The Norwegian Petroleum Directorate (NPD) has received applications from 39 companies for new acreage in mature areas on the Norwegian Continental Shelf, including the largest ever offering of acreage in the Barents Sea. Statoil and partners have also announced three Barents Sea discoveries in 2017: Kayak, Blamann, and Gemini North.

The Barents Sea is a challenging environment due to harsh Arctic environmental conditions and minimal existing infrastructure. To be economic means that new discoveries must be jointly developed, or stand-a-lone developments will need to be larger than those in the North Sea or the Norwegian Sea to be profitable. So, what are the proven plays in the Barents Sea and based on an assessment of applicable global reservoir analogs, do these merit the investment risks?

SEPTEMBER 2017

BARENTS SEAON A BEARING TO BECOMING A SIGNIFICANT OIL PROVINCE?

Figure 1 - Barents Sea Discoveries (red dot gas, green dot oil)

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Cenozoic

Mesozoic

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Proterozoic

General

Tectonic Structures

BARENTS SEA

KARA SEA

NO

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S V A L B A R DN

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Y A

Franz Josef Land

Norway

Russia

PayKhoy

Kolguyev

Bjørnøya

Bjarmeland Platform

Olga Basin

Loppa High

North Barents Basin

South Barents Basin

Ludlov Saddle

Sentralbanken High

Stappen High

Nordkapp Basin

Pechora Basin

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irality

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s

GardarbankenHigh

Finnmark Platform

HammerfestBasin

Harstad BasinTromsø Basin

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Kong Karl Platform

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WISTING FIELD

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Jan Mayen

Switzerland(Norway)

Franz Joses Land(Russia)

NuwayaZemiya

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FINLANDNORWAY

DENMARK

GERMANY POLAND

ESTONIA

LATVIA

LITHUANIA

Archangelsk

RUSSIA

Murmarisk

St. Petersburg

Moscow

Arctic Ocean

GreenlandSea

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NorthSea Baltic

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White Sea

The principal Barents Sea discoveries are listed in Figure 1 and Table 1, with their primary play elements captured using C&C Reservoirs’ proprietary classification system. The use of a consistent classification is essential to identify a relevant population of global reservoir analogs. These can be used for benchmarking, calibrating uncertainty ranges and validating development assumptions. Reservoir analogs marry a knowledge of the geological characteristics with the development decisions that have resulted in the observed production performance.

As seen in Table 1 the most significant play in the Barents Sea is the Jurassic Stø clastic play which will be the focus of this analysis. The Stø clastic play has limited production history in the Barents and therefore valuable insight can be gained by identifying applicable global reservoir analogs using the Frequency Search algorithm in DAKS IQ. This workflow requires, firstly, loading the target parameters for the Stø play. Secondly, defining a parameter search range for each of the target parameters. The Frequency Search algorithm uses these ranges to automatically identify all reservoir analogs that fall within one or more of the parameter ranges.

A summary histogram can be produced quickly and shows how many, and which, Stø parameters, each reservoir analog matches (Figure 2). The identified analog population can be further filtered to assess those reservoir analogs that dominantly match the geological, engineering or fluid parameters of the Stø play. Analogs are used to solve specific problems and the population of applicable global reservoir analogs can be adjusted to suit the nature of the problem.

Table 1 - Barents Sea principle discoveries adopting elements of the DAKS TM IQ classification system

Field Country DAKS IQ Field Report (update date)

Hydrocarbon Type

EUR (mmboe) Reservoir Age Depositional Environment of Reservoir Trap Style

Snohvit Norway 2017 Gas-

Condensate with Oil

1700 Early to Middle Jurassic Barrier-Island-Lagoon, Shoreface-Shelf Horst Block

Askeladd Norway 2017 Gas-Condensate 1700 Early to Middle Jurassic Barrier-Island-Lagoon, Shoreface-Shelf Horst Block

Albatross Norway 2017 Gas-

Condensate 1700 Early to Middle Jurassic Barrier-Island-Lagoon, Shoreface-Shelf Horst Block

Skrugard Norway 2018 Oil with gas 250 Early to Middle Jurassic Costal, Shoreface-Shelf Horst Block

Havis Norway 2018 Oil with Gas 250 Early to Middle Jurassic Costal, Shoreface-Shelf Horst Block

