Figuring the forecasts

06.01.2014
One of the most important inputs to Norway’s national planning budget comes from the NPD. But Tom Andersen and his colleagues must first analyse huge volumes of oil company data.
  • Bjørn Rasen and Emile Ashley (photos)
 

Tom Andersen

Independent.
“The operators report their view of the position,” observes Tom Andersen. “We make our own assessments of what the future will look like.”

 

The oil and gas sector accounts for a third of the Norwegian economy, and offshore revenues are highly significant for national prosperity.

Staggering sums flow from Norway’s energy-intensive resources. Inputs based on conditions in this industry weigh heavily in the national planning budget.

But somebody has to do the far-reaching job of collecting and analysing the figures from various activities related to the NCS – and develop forecasts from them.

“Many people know a lot about the NCS, but want to know everything,” says Andersen, a reservoir engineer who has long played a key role in this work.

Joining the NPD’s development department 22 years ago, he subsequently followed up companies with chalk fields, such as Ekofisk and Eldfisk.

“During the decade I worked on that, the reserves increased by 100 million cubic metres [625 million barrels] of oil. Those were exciting times.”

The NPD collects and analyses data from operators on the NCS and compares this material with its own information and forecasts.

Andersen notes that these data represent an important management tool for the oil industry and a significant input to the government’s budgets and petroleum policies.

He is surprised over the lack of public debate about the forecasts for developments on the NCS, given that “these are important figures for the Norwegian economy”.

 

"I thought I’d never be producing another forecast about growing oil production. ’Johan Sverdrup’ certainly overturned that expectation elegantly."

 

 

Tom Andersen

Administration.
One of the most important jobs for the NPD, and for Tom Andersen, is to maintain an overall view of petroleum resources on the NCS. The goal is to administer these assets in the best possible way for society.

 

Autumn

All the operators on the NCS submit information and forecasts every autumn for their fields, discoveries and transport systems.

This includes reserves, both in place and recoverable, in each field and discovery as well as high and low estimates for these assets.

Recoverable petroleum resources are classified in accordance with the NPD’s system, which sorts them by maturity or status in relation to decisions by the relevant licensees.

With the companies also reporting predictions for production, costs and emissions/discharges to the environment, all this material is reviewed with a critical eye by the NPD.

Company and government forecasts differ. As Andersen says, “company attention is focused on projects, and their views are based on their own goals and plans.

“These are often a little optimistic. That’s probably inevitable in the nature of things, but we make our own adjustments.”

He nevertheless emphasises that a trusting relationship exists between the companies and the NPD, which means “that we get good data from them.

“We don’t release any figures for individual projects. We publish resource estimates for fields and discoveries, but no further details.”

 

Pessimistic

Oil production forecasts are the NPD’s oldest series of figures, starting in the 1970s when the agency was overoptimistic about how fast output would rise and too pessimistic in the long term.

During the two subsequent decades, the predictions were both too low and too high. In recent years, the short-term forecasts have been accurate to within plus/minus five per cent.

But the surprises are never far away. The biggest is called “Johan Sverdrup” and is a coming field in the North Sea.

“I thought I’d never be producing another forecast about growing oil production,” says Andersen. “’Johan Sverdrup’ certainly overturned that expectation elegantly.

“As things look today, we could see a small increase in output around 2020. In the shorter term, next year’s production curve may also turn a little upwards.”

But he nevertheless believes that peak oil has passed on the NCS – although when that point was reached is a recurring topic of discussion.

Andresen has the answer. Production reached its highest level in 2000 – a leap year, which meant the biggest output in a single day fell in 2001.

“Only a few barrels separated those two years, so the extra day in 2000 made the difference.”

However, Andersen is not ready to express either confidence in or doubts about oil prices. “Many people think a lot about the oil price, but we don’t produce any forecasts on that subject.”

The companies had a reporting deadline of 15 October, while the NPD’s contribution to the revised national planning budget is due no later than 31 December. So Andersen and his colleagues face the usual hectic Christmas period.

 

"Many people know a lot about the NCS, but want to know everything."