US unconventionals at center of Statoil’s E&P strategy

By Joanne Liou, associate editor

Although Statoil has deep roots as a Norway-based offshore operator, the company is now finding the US onshore business to be at the heart of its E&P strategy. With core operations in the Bakken, Marcellus and Eagle Ford, the US onshore business has become the fastest-growing sector for Statoil within the past three years, Stephen Bull, vice president – commercial North America, D&P, said. Mr Bull discussed how the company landed in the US onshore business and how it has become part of Statoil’s corporate strategy in a presentation at the IADC Drilling Onshore Conference on 16 May in Houston.

Statoil is a historically deepwater-oriented company, Mr Bull said; approximately 1.5 million bbl of its 2 million-plus bbl daily production come from Norway, and the remaining comes from Angola, Azerbaijan and Brazil. However, “the fastest-growing area is by far North America,” Mr Bull stated. In fact, the US unconventional business is now at the center of Statoil’s goal to produce 2.5 million bbl/day by 2020. This E&P strategy consists of three elements: a strong management system, technology, and a long-term commitment to the communities in which it operates.

The first element – a robust management model – is applied through the whole company, Mr Bull emphasized. For example, when Statoil entered the US onshore business, the company created an operations support team to analyze performance metrics to enhance its understanding of the business. “That team is developing a cross-functional collaboration,” he said. “We looked at the best wells in the Eagle Ford. We looked at other operators, benchmarked them completely across the board, gave them rational reviews and looked at what are the best operations.” Based on those findings, Statoil saw the potential for 45% to 50% improvement in performance. “The first few wells that we have drilled in the Eagle Ford have been fairly close to what we want to achieve.”

Statoil also aims to apply its knowledge and experience in hostile recovery techniques used in the Norwegian sector to the US onshore. In Norway, the company has achieved more than 50% recovery rates in some fields and some as high as 75%. While acknowledging that the US plays behave differently and have different permeabilities, “we want to apply that (experience) to the US onshore” to increase recovery rates, Mr Bull said.

In the Williston Basin, Statoil has been swapping out its older rigs for walking rigs that can reduce drilling and skid times and is using dual fuel technologies when possible, Mr Bull said. Further, the company has 700 miles of oil, freshwater and saltwater pipelines in the Williston Basin that help to “reduce thousands of trucks on the road when we are doing our frac jobs,” he continued. Statoil also continues to develop new technologies and solutions for unconventionals at its research center in Houston.

Part of Statoil’s long-term perspective is its investment in industry collaboration and commitment to the communities in which it operates. Mr Bull believes that his company’s efforts are apparent in three ways: direct financial support, participation on local boards and volunteer efforts. “Employees serve on school boards, hospital boards and volunteer efforts as well, from trash pickups to cook-offs,” he noted.

Besides communication and leadership knowledge and understanding, Mr Bull noted that there’s also an X factor to Statoil’s E&P strategy. “You can’t just come in here and talk about processes and ‘you must follow this,’ ” he stated. “We need some creativity in there, and you need a just-do-it attitude and an entrepreneurial feeling you get in the US onshore. We don’t want to lose that.”