The first oil crisisContending over capital

Start of something big

Geological chance dictates the presence of petroleum on the Norwegian continental shelf (NCS), but its discovery was not a matter of luck. Great expectations and struggles for position ruled when blocks along the boundary with the UK sector of the North Sea came to be awarded in 1973.
By Björn Lindberg, Norwegian Petroleum Museum
- Statfjord. Photo: unknown/The Norwegian Petroleum Museum

Mobil won the battle over the operatorship for this key licence, and was responsible for finding what still ranks as the biggest oil field on the NCS. Statoil was originally merely a partner in the discovery which was to become a cornerstone for the company. Ever since Britain’s massive Brent discovery close to the North Sea dividing line in 1971, blocks 33/9 and 33/12 adjacent to the boundary on the Norwegian side had become attractive to and sought after by the big international oil companies. Shell and Esso submitted an application for this acreage as early as February 1972, and its rejection by the government did not put them off re-applying a year later – but then with 19 others at their heels.

The possibility that Brent extended into the Norwegian sector and the probability of discovering oil drove a desire for a rapid clarification among both politicians and companies. Selected blocks, particularly in the boundary area, had been kept back by the government and, after tough negotiations and much positioning, blocks 33/9 and 33/12 were allocated in August 1973 outside the normal licensing rounds.

Following negotiations with a number of relevant companies, Mobil became operator with 15 per cent, while Statoil was a partner with no less than 50 per cent. Shell, Esso and Conoco secured 10 per cent each, and the Saga/Amoco group received five per cent.[REMOVE]Fotnote: Fra vantro til overmot. Hanisch and Nerheim, op cit: 378. An important licence condition which Mobil was obliged to accept gave Statoil an option to take over the operator role 10 years after a possible discovery was declared commercial (worth developing).

Wrecked rig and bad weather

Testing the first oil from Statfjord on Waage Drill I in April 1974. Photo: Mobil

The first licensee meeting to discuss seismic interpretations of the area took place as early as 6 September 1973, and the first drilling location was determined at a second meeting on 16 October. Time was short, since Mobil had promised the Ministry of Industry during the pre-award negotiations that it would start drilling around 1 November.[REMOVE]Fotnote: Fra vantro til overmot. Hanisch and Nerheim, op cit: 378. The operator’s original plan had been to utilise the new Transocean 3 drilling rig, but this unit was delayed and had not been approved by the Norwegian authorities. Nor did it have fortune on its side, and broke up before drilling a single well. Dramatically enough, the damaged semi-submersible began drifting out of control towards the nearby Frigg field installations. The government prepared to bomb the rig to prevent it causing damage, but this proved unnecessary.[REMOVE]Fotnote: Lerøen, B V, 2002, Drops of black gold, Statoil 1972-2002, Statoil: 146.

Shaped like a diver’s helmet, this sculpture was created while crossing from the USA to Norway with the Waage Drill I rig, which made the first oil discovery on Statfjord. Photo: Norwegian Petroleum Museum

Mobil turned west to another semi-submersible. Waage Drill I was built in New Orleans and delivered to Norway’s KS Waage Drilling A/S in 1973. It was accompanied during its voyage across the Atlantic by welder Torbjørn Aakra, who spent some of his free time welding together a sculpture from the top of a oxygen cylinder and parts of a pipe (see illustration).  Little did he or anyone else know that the rig was on its way to find Norway’s biggest oil field – which was eventually to be given the name Statfjord.

On 1 December 1973, the first well in quadrant 33, block 12 (abbreviated 33/12-1) was spudded by Waage Drill I just a few hundred metres from the UK boundary. Bad weather combined with running-in a new rig and crew meant it took time to reach the target depth. No less than 47 days were consumed by technical problems and waiting on weather. Already on the way to what was expected to be the reservoir, however, signs were received that something was to be found further down. Finally, the drill bit penetrated the Brent group formation at a depth of 2 409 metres beneath sea level. The structure proved to be full of oil. Drill cores were taken and production tests carried out to be able to say something about both the reserves and the reservoir.

War dance

“Oil on deck” was the concrete proof that what had been planned, hoped for and perhaps dreamed about really existed. So it was an understandable reaction when the Mobil geologists “encouraged a genuine war dance of pure joy” at the sight of the oil.[REMOVE]Fotnote: VG, 6 December 1994.

A more restrained note was struck in the telex from Mobil to the Norwegian Petroleum Directorate (NPD), which reported an “encouraging discovery of hydrocarbons in the first exploration well in block 33/12”.[REMOVE]Fotnote: Statoil exploration chief Phil Halstead was more sober, too: “This is also big, even if it’s not itself among the biggest in the North Sea”.[REMOVE]Fotnote: Aftenposten, 8 March 1974, “Brent-funnet er av stor betydning”.

Local daily Stavanger Aftenblad clearly had good contacts, because it learned that the Jurassic reservoir rock meant the oil would be easier to produce than Norway’s earlier Ekofisk discovery and might also be larger than the latter. Statfjord contains oil and associated gas in Jurassic sandstones of very good reservoir quality. These rocks lie 2 500-3 000 metres deep in a large fault block inclined towards the west and in many smaller blocks along the eastern flank.[REMOVE]Fotnote:

Identifying the oil/water contact is important for reaching conclusions about the quantity of crude in a discovery. It was not found in the first well because the whole reservoir section was filled with oil. Appraisal wells were therefore needed, and the first of these had begun to be drilled even before the initial discovery well was completed. The Norskald rig spudded this in the neighbouring 33/9 block on 2 April 1974, and one well then followed another in a continuous sequence. Two further exploration wells were drilled in 33/9 and one in 33/12 during 1984. A total of nine successfully identified oil. Jørund E Karlsen, who worked on Norskald, later commented: “We simply moved from well to well in the early days. There was oil everywhere. We didn’t drill a single duster.”[REMOVE]Fotnote: Lerøen, op cit: 146

It was quickly established that the discovery had no connection with Brent, but did extend across the dividing line into the UK sector.

Number and name

It is not easy to estimate the size of a discovery on the basis of seismic data and a few “pinpricks”, no matter how much they have cost. Imagine forming a view of an area equal to 1 500 football pitches based on nine small holes. In the Statfjord case, however, it was clear that huge quantities of oil were present in a good reservoir. The discovery was declared commercial as early as 7 August 1974, with estimated resources of 1.88 billion barrels of recoverable oil. Before the end of the year, this calculation had been upgraded to three billion barrels. And in December 2020, the latest resource estimate from the NPD was 578.7 million cubic metres – the equivalent of 3.6 billion barrels or 600 billion litres.

Statoil CEO Arve Johnsen proposed to the board in May 1974 that the company’s fields should be called after Norwegian explorers. The new discovery would be called Nansen, with subsequent finds given such names as Foyn, Sars, Amundsen and Sverdrup. However, the directors were dissatisfied with this suggestion and asked for alternatives. The next proposal, presented at the board meeting in August was to adopt names beginning with “Stat” and ending with terms from Norwegian topography. That was better received.[REMOVE]Fotnote: Memorandum to the board, doc 46/742, August 1974. A press release dated 29 August thereby announced that the field would be called Statfjord. Later developments meant that this was the only time the “Stat” prefix was used.

Further reading:

Brent discovered

A Norwegian share of Brent?

Statfjord blocks awarded


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