Oil promise for OMV in the Barents Sea

Sept. 18 (UPI) -- The Norwegian government said Monday it was assessing the discovery of oil from an appraisal well drilled by Austria's OMV in a section of the Barents Sea.

As one of the most prolific, Norway is an important oil and natural gas producer because it designates nearly all of its offshore production for exports to the European market.

The Norwegian Petroleum Directorate said it assessed the results from an appraisal well drilled in the Wisting area of the Barents Sea. The well was drilled about a mile away from a previous discovery in the same area.

"The objective of the well was to collect data to reduce uncertainties as regards to the recoverable volumes," the NPD, the nation's energy regulator, said in a statement.

Before the appraisal, the Austrian energy company estimated the Wisting area held between 138 million and 500 million barrels of recoverable oil equivalents.

At 820 feet below the seabed, OMV set a record last year with a horizontal appraisal well in the Barents Sea in the Wisting area. Research from the U.S. Energy Information Administration written more than 10 years before the U.S. oil boom found horizontal drilling exposed "significantly" more reserves to drillers than conventional vertical wells. Production rates using horizontal wells were at the time up to seven times greater than vertical wells. An offset, however, was higher drilling costs.

Historically low oil prices may be prohibitive to ambitious drilling plans, though operators are becoming more acclimated to the weak market conditions.

OMV had no comment on the NPD's latest assessment, nor did it indicate what type of well it drilled.

The prognosis, however, followed disappointing results in a similar area from Norwegian energy company Statoil. Known as a wildcat well, one drilled into an area not previously known to hold oil and gas reserves, the NPD said only minor reserves were found at a site meant to expose more oil resources near the Wisting discovery in the Barents Sea.