INTERVIEW: Norway's BlueNord to focus on maximizing Danish gas recovery

BlueNord plans to focus on maximizing economic recovery from its resource base offshore Denmark and to maintain production levels through the development of existing assets, CEO Euan Shirlaw said in an interview.

BlueNord -- formerly known as Noreco (Norwegian Energy Company) -- holds a 36.8% stake in the Danish Underground Consortium alongside TotalEnergies (43.2%) and Nordsofonden (20%).

The DUC's main asset is Tyra -- the biggest gas field in Denmark -- which has recently been redeveloped. But its portfolio also includes undeveloped resources of which several can be produced through the Tyra hub.

"We want to make sure that we maximize the recovery that we can for the asset base that we have," Shirlaw said.

"That means investing where it makes economic sense so that we're able to look back in 20-25 years' time and say that we got everything out that we could," he said.

Denmark was historically a relatively large offshore gas producer, with output at its peak of more than 11.5 Bcm in 2005.

But production declined rapidly in subsequent years and with the temporary closure of the Tyra field for redevelopment in 2019, offshore output has fallen further and is set to total just 1.2 Bcm this year, according to the Danish Energy Agency.

Once at full capacity, Tyra -- whose license is valid until 2042 -- will be able to produce by itself some 2.8 Bcm/year, turning Denmark back into a net exporter of gas.

And while Denmark has pledged to end oil and gas production by 2050, Shirlaw said there was an "understanding" at the political level that in the meantime, the focus should be on maximizing recovery.

Modern infrastructure

Some of the DUC's existing undeveloped resource base could be quickly brought online and delivered to the market through the modern Tyra infrastructure, Shirlaw said.

"Now that we have invested in the infrastructure, we want to keep it full for as long as we can," he said.

This could be through the drilling of new wells -- such as the recent HEMJ-1X well drilled in the eastern part of Harald field -- or infill wells. "That is something that has a relatively short investment period," Shirlaw said.

"We're looking at relatively infrastructure-light unmanned platforms that can be brought on stream before the end of this decade," he said, pointing to the Adda resource as an example of an asset that will be produced through Tyra.

"We now have some very modern infrastructure, and we want to make sure that we're using that to produce as much gas as we can," he said.

It comes as Denmark pledged to no longer hold exploration license bidding rounds as it looks to transition away from fossil fuels.

But upstream companies can apply for acreage in so-called "mini-tenders" such as the one launched in 2023 for the Elly and Luke discoveries in blocks 5504/6 and 5504/10, which are estimated to hold some 5.2 Bcm of gas.

BlueNord made the initial approach to the authorities but ultimately decided it would not proceed as an applicant in the tender after identifying potential technical challenges and taking commercial considerations into account.

Shirlaw said the DUC's resource base was already big enough without the need for new exploration offshore Denmark, with numerous prospects near the Tyra hub.

Technical issues

The resumption of production at Tyra, however, has not been without challenges.

It was taken offline in September 2019 for redevelopment work and resumed production in March.

However, technical issues were identified soon after in April, with TotalEnergies having since undertaken several actions to resolve the issues. It said Nov. 10 that the field was now ready for full operation.

Shirlaw said the delays had been frustrating, but that safe and reliable supply from Tyra was the main goal.

"It's disappointing that it happened, but since it did, we've been very focused on making sure that we maintain the long-term integrity of the asset," he said.

"We want a long-term production profile that is stable and predictable that we can build a business around."

Once at full capacity, BlueNord's share of Tyra output will more than double the company's total production from around 26,000 b/d of oil equivalent currently.

While TotalEnergies is the operator at Tyra, Shirlaw said BlueNord worked together with the French company on project development strategy, with much of its Denmark-based workforce having previous knowledge of the asset.

Gas from Tyra, he said, was also significantly more important now to the wider gas market than when the facility was taken offline.

"Obviously the market has changed quite significantly. And Tyra turns Denmark from a net importer to a net exporter of gas," he said.

"It means that Denmark is able to support the EU in terms of its energy needs," he said, adding that domestically produced gas also has lower emissions than imported LNG.

New opportunities

While BlueNord remains focused on Denmark, Shirlaw said the company wouldn't rule out activities elsewhere, though it wouldn't target growth for growth's sake.

"We obviously do look at other opportunities and we do think about whether there's anything we can do to improve our base to create more volume and more potential," he said.

"If it's the right opportunity, it is reasonable to think that we would look at it actively. But the yardstick against which we measure these things is very high because we have an extremely high-quality portfolio as our base."