Norway Investment to Stabilise in 2018: NPD
After several years of declining investments, Norway’s upstream regulator said January 11 it expects investments to stabilise in 2018.
Upstream investments offshore Norway in 2018 are expected to be around kroner 122bn ($15.1bn), about the same as last year, said the Norwegian Petroleum Directorate (NPD) in its annual review of offshore activity. In 2019, it expects investments to rise to just under kroner 140bn.
Norway had 85 producing fields (66 in the North Sea, 17 in the Norwegian Sea and 2 in the Barents Sea). Five of these came on stream in 2017, of which only two were significant: the Statoil-operated Gina Krog oil and gas field in the North Sea, and Wintershall-run oilfield Maria in the Norwegian Sea. The three others including Byrding, an oil and gas field southwest of Gjoa.
Plans for development and operation (PDOs) were submitted for ten new projects including the Aerfulg (formerly Snadd) gasfield and Fenja oil and gas project; nine more are under development (including the Dvalin gasfield).
NPD chief Bente Nyland though said: “If production is to be maintained at a high level also beyond 2025, more profitable resources must be proven, including in major discoveries." She said exploration effort should be increased in both mature and frontier areas. NPD said 34 exploration wells were completed in 2017, three fewer than the previous year. Half (17) were drilled in the Barents Sea, a new record, with 12 in the North Sea and five in the Norwegian Sea. Eleven relatively minor discoveries were made last year (down from 18 finds in 2016) though some could become profitable if tied in to existing fields.
Despite the decline in the number of exploration wells in the last few years, the companies exhibited significant interest in new acreage in the most recent licensing rounds. A total of 56 production licences were awarded in its APA 2016 round, and 39 companies applied for acreage in APA 2017, while 11 have applied in the 24th licensing round.
Nyland also said: “Nearly two‐thirds of the undiscovered resources are located in the Barents Sea. This area will be important in maintaining high production over the longer term.” The petroleum ministry won a court case last week, initiated by environmental campaigners. Had it lost, future exploration of the far northerly Barents Sea might have halted.
NPD also outlined how development project costs have been cut by 30% to 50% in the last couple of years while, at the same time, the oil price had risen, leaving projects more profitable. Operating costs have been reduced by around 30% since 2013/2014, it added. “Projects now being approved generally have good profitability and can tolerate an oil price as low as $30 to $40/b,” said Nyland. Tensions in Iran have contributed to the oil price strength as the oversupply shrinks. Dated Brent has been at over $50/b for months, and is now not far short of $70/b.