Feature Stories
This is the first in a series of articles about the 50th anniversary of ConocoPhillips’ Ekofisk field discovery.
by Jan Hester
Trond-Erik Johansen launched his career with Conoco in 1987 as a graduate petroleum engineer in his native Norway. During his 32-year tenure with the company, he has moved 14 times and lived in six different countries. In 2000, he took a break from the office to earn an MBA through the Massachusetts Institute of Technology’s Sloan Fellows program in Boston.
Johansen returned to Norway four years ago to assume his current position. Here, he shares his thoughts on Ekofisk, Norway, and the oil and gas industry.
What was the situation when you first started your career, and what’s different now?
Conoco had a new discovery at the time, the Heidrun field offshore Norway in 1,000 feet of water. In those days, the maximum angle we could drill a well was 60 degrees. We thought we’d recover 750 million barrels out of the field but far exceeded that because of improvements in drilling and completions technology and subsurface imaging. Every year something new comes along that makes this business exciting. As a result, we continue to recover more reserves.
Over the years we’ve had paradigm shifts in the industry, and I think we’ll see more in the future. Think about what’s happened in the Eagle Ford, Bakken and Permian. When I was in university studying to become a petroleum engineer, if I had told a professor we’d produce out of a tight shale layer, I would probably have flunked.
How did the 2002 merger of Conoco and Phillips impact you?
I was working in Aberdeen as the VP of development and operations at the time and was asked to return to Norway to become manager of operations for the Ekofisk field. It was my first real exposure to Ekofisk. I remember my first trip out to the complex. It was mind-boggling, like flying to a city in the middle of the North Sea. It has been exciting to see how the field has evolved and been recapitalized to enable production and drilling for decades to come.
Then in 2005, I became managing director of ConocoPhillips Norway — a fantastic business with great people, great assets, lots of history, a wealth of experience and big operations. The people here really know these assets and continue to find ways to improve.
Do you find it surprising that Ekofisk is now 50 years old?
If you went back to 1969, when the field was discovered, and asked that question, then I would say it’s very surprising. But if you look at what humankind can do in terms of technology and brainpower, it’s not surprising at all. I can easily see another 30 or 40 years more if we continue to improve the recovery factor through technology and innovation.
When Ekofisk was found, we thought we’d recover less than 20% of available resources. With today’s technology, we believe we will recover more than half. Our estimates for recovery at Eldfisk have more than doubled.
We’re currently producing 180,000 barrels of oil equivalent per day between Ekofisk and Eldfisk, and we think there are more than 2 billion barrels of moveable oil left in the two fields. Moveable oil is oil that can release from the pores in the reservoir rock and not cling to the rock face. The opposite of movable oil is what reservoir engineers and geologists call residual oil, oil that will be stuck in the rock pores and cannot be produced or flow. Not all of those barrels will be recovered, but I will not be surprised if we recover over half. It’s a matter of what technology does, how we use it, and how we’re able to control spend and unit cost to create profitable opportunities.
It’s important to note that, while the field is 50 years old, the facilities are not. We have redeveloped and recapitalized the field over the years. Going forward we will add wells and pipelines that tie into existing facilities. We’re looking at remotely operated facilities, including subsea wells and unmanned platforms. But we also continue to drill wells from the newer existing wellhead platforms.
Maybe Ekofisk with some of the satellites will produce for 100 years. Who knows? Technology continues to evolve, and the resource base is large in the area.
What is going on in the Greater Ekofisk Area right now, and what challenges does the area face?
There are currently three projects in the pipeline with a low cost of supply. In 2015 our mantra was to get back to basics and find safe but more cost-effective ways to get more reserves out. We were able to do so because of our people here. They took the challenge right on. We have a strong, competent workforce and a legacy asset with a fantastic history of converting resources into reserves.
The biggest challenge going forward will be water management. By that I mean how and where to inject water where it is most needed and how to control water production and minimizing recycling to keep the water-drive energy in the reservoir. We’re working on a refined water management strategy along with the experts here and in the U.S.
Looking at the broader Norway business unit, tell us a little about what’s going on.
There are many decades to come of good production, and it’s important to remember that 50% of our production now comes from partner-operated assets.
Equinor still operates Heidrun in the Norwegian sea, the field we developed. One of Conoco’s pioneering technologies was to put a concrete hull on the floating tension leg platform that will last for 50+ years with little corrosion. We will likely produce for 30 more years.
ConocoPhillips also holds a small equity interest in the Troll field that amounts to 12,000 net barrels of oil per day. It doesn’t sound like much, but it’s got an extremely low unit cost. We’re just developing a new part of that field, and our small equity interest will add another 35 million barrels of oil equivalent at a very low cost of supply.
And we have good production from the Alvheim field and the recently developed Aasta Hansteen field, which is in 3,000 feet of water.
Tell us about the new exploration projects underway.
You find oil and gas by looking for it, and it is often found near other big oil fields. We reset our exploration strategy three years ago, and we’re now looking for oil and gas that can be developed with a low cost of supply near existing infrastructure. In the last three years, we have picked up 18 licenses, most as an operator, and will embark on a three-well exploration program in September. These are close to other fields we have an ownership in, further north than the Ekofisk area in the North Sea.
With talk of climate change and some groups expressing discomfort with the environmental impacts of Norway’s energy production, how do you see the future here?
It’s true that some people are cooling on oil here in Norway and Europe, as we also see in the U.S. We currently have a coalition government with climate change high on the agenda. But 30% of Norway’s gross domestic product comes from the oil and gas industry, so my prediction is that Norway will continue to explore, develop and produce for many decades to come while continuing to lower emissions and minimize our environmental footprint. Norway is doing a very good job at that, so are we. And Norway has lots of natural gas that can replace coal, which is still a big part of Europe’s energy mix.
Norway also has a stable fiscal regime where the rule of law is strong and the political risk is low. Tax incentives make oil and gas investments attractive. There are still lots of resources left on the Norwegian shelf, so it makes sense to plan to add to our production profile beyond 2030, when our current Norway business unit production will decline. Continued improvement in the recovery factor from the Ekofisk area and from our partner-operated assets, combined with some exploration success, should help mitigate this decline.
Cautionary Note to U.S. Investors – The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable and possible reserves. We use the term “resource” in this article that the SEC’s guidelines prohibit us from including in filings with the SEC. U.S. investors are urged to consider closely the oil and gas disclosures in our Form 10-K and other reports and filings with the SEC. Copies are available from the SEC and from the ConocoPhillips website.
