Norway: PGNiG Reports Discovery of Gas Deposits in Snadd North Prospect

The Management Board of Polskie Górnictwo Naftowe i Gazownictwo SA („PGNiG”) reports it was notified that on Licence PL212, near the Skarv gas and oil field, PGNiG Norway AS (a wholly-owned subsidiary of PGNiG) and its license partners discovered gas deposits in the Snadd North prospect.

The recoverable reserves of Snadd North are initially estimated at 9–16bn of cubic metres of natural gas(from 57m to 100m boe). PGNiG Norway AS holds an 11.9175% interest in the newly discovered gas deposit.

The discovery was confirmed through exploration well 6507/5-6ST2. The main purpose of the well was to examine hydrocarbon saturation in the early Cretaceous Lysing

formation lying some 800 m above the mid Cretaceous formation where the Skarv deposit is documented. The drilling of the well was preceded by detailed geological and geophysical analyses by the partners, i.e. BP Norge AS, E.ON Ruhrgas Norge AS, Statoil ASA, and PGNiG Norway AS. The well confirmed existence of deposit sandstone featuring very good containment properties and saturated with highmethane natural gas. The drilling was finished at the depth of 2876 (TVD) in the early Cretaceous Lange formation.

The newly discovered deposit has material economic significance for PGNiG Norway AS. Snadd North will have a direct contribution to the reserves already documented on

the Skarv field, which net of Snadd North amounted to: 42.1bn m3 of natural gas, 16.5m m3 of crude oil and 5.5m tonnes of NGL (434m boe). The deposit will be developed in 2011 from the Skarv platform, which will significantly reduce the capital expenditure and facilitate swift transition to production. The Snadd North deposit, containing natural gas, will significantly increase the flexibility of future production from the Skarv field. Production from Skarv is expected to start in H2 2011. Currently, the project is advanced in about 80% and has progressed as scheduled.

Drilling of the production well through the deposit formation has been planned for H1 2011. The production well will be a sidetrack from the exploration well and will be drilled as a horizontal hole in the deposit zone.

Well 6507/5-5 was drilled from the Borgland Dolphin drilling rig, which continues drilling in the Skarv field area. The sea depth in the area is approximately 325 metres.

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Source: Pgnig, June 9, 2010: