New prescriptions are constantly being written as studies aimed at improving recovery on the NCS. But we are familiar with the medicine. It is as simple as it is demanding: the companies must drill more wells.
This has been a core issue for the NPD over many years. So we are pleased that greater attention is now being paid to challenges of improved recovery. Published earlier this autumn, the Åm commission’s report provided a useful review and will now form part of the basis for the discussion on improved recovery in the petroleum White Paper due in 2011.
Our impatience is well-founded. We are seeing write-downs of planned production on a number of fields. Adopting measures to secure maximum value creation from many of Norway’s large mature fields is now a matter of urgency. If the industry waits too long, profitable oil resources will be lost and society may lose out on billions of kroner in additional revenues.
The question is why more wells are not being drilled. Few people in the industry, if any, would disagree that they are needed. The companies are nevertheless struggling to drill the planned number of production wells.
Several factors are involved, but we can see some common denominators. A number of wells are relatively old, and the equipment needed to maintain them needs upgrading – at the expense of new producers. The number of subsea-completed wells is also rising, and these call for more demanding maintenance and intervention operations than platform wells.
Natural resources, a forward-looking framework, the ability to surmount technological barriers and good field operation have created huge value for Norwegian society over more than 40 years. The oil age has been fantastic for Norway Ltd. A number of articles in this issue illustrate that value creation and the far-sighted decisions which have underpinned it.
The many technological leaps have also been crucial to the oil nation’s success. If that trend is to continue, the industry must face up to new and demanding technical challenges. Remaining oil on the NCS is more difficult to get at, and the volumes are generally smaller than before.
It is no longer the case that a single field can bear the costs of technology development – as could Statfjord, for instance. Ever smarter technology must now be devised more cost-effectively than before, and with high standards of quality. These solutions will relate largely to the drilling and well area.
The Åm report was commissioned by petroleum and energy minister Terje Riis-Johansen with the aim of identifying measure to improve petroleum recovery from the NCS. Its proposals include regulatory changes.
Existing regulations already commit the companies to ensure optimum recovery of oil and gas resources when they secure a licence on the NCS. We give priority to close dialogue with the licensees to ensure that they comply with these obligations.
The government set a goal in 2005 of boosting Norway’s oil reserves by five billion barrels before the end of 2015. We estimated that improved recovery would account for three out of four of these barrels. At present, Norway is behind schedule in meeting this target. Efforts need to be increased, and drilling more wells is the quickest way of closing the gap.