When the giant Johan Sverdrup comes on stream later this year, Hans Christen Rønnevik deserves much of the credit. He believes the Norwegian shelf has a bright future – if we are able to challenge established truths and embrace surprises.
Hans Christen Rønnevik has been a part of the industry since the very beginning of this unique oil fairy-tale. He drew the first shelf maps at what was then called the Oil Office, and in the 70s, he prepared the first estimate of total resources on the Norwegian shelf.
“We were fortunate enough to surpass that first number we calculated at the Norwegian Petroleum Directorate when I retired in 2015,” Rønnevik says.
He has personally provided a substantial contribution toward exceeding his own predictions. Rønnevik was the exploration manager for Saga Petroleum, where he laid the foundation for the Snorre delineation, Vigdis, Borg and the Kristin and Lavrans discoveries in the 80s and 90s. Later, Rønnevik played a key role when the challenger and exploration phenomenon Lundin Norway arrived on the scene.
“No one” believed in Sverdrup
“Logic can get us from A to B. Imagination can get us anywhere.”
Albert Einstein quotes come up quite often when Rønnevik explains his exploration philosophy. This approach has enabled him to discover billions of barrels of oil and gas, including in areas where others had given up.
In 2004, Rønnevik and his three-person exploration team at Lundin believed that the Utsira High in the North Sea had vast potential. Drilling and exploration had been taking place here since well number three on the Norwegian shelf, with no particular success. But then, Lundin Norway found Edvard Grieg in 2007. This was the start of the most important chapter in modern Norwegian petroleum history: the giant Johan Sverdrup comes on stream this year. With expected resources totalling 2.2 – 3.2 billion bbls of oil, this field is among the largest on the Norwegian shelf.
“Johan Sverdrup probably wouldn’t have been discovered in 2010, had it not been for the breakthrough with Edvard Grieg in 2007. This laid the foundation for a deeper geological understanding of the Utsira High,” says Rønnevik.
The first logs of the reservoir in Edvard Grieg showed no traces of oil or gas. But Rønnevik and his team had a core sample showing that the indirect measurements had to be wrong. Luckily, they kept on drilling.
“Everything we found in the southern part of the Utsira High was different from what we predicted. All the reservoirs were new for the Norwegian shelf. If we hadn’t taken a core sample in the first well on Edvard Grieg, we would not have seen that there was oil there. The indirect measurement methods were inadequate. They read it as though there was shale with water and not oil. We weren’t sure that it was oil until we saw the cores, and ran the tests.”
Rønnevik shows a slide with a graph. These were the reserve and probability figures he and his colleague Arild Jørstad used to entice additional partners to join the license that ended up becoming Edvard Grieg. Lundin applied for and was awarded 100 per cent with a firm drilling commitment, but with the stipulation of building a larger, more established company before drilling.
“Few people believed in us. We went to 30 companies, and only two companies shared our positive view.”
Rønnevik believes that it’s important not to place all our blind trust on forecasts from models.
“If we make estimates based on expectations, we will only find that we are recreating the past, not the future. An area is not defined as mature based on time, but rather on activity. When we look for opportunities, we have to be aware of the limitations of what we know at any given time. We have to maintain dialogue; producing figures is not enough.”
The art of dealing with surprises
Many of the exploration concepts for the Utsira High were developed as early as the 70s. Saga, spearheaded by Rønnevik, along with Statoil and Mobil, helped further develop these concepts in the 90s. But the companies were working with different plays, and different merger processes were underway. In the early 2000s, the plays were either shelved, or not pursued further. At the same time, the authorities facilitated the establishment of new companies on the Norwegian shelf, among other things to promote a diversity of ideas, a quality which was starting to dwindle away. This made it possible for the novel Lundin Norway, led by Rønnevik, to continue to pursue their basic concepts.
With the knowledge they had after discovering Edvard Grieg in November 2007, they applied in the 2008 licensing round for 100% ownership and one firm well in the relinquished acreage of PL 265. The new PL 501 license was awarded to Lundin Norway as operator with 40%, along with Statoil 40% and Mærsk 20%, and a drilling commitment of one firm well. Coring and testing were essential in order to uncover the reservoir understanding for the Johan Sverdrup field. The giant Johan Sverdrup discovery was proven in 2010.
“The plays are becoming increasingly refined, but we’re still using these basic concepts from the 70s. Our experience is that every field is unique and was considered impossible until it was proven through drilling. A number of breakthrough discoveries have been achieved through commitment drilling.
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From the start, Lundin Norway’s strategy has been to grow organically. This means that growth in the company primarily takes place through our own discoveries and fields.
“Taking part in the surprises along the way is important in order to be aware of what organic growth actually is. Every discovery, every surprise, is field-specific. There’s no general rule for where we failed and where we didn’t. We have to learn from each and every field, and always be focused on how we deal with surprises.”
He believes that concepts that involve reality should be done in what he calls a quantum physics paradigm.
“By that I mean that you’re always looking for opportunities and breakthroughs. Realising that the theories and models we have at any given time, are not reality. Reality is what we discover through actions. Our understanding of reality will continue to improve if we are capable of maintaining an open and seamless dialogue.”
Rønnevik shows two photos of seismic data, and points to the one that clearly has the lowest resolution.
“This is the photo we had when we came to the conclusion. The difference between these two photos is NOK 500 million in new technology. What we see here is that the concepts and success are driving the technology – and rarely the reverse. You have to be willing to make decisions at an early stage. We always have to make room for good ideas, but these ideas often have to come before the technology.”
“Intellect is more important than money in processes like this, but you have to be able to take a chance on good ideas,” says Rønnevik.
This is why Lundin established a producing portfolio to guarantee a cash flow to cover exploration activity.
Bright future on the shelf
Rønnevik is the only European to receive one of the world’s most prestigious awards for excellent exploration, the Norman H. Forster Outstanding Explorer Award. He is also one of 53 geoscientists to be interviewed as “Geolegends” by the American Association of Petroleum Geologists (AAPG). He believes that “the Norwegian model” is one of the reasons behind our success on the shelf.
“Knowledge requires a network model, which may not be the one first taught at universities around the country, but this collective model was the basis for developing a Norwegian petroleum vision and industry.”
“If you want stability, you have to be in a state of constant renewal: through self-organisation, by sharing information even quicker. You also have to network beyond yourself and internally in the organisation.”
History shows that we ended up with a good model. So far, 18 per cent of the boreholes in Northwest Europe have been drilled on the Norwegian shelf, and we have discovered 51 per cent of the resources. Fifty billion barrels were discovered in 1997. Back then, Rønnevik believed that at least twice this volume could be discovered on the Norwegian shelf.
“This figure was considered overly optimistic. Today, this is realistic, and even somewhat conservative. I’m convinced that we will exceed 100 billion barrels of additional resources through renewed activity based on always challenging the established truths,” says Rønnevik.