StatoilHydro Starts Exploration Drilling at Peon Gas Prospect

LONDON (Dow Jones Newswires), Jun. 18, 2009

StatoilHydro has started drilling at its promising Peon gas prospect, which lies to the east of the Tampen area in Norway, a company spokesman said.

The Transocean Winner started drilling exploration well 35/2-2 earlier in June for around 70 days, StatoilHydro's Geir Gjervan said.

Drilling operations "are demanding and techniques for a future development are being tested on this well," he said.

Peon was operated by Norsk Hydro (NHY) -- before Statoil took over its oil and gas assets -- which drilled well 35/2-1 there in 2005. The Norwegian Petroleum Directorate estimates the discovery holds between 14 billion-19 billion cubic meters of gas, but the reservoir has extremely challenging characteristics because it is located in both shallow water and bedrock.

"The main changes in (this) well design are that a wide suction can is used as a foundation for the well construction," Gjervan said. An unusual technique is used: Instead of drilling the conductor, it is hammered down, and two more casings have been installed to give sufficient barriers from the shallow reservoir, he said.

Peon lies close to the Agat discovery which was deemed too small to be commercial as an independent discovery. That stance could change if Peon's volumes make it economic to build export pipes from the area. "Peon is an integrated part of our Norwegian continental shelf strategy to maximize potential," Gjervan said.  

Copyright (c) 2009 Dow Jones & Company, Inc.

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