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Aasta Hansteen gas field in Norwegian Sea to begin production 'in the autumn': NPD

London — The major Aasta Hansteen gas field in the Norwegian Sea is expected to start production this autumn, the Norwegian Petroleum Directorate (NPD) said Thursday, as it called on operators to continue to "keep activity high" to maintain current production rates.

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In an activity update, the NPD said development and exploration work on the Norwegian Continental Shelf remained strong, although there have been no new field start-ups so far in 2018.

Equinor-operated Hansteen -- the first deepwater development in the Norwegian Sea -- is behind schedule having originally been expected to begin production by the end of 2017.

The platform at Hansteen -- which has estimated reserves of some 47 Bcm -- will have a gas processing capacity of 23 million cu m/d and is linked to the Nyhamna gas processing facility via the new 480 km Polarled pipeline.

Hansteen itself is expected to produce up to 15 million cu m/d, but the platform will also take gas from the Equinor-operated Snefrid Nord satellite field whose development was approved by the Norwegian energy ministry in October last year.

A spokesman for Equinor told S&P Global Platts Thursday its guidance for the startup of Hansteen remained Q4, 2018. PRODUCTION RATES The NPD said total production in the first half of 2018 was down slightly on the same period last year, with oil output down around 9% at 1.86 million b/d and gas production up just 1% at 61.5 Bcm.

"There are several reasons why output is lower than last year and lower than our expectations," it said. "It is partly due to technical problems at some fields and partly because of a colder winter than normal which resulted in reduced production."

The NPD called on operators on the NCS to maintain high activity to increase recovery from already producing fields.

"Drilling new wells is the most important single measure to increase recovery. It is therefore important that new drilling targets are constantly identified and wells drilled," Ingrid Solvberg, the NPD's Director of Development and Operations, said.

A total of 83 fields were operational as of the end of June, with 20 development projects ongoing. In addition to the development projects, two new applications for development plans were submitted in 2018 -- the Wintershall-operated Nova field and the Equinor-operated Troll phase 3 project.

The development plan for the second phase of the giant Johan Sverdrup field is expected in Q3, the NPD said.

In the first half of the year, seven development plans were approved for the Skogul, Yme, Valhall Flank West, Aerfugl, Fenja, Johan Castberg and Snorre expansion projects.

These projects, the NPD said, represent investments of around NOK 100 billion ($12.3 billion).

Solvberg said the NPD was "especially pleased" that operators were investing in enhanced recovery at existing fields, such as the Valhall and Snorre expansions.

"These are major and important developments to ensure that we get more profitable oil and gas from the ground," she said. 'BIGGER FINDS' Despite being buoyed by the ongoing development work, the NPD warned that bigger discoveries needed to be made in the coming decade for current output rates to be sustained.

"If production is to be maintained at a high level, larger findings must be made than the average for the past 10 years. The possibilities for making larger discoveries are the greatest in the least explored areas," the NPD's exploration chief Torgeir Stordal said.

This is a reference to the potential in the Barents Sea, which has yet to see large-scale exploration.

At the same time, Stordal said exploration should continue to be pursued in the North and Norwegian Seas.

"It is particularly important that more exploration wells are drilled in the North Sea and the Norwegian Sea, where additional resources must be identified and recovered while the infrastructure is still in operation," Stordal said.

A total of 13 exploration wells were drilled in the first half, which led to six discoveries, and the NPD expects to drill between 40 and 50 exploration wells in 2018, against 36 in 2016 and 2017.

Three of the discoveries were in the North Sea, two in the Norwegian Sea and one in the Barents Sea.

--Stuart Elliott, stuart.elliott@spglobal.com

--Edited by Jeremy Lovell, jeremy.lovell@spglobal.com