Drivis Norway 2018 Oil with Gas 54 Early to Middle Jurassic Costal, Shoreface-Shelf Horst Block

Wisting Norway 2018 Oil Only 300 Early to Middle Jurassic (Pliensbachian to Bajocian) Shoreface-Shelf Tilted Fault-block, Horst block

Hanssen Norway 2018 Oil Only 50 Early to Middle Jurassic (Pliensbachian to Bajocian) Shoreface-Shelf Tilted Fault-block, Horst block

Alta Norway TBD Oil with Gas 89 Permo-Carboniferous Carbonate Rocks, Shallow Marine Platform, Sabkha (Atla Discovery) Horst Block

Gohta Norway TBD Oil with Gas-Condensate 51 Permian

Carbonate, Low Relief Carbonate Platform, Distal Marine, Periodic High-Energy Storm Episodes

(Ghota discovery) Fold (4-way Dip)

Goliat Norway 2018 Oil with gas 21.8 Jurassic, Triassic Kobbe: Coastal-Delta; Kapp Toscana Group, Realgrunnen Formation: Coastal, Delta Tilted Fault Block

Shtokmanov Russia 2007 Gas Only 15200 Early to Middle Jurassic Shoreface, Offshore Bar Basement-Uplift Anticline

Prirazlom Russia 2012 Oil 31 Permo-Carboniferous Carbonate Bioherm Inversion Anticline, Organic Buildup

Ludlovskaya Russia TBD Gas-Condensate 23400 Middle and Upper Jurassic,

Lower Cretaceous Sandstones Tilted Fault Block

Murmanskoye Russia TBD Gas 710 Triassic Deltaic Sandstones Basement-Uplift Anticline

Ledovoye Russia TBD Gas-Condensate 14 Middle Jurassic Sandstones Unknown

North Kildinsk Russia No Gas 97 Triassic Deltaic Sandstones Unknown

Pomorskoye Russia No Gas-Condensate 465 Devonian to Carboniferous Unknown Tilted Fault Block

Varandey Russia No Oil 465 Devonian to Carboniferous Unknown Unknown

Medynskoye Russia No Oil 465 Devonian to Carboniferous Unknown Unknown

Severo-Gulyaev Skoye Russia No Oil and Gas-

Condensate 465 Upper Permian, Middle- Upper Carboniferous

Clastic, Fluvial , Carbonate, Foreslope Basin, Debris-Flow or Turbidite Fold / Arch

Dolginskoye (N+S) Russia No Oil 1257 Devonian to Carboniferous, 4 Reservoir Zones Carbonate Unknown

Kayak Norway TBD Oil 38 Early Cretaceous Sandstones Unknown

Blamann Norway TBD Gas 15 Unknown Unknown Unknown

Gemini N Norway TBD Gas with Oil 5 Unknown Unknown Unknown

Norvarg Norway TBD Gas 300 Triassic Sandstones a Low Energy Shallow Marine Platform (Stacked Heterolithic Tidal Bars

and Channels)

Norvarg Dome : It is Unclear How the Structure Should be Interpreted

Alke Norway TBD Gas 13 Jurassic-Triassic Unknown Unknown

Tornerose Norway No Oil and Gas-Condensate 4 Early to Middle Jurassic Fluvial, Deltaic, Estuarine Tidal and Shallow Marine Unknown

The results in this note combine the assessment of a number of Norwegian discoveries, with subtly different play controls, into one analog search algorithm, for brevity. The Frequency Search algorithm has identified 227 applicable global reservoir analogs (Figure 2) that match at least 8 of the defined search parameters.

The focus of this search has been on geological parameters. Typically, fluid and engineering parameters would be added to refine the search and to conduct a more detailed analysis at the individual prospect or field level. Two questions that can be quickly addressed with the geological analogs are:

1. To guide my exploration campaign in the Barents Sea, what are the most likely trapping mechanisms observed in the analog plays?

2. To calibrate uncertainty for the parameters required to calculate a probabilistic resource volume; what are the range of field average values for each parameter in the analog population?

