As Shell divests its stake in Norway’s ‘largest undeveloped gas discovery,’ Equinor snaps it up
Norske Shell, a subsidiary of the UK-headquartered energy giant Shell, is in the process of selling its interest in a giant gas discovery on the Norwegian Continental Shelf (NCS) to Equinor. This acquisition will enable Norway’s state-owned energy giant to boost its stake in this asset.
Equinor has inked a deal to acquire Shell’s 30% interest in the PL 255, covering the Linnorm discovery in the Norwegian Sea, 50 kilometers northwest of the Draugen field. The water depth at the site is around 300 meters and the discovery was delineated in 2007. This deal, which is conditional upon Equinor taking over the operatorship helm from the oil major, is expected to close during the first quarter of 2024.
Kjetil Hove, Equinor’s Executive Vice President for Exploration and Production Norway, commented: “Through this acquisition, Equinor will deepen our position in the Halten area, in line with our strategy to optimize our portfolio on the NCS. We know this area well, where we already have producing hubs and still see attractive opportunities.”
Proven in 2005, the Linnorm discovery is “the largest undeveloped gas discovery on the NCS,” according to Equinor. This asset is estimated to contain around 25-30 billion cubic meters (bcm) of recoverable gas resources, which is more gas than the remaining reserves in each of the producing fields: Aasta Hansteen, Martin Linge, and Gina Krog.
Marianne Olsnes, Managing Director of Shell in Norway, remarked: “We are proud of our efforts to mature Linnorm and are pleased that we were able to find a solution which opens for it to be developed with an aligned partnership. This does not impact our ambition to maintain a material upstream position in Norway and contribute to the development and transition of the Norwegian Continental Shelf.”
Equinor confirms that it will continue to evaluate a tie-back for Linnorm to its operated Kristin or Åsgard B platforms. This acquisition is subject to the approval of the Norwegian authorities. The partners in PL 255 are A/S Norske Shell (30%, operator until the transaction is completed), Petoro (30%), Equinor (20 %), and TotalEnergies EP Norge (20%).
The Norwegian giant elaborates that the reservoir, which contains relatively dry gas with high CO2 content, is in the Ile, Tofte, and Tilje Formations of Early to Middle Jurassic age, and has variable quality.
Aside from acquiring new assets, Equinor has also been selling off some of its existing ones. One of the recent divestments will enable the firm to exit Nigeria, thanks to a deal with Chappal Energies to sell its Nigerian business, which entails a stake in a Chevron-operated oil field.
On the other hand, Shell has been a busy bee in the Gulf of Mexico. Recently, Shell secured the remaining interest in a deepwater field in the U.S. Gulf of Mexico, bringing its total interest in this asset to 100%. The field has been developed as a subsea tie-back to the nearby Ursa production hub.
Shortly before this, the oil major took a final investment decision (FID) on a phased three-well program to bolster production at another development in the U.S. Gulf of Mexico.