Expert agreement

Before development could begin, a number of issues had to be clarified. Socio-economic and resource considerations indicated that Frigg should be unitised. In other words, its licensees should join forces over a joint plan for development and operation and reach agreement on how costs and revenues should be split between them. Agreement had to be reached on the size of the field and how much of it lay on either side of the boundary.

How to apportion the field became a burning issue in the summer of 1972. The Frigg reservoir had been estimated that January to contain 285 billion standard cubic metres (scm) of gas, with 57 per cent located on the UKCS. Total then drilled a well on the UK side which proved to be dry.

The Norwegian licensees maintained that this required a reassessment of the reservoir’s size and a reapportionment in Norway’s favour. On 8 September, both sides presented their calculations of the field’s size and distribution, with Elf/Total maintaining that the reservoir contained 260 billion scm of gas and that 52-55 per cent lay on the Norwegian side. Hydro argued that gas resources amounted to 234-291 billion scm, with 65-66 per cent falling to Norway.

To reach agreement, Elf proposed that independent experts be hired to interpret the data and reach a conclusion. The other partners agreed to this. The choice lay between DeGolyer and MacNaughton and Core Laboratories, and the first of these was chosen.

Its job was to decide on the boundaries of the Frigg reservoir, estimate the total volume of gas it contained and determine how large a part of the reservoir lay on either side of the boundary. The work was to be finished by 30 September 1974.

The licensees undertook to abide by the conclusions reached. But the British and Norwegian governments refused to be bound by them. The decision to consult a specialist was enshrined in late May 1973 in the Frigg field expert agreement, the first official agreement between the licensees.

It was already clear by the summer that DeGolyer and MacNaughton needed more basic data and that additional seismic would have to shot. At the same time, the newly established Norwegian Petroleum Directorate (NPD) wanted an independent assessment of Frigg.

It hired Core Laboratories to conduct a separate review of the data on the reservoir’s size and to advise on both reservoir and production in relation to the unitisation. The conclusion was that Frigg contained 242 billion scm of gas, with 69 per cent on the NCS.

Hydro and Statoil did not agree with DeGolyer and MacNaughton’s interpretation of the data, and pointed to a wide divergence between that consultant’s findings and those of Core Laboratories. DeGolyer and MacNaughton had determined that only 51 per cent of the gas reserves lay on the NCS. The French companies also had to admit that great uncertainty prevailed over the interpretations, but were satisfied with the results.

Further drilling was demanded by Hydro and Statoil to provide a better decision basis. The Norwegian companies had everything to gain from additional appraisal wells, even though the price per well was high (drilling costs were put at NOK 20 million).

DeGolyer and MacNaughton agreed in September 1974 that a new well on the western flank would be sensible. Statoil and Hydro convinced the French partners that a further three wells were required. All four of these were drilled between April 1975 and January 1976.

DeGolyer and MacNaughton signed off its final report on the size of resources in Frigg and their division between Norway and the UK on 14 February 1977, almost three years late. The reservoir was estimated to contain 268 658 million normal cubic metres (ncm) of gas, of which 60.82 per cent lay in the Norwegian sector and 39.18 per cent on the UKCS. While the licensees had bound themselves to accept this conclusion, the Norwegian and British governments were free to accept or reject it. After much discussion, both countries accepted the proposed division on 12 December 1997. By that time, part of the field had already been developed and production was under way from the UK side.

More information:  The unitisation agreement

This text is based on an unpublished manuscript by Lars Gaute Jøssang and Birger Lindanger: Pioner på sokkelen. Elf i Norge gjennom 30 år 1962-1992, and on En prøvestein på petroleumshushold og unitisering, by Gunnar Nerheim, Norsk Oljemuseums årbook 1991.