Summary

Hav
24.06.2010
The continental shelf and slope off Nordland and Troms counties have a varied and complex geology. Extensive mapping has been conducted by the NPD on the basis of geological and geophysical data. As part of this work, substantial volumes of two- and three-dimensional seismic data have been gathered.

A total of 50 prospects have been identified in Nordland VI/VII and Troms II. These lie in sandstone reservoirs at four main levels in the sub-surface, originating in the Early and Middle Jurassic, Early Cretaceous, Late Cretaceous and Palaeocene. Crushed and weathered basement rock has also been assessed for possible reservoir formations. The most prospective levels are the Jurassic and Cretaceous, which share many features with better-known geology in the Norwegian