The Barents Sea is undergoing significant growth in oil and gas exploration and production.
The area, divided between Norway and Russia and located at the margin of the Arctic Ocean, sees 24-hour darkness during the winter, polar lows and sea ice, all of which make operations challenging.
Nonetheless, oil and gas exploration has been ongoing in the region since the 1980s and approximately 60 discoveries have been made in the Norwegian sector of the sea alone.
The oil price peak before the subsequent crash in 2014 saw the highest number of wells drilled as well as discoveries made, with a 69% technical success rate. The falling oil price led to a severe drop in exploration activity in the following years, however, 2017 saw a sharp rise in drilling but with reduced success. That year only managed a 46% technical success rate and resulted in the highest number of dry holes drilled in the basin’s history.
Despite a fairly commendable technical success rate overall, only around 35% of the discoveries made are currently producing or considered for development. The lack of available infrastructure and high development costs mean minor-sized fields remain a challenge to develop. Larger resource discoveries such as Johan Castberg and Snøhvit are likely to transform into hubs for marginal field tiebacks over time.
As the Barents Sea basin matures, its relevance will become more pronounced and its domestic position more established. To ensure such a trajectory, continued exploration activity is vital to unlocking the larger discoveries needed to attract continuous investment.
The Norwegian Petroleum Directorate reported in 2018 that over 60% of Norway’s yet-to-find hydrocarbon resources lie in the Barents Sea basin. Despite this, the last five years have not favoured the high risk, high reward exploration approach, with 30 exploration wells being drilled since 2015 and no discoveries larger than 100 mmboe.