As the quest for new resources takes us further afield, international expansion forms a key part of our long-term strategy. We continue to build on our already significant international portfolio, and we are now present in several of the most important oil and gas provinces in the world.
Last year, our international equity production surpassed 500,000 boe/day, but we believe that the real milestone is our transition to international operator. It’s our chance to prove our strengths as a company.
We already have a track record of achievements to point to. We are the world’s largest operator in waters deeper than 100 metres. We are the only company producing LNG in the Arctic. And we have been drilling deeper and further in harsh conditions for the last 35 years.
With our strengths firmly established, our strategy is to focus on the key areas in which we have expertise that gives us a signficant competitive advantage: deep waters, gas value chains, harsh environments and heavy oil.
For example, in the deepwater Gulf of Mexico, we are currently positioned as one of the largest licence holders in the area. Here, we’re pushing the limits of technology by drilling some of the world’s longest wells in deep water.
In the ocean off Brazil we’re drawing on our experience that was gained with heavy oil on the Norwegian continental shelf. The gigantic Peregrino field is our largest project outside Norway for which we are operator.
In the world’s largest energy market, the USA, we are involved in one of the most exciting developments currently taking place: shale gas. New technology has recently made this unconventional source of energy economically viable, and released a colossal resource bank. In 2008, we entered into a strategic alliance with Chesapeake Energy Corporation to jointly explore unconventional gas opportunities worldwide. Initially, we have acquired a 32.5% interest in the vast shale gas field Marcellus.
In Iraq, our winning bid for the West Quarna 2 field also shows our determination to seek new and profitable business opportunities. We won the contract in an entirely transparent bidding round together with Lukoil. Our ambition is to produce 1.8 million boe per day within seven years - almost as much as the entire daily production from the Norwegian continental shelf.
Our international business is therefore on the doorstep of a new era. Throughout 2009, we have been gearing up our organisation to take on greater tasks and more responsibility all around the world. Production from our international portfolio is growing and our global exploration activity is high.
The portfolio administered by our Houston office currently produces 65,000 boe/day, with more than USD 11 billion invested to date. We continue to expand this office’s portfolio through acquisitions, farm-ins and licence rounds.
We also have a trading office in Stamford, Connecticut, which plays an important role in our global network for trading crude oil and refined products. From here we deliver about 600,000 barrels of crude oil, petrol, propane and butane to the North American market every day.
Our international access strategy has increased the scale of our operations in terms of produced volumes, reserves and technological and geographical breadth. We’re building a robust, diverse and long-life portfolio which can increase our opportunities in the future. We believe it’s the start of a new voyage of discovery.
- Our international average daily production exceeded 500,000 boe in 2009.
- Production from three new fields started during the year.
- Six of the 29 exploration wells drilled in 2009 have been announced as discoveries.
- Offshore installation of the first wellhead platform on the Peregrino field in Brazil started in late 2009.
Oil sands: Our commitment to responsible development
One of the projects in our international portfolio that has received most attention is oil sands in Canada. Production of oil sands is controversial on environmental grounds — but we’re taking a new approach to the problem.
Canada’s oil sands represent the second largest oil reserves in the world. With the increasing pressure on the world’s energy reserves it is inevitable that these resources will be produced — with us, or without us. We believe that we can change the oil sand industry for the better.
This year, we will open our demonstration facility in Leismer where we will trial over 20 new technologies intended to pave the way for improved recovery and sustainable production.
Over the next five years about 10% of our R&D spending will be on heavy oils, in addition to investments into technology pilots. Our ambition is to reduce emissions from production by over 40% by the year 2025.
But reducing emissions is only one aspect of our total commitment to responsibility in Canada. These are some of the other measures we are implementing:
Our commitment to responsibility: Oil sands
- We will not employ open cast mining
- We will develop the SAGD (Steam Assisted Gravity Drainage) method
- We will drill 300—500 metres down from small well pads
- 92 per cent of the area will remain undisturbed throughout the operation period
- We will reclaim and restore any disturbed areas before leaving
- River and surface water will not be used
- Water will come from underground aquifers, and 90 percent will be recycled
- We will not emit any poisonous waste to the air, rivers, fresh water or soil
- Any forest cleared will be replanted - we planted 32,000 trees in Canada last year
- We are cooperating with a leading researcher to understand how our operations affect wildlife, and take action for improvements
- In 2009 we opened a local opportunities office to help local businesses to compete for supplier contracts
- We run a work training scheme on the drilling rigs in our licence area for the local population.