst Unit, and a 15.4 percent WI in Sygna Unit.
