Lundin Petroleum is the largest oil company in Norway and is expected to grow production to over 150,000boe/d from the current 35,000boe/d (Source: Herrald Pattersan/Statoil ASA)

Lundin Petroleum is the largest oil company in Norway and is expected to grow production to over 150,000boe/d by 2018 from the current 35,000boe/d (Source: Herrald Pattersen/Statoil ASA)

In September 2010, Lundin Petroleum (LUP:TSX) announced the largest ever oil discovery made in the Norwegian shelf; the Johan Sverdrup discovery.  It is estimated to hold a staggering 3.6 billion barrels of oil.  The discovery covers an area of approximately 180 km² in blocks 16/2, 16/3 and 16/5 on the Utsira High in the central part of the North Sea.  This morning the company announced they have commenced drilling the appraisal well,16/3-8S.  The well is located on the production license, PL501 which is one of three production licenses that the discovery is known to extend onto (the others being PL265 and PL502).

The PL501 block is 40% owned by Lundin Petroleum who is also the operator.  The other owners are Statoil and Maersk Oil Norway which own 40% and 20%, respectively.  Lundin holds a 10% interest in the PL265 block with Statoil the operator at 40% interest and Det norske oljeselskap and Petoro with 20% and 30% interests, respectively.

The 16/3-8S appraisal well is targeting a total depth of 2,025m below mean sea level and is expected to take 45 days to complete.  The well is part of a work program to establish the depth, quality and thickness of Zechstein group carbonates of Permian age and to investigate the presence and quality of Jurassic reservoir sequences.

The company expects the carbonates to potentially play an important role in the development of this discovery which they expect to start production by 2018.  The field will likely be developed by a combination of fixed platforms and seabed installations. The water depth in the area is approximately 110-120 metres.  Statoil is expected to complete the production development work.  They expect to submit the PDO to the Ministry of Petroleum and Energy by the end of 2014.

Lundin Petroleum will likely come out with an increased and updated reserve calculation to bolster their current 2P reserve base of over 201 million barrels of oil equivalent.  The company currently produces over 35,000boe/d but expects that once the giant Johan Sverdrup discovery hits plateau production it surpass 150,000boe/d.

Through Lorito and Zebra Holdings, the Lundin Family controls close to 30% of Lundin Petroleum.

Read: LUNDIN PETROLEUM SPUDS APPRAISAL WELL 16/3-8S ON JOHAN SVERDRUP DISCOVERY, OFFSHORE NORWAY