Norway Can Produce for Decades to Come: NPD Report

Norway’s upstream regulator remains confident that the country’s offshore oil and gas resources can provide the basis for production for decades to come, it said on April 14.

The Norwegian Petroleum Directorate’s Resource Report 2016 includes new long-term projections for undiscovered resources on the shelf. These indicate little change since its 2013 resource report, despite the 57 discoveries made in the past three years.

NPD estimates that almost 3bn m³ (18.5bn barrels) of oil equivalent on the Norwegian shelf are yet to be discovered – nearly half in the Barents Sea, with the rest equally distributed between the North Sea and Norwegian Sea. There was a minor decline in the latter two seas, but it was offset by an increase in the Barents Sea.

Resources yet to be discovered on the Norwegian continental shelf

Source: NPD Resource Report 2016 (figures in mn boe are conversions by NGE)

However NPD warns that continued high exploration activity is needed in order for the undiscovered resources to contribute toward maintaining production starting from around 2025, and to create values for industry and for society at large over the long-term.

The implication is that without such activity, infrastructure may be mothballed or decommissioned before there has been an opportunity to firm up some of those resources into commercially recoverable reserves. Already offshore UK and Denmark, such gas infrastructure is being considered for closure.

Given current low oil prices and the challenges faced by the industry, NPD says “it's important to have a long-term perspective”; its report is intended to keep the door open to future value creation.

NPD finds that during 2000-14 the Norwegian Sea and the Barents Sea generated considerable added value. It estimates that the total net cash flow from discoveries during the period at nearly 2 trillion Norwegian kroner (€215bn), net of exploration costs, of which Nkr 1400bn (€150bn) in the North Sea and Nkr 500bn in the Norwegian Sea and the Barents Sea.

The fact that discoveries are still being made after 50 years of exploration activity shows that the Norwegian continental shelf is an attractive petroleum province, argues the NPD. From a “high” level over the past decade with on average some 40 exploration wells drilled each year, 56 such wells were spudded in 2015, although only about 30 wells are expected this year.  

At end-2015, there were 53 companies active on the shelf, a doubling since 2000, most explorers. “New players mean greater diversity, and greater diversity means that we test a greater number of ideas and more innovative concepts,” said NPD adding that this contributes to a higher discovery rate.

The English version of the report will be published in late April.

Mark Smedley