Statoil to triple North America oil and gas output

NEW YORK (Reuters) - Norway's Statoil aims to triple its North American oil and natural gas production by the end of the decade as it ramps up spending in oil-rich prospects, and it also plans to develop Australian shale gas, the company said on Wednesday.

Statoil expects to produce 500,000 barrels of oil equivalent a day (boepd) in North America by 2020, up from the 149,000 boepd produced in the first quarter of this year, as it moves away from barely profitable natural gas fields to concentrate on more lucrative liquids-based acreage.

Meanwhile, Statoil has entered into a partnership with Canada's PetroFrontier Corp to explore for shale gas in Australia, it said on Wednesday.

The majority of North America increases will come from U.S. operations focused in the Marcellus, Eagle Ford and Bakken shale plays, said Bill Maloney, president of Statoil North America. Some 100,000 boepd will be produced from offshore assets in the deep water Gulf of Mexico, double today's output, the company said during its analyst day in New York.

"The resource base in North America has grown well above 6 billion boe, representing around 30 percent of Statoil's total resource base," Maloney said. To grow further, the company is also considering further acquisitions in the region.

The state-controlled company, which increased its global capital spending to $17 billion this year, already saw a 75 percent year-over-year increase in its North American output in the first quarter and is shifting its focus to liquids-rich plays like the Bakken in North Dakota and Montana, where it secured a key position last year with its $4.4-billion acquisition of exploration outfit Brigham Exploration.

After producing some 26,000 barrels-per-day in the first quarter, Statoil is ramping up its output in the Bakken. It has built some 500 miles of oil and gas gathering lines in the Bakken shale outpost and taken a position on the Enbridge pipeline to ship its crude to Guernsey, Wyoming, said Torstein Hole, Statoil's Senior vice president of development and production for onshore North America.

Rail connections will then deliver the crude to the U.S. Gulf Coast refining hub.

Statoil's expansion in the Bakken and in other liquids plays comes at the expense of its natural gas acreage in the Marcellus shale, where it is partnered with Chesapeake Energy , as low natural gas prices erode production profits. Currently Statoil is only drilling in natural gas acreage to hold onto leases that would expire if the land remained fallow.

The company is at present operating about 20 rigs in the Marcellus, down from 36 rigs at the end of 2011.

"We've brought the rig count down and we've taken some of that (capital) and put it in the Bakken," Maloney said.

"We continue to bring on more wells (in the Marcellus) but we don't produce them to the capacity they have," he added. Statoil had previously said it has 400 wells awaiting completion in the Marcellus shale.

Statoil's plans to double deep offshore production will involve the addition of about four rigs this year and another twelve next year, the company said.

It is currently operating about 30 rigs in the Gulf, a number not reached by the company since the BP oil spill in 2010, which slowed activity as the government weighed the environmental threat of deep water drilling.

One of its latest Gulf of Mexico finds, the Logan discovery in the Paleogene prospect, holds between 1 billion and 2.5 billion barrels in place, though the volumes that can be recovered are so far unclear, a Statoil spokesman said.

Statoil has bid on 32 blocks in the latest Bureau of Ocean Energy Management lease sale in the Gulf of Mexico, the results of which will be announced Wednesday.

(Additional reporting by Victoria Klesty in Oslo; Editing by Alden Bentley)

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