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Norway's Aker BP (NYSE:BP) (OTCQX:AKRBF) has made a much bigger-than-expected oil discovery in the Yggdrasil area of the North Sea, the energy company reported on Thursday.
Preliminary estimates indicate a gross recoverable volume of 40 million-90 million barrels of oil equivalent (boe), much higher than the company’s earlier projection of between 18 million and 45 million boe.
The discovery will significantly enhance Aker BP’s resource base for the Yggdrasil development, which previously was estimated at 650M gross boe. The oil discovery is located within production licenses 873 and 442: In license 873, with Equinor ASA (NYSE:EQNR) and PGNiG Upstream Norway as partners. The plan for development and operations (PDO) for this project was submitted to Norwegian authorities in December 2022, with production scheduled to start in 2027.
The North Sea is home to substantial known oil and gas reserves. According to a report produced by the Oil and Gas Authority, known reserves of oil and gas in the North Sea at the end of 2020 amounted to 4.4 billion barrels of oil equivalent (BOE).
According to Oil and Gas Authority’s Vision 2035, taking into account future exploration, 14.9 billion BOE could potentially be extracted between now and 2035. The figures in Vision 2035 were based on an assumption of an oil price of $60 per barrel of oil and 55 pence per thermal unit of gas. With current oil prices, it should be economic to continue production in the North Sea as per the Oil and Gas Authority’s estimates. The industry has been able to lower drilling costs considerably since the oil slump of 2014.
The UK government is currently weighing whether to approve a giant new oil and gas field in the North Sea, despite warnings from climate scientists and energy economists that the world cannot afford to develop any new fossil fuel projects. The Rosebank oilfield has the potential to produce 500m barrels of oil over its lifetime
By Alex Kimani for Oilprice.com
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Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com.