Figure 3 - Location of the 227 applicable global reservoir analogs for the Barents Sea Jurassic Stø play

Figure 2 - Frequency Search histogram results. Green bars are the selected reservoir analogs. The chart line labeled At Least means the reservoir analog will match this number of parameters and more. The bars labeled Exactly means the analog reservoir matches only that number of parameters.

To better address these questions for the Stø play, the 227 reservoir analogs have been further refined to be those that match at least 8 parameters and have a shoreline-shelf depositional environment in a rift tectonic setting. This results in a subset of 54 from the 227 displayed. From this population, the most comparable proven play analogs to the Stø play are: Latrobe play (Gippsland Basin, Australia), Plover play (Bonaparte Basin, Australia / Indonesia), Ben Nevis play (Jeanne d’Arc Basin, Canada), and the Fulmar play (North Sea, UK / Norway).

To address question 1, the population of analogs highlights 14 different Trapping Mechanism (Main) classes, with tilted fault block and paleostructure subcrop traps dominating (Figure 4). These should be contrasted against the proven discoveries in the basin through an assessment of the DAKS IQ Field Reports (Figure 5).

Figure 4 - Trapping Mechanisms in the analog population. DAKS IQ classification infographics shown for the top two.

Figure 5 - Structural geoseismic sections across proximal field analogs Wisting, Snohvit and Albatross discoveries.

Hanssen

WC South WC

WC West

Bjaaland

Hassel

7324/7-27324/7-27324/7-1 S7324/7-1 S

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NW-SE cross section through Wisting Field (Stueland, 2016)

Interpreted seismic section through Snohvit and Alba-tross courtesy Statoil, 2007

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EUROPE

SNØHVIT

FIELD EVALUATION REPORT

NORWAY - LOWER-MIDDLE JURASSIC STØ FM RESERVOIR

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SNØHVIT7121/4-1

UPPER PALEOCENE

TOP CRETACEOUS

TOP CENOMANIAN

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KOLMULE Fm

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Oil Gas Sandstone reservoir

Lower Cretaceous

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Upper Jurassic

Minor accumulations existin Upper Triassic rocks

Figure 8 - S-N structural cross-sections through the Snøhvit Field (Linjordet and Grung Olsen, 1992;Johannsen et al., 1992). Location are shown in Figure 7.

© C & C Reservoirs. All Rights Reserved.

© 1992 American Association of Petroleum Geologists. All rights reserved. Reprinted with permission of American Association of Petroleum Geologists.S-N structural cross-sections through the Snohvit Field

(Linjordet and Grung Olsen, 1992; Johannsen et al., 1992).

To address question 2, the uncertainty ranges for each of the geological parameters included in a probabilistic volumetric calculation are calibrated using the analog knowledge base. Benchmarking the estimated parameter ranges from proximal wells, against those observed in the analog population is a proven technique to calibrate uncertainty. In the characterization table (Figure 6) the analog population highlights that the assumed initial water saturation is relatively high, whilst other parameters are within the ranges observed in the relevant analogs (indicated in the Rank column). Recovery factors from the analog population can also be quickly assessed.

The production profiles for this population of analogs show that many have ramped-up production quickly and sustained plateau rates (Figure 7). All of which would support investment returns in the event of a discovery. Contrast this, for example, with fractured carbonate plays that often require numerous wells before the optimal development well design is discovered, which delays production revenue.

The Barents Sea has a number of proven plays and the potential to be a significant hydrocarbon province. Within this harsh Artic environment, the chance of uneconomic discoveries is higher and managing uncertainty ahead of drilling dry holes will be critical to economic success. Four global play analogs and 54 reservoir analogs have been quickly identified using DAKS IQ, many of which have long production histories.

The combination of detailed play and reservoir descriptions, coupled with a knowledge of the development decisions that have driven the production performance, is valuable in calibrating geological parameters and validating development scenarios. Learning from the experience of others will help focus future exploration campaigns in the Barents Sea and help it become a significant hydrocarbon province.

Figure 6 - Geological parameter ranges and benchmarking of Reservoir Thickness, Net/Gross, Net pay, Porosity and Initial Water Saturation

Figure 7 - Production profiles from a selection of the applicable global reservoir analogs

For more information on how DAKS IQ can be used for global analog analysis, contact C&C Reservoirs.

13831 Northwest FWY, Suite 450 Houston TX, 77040

Phone: +1-713-776-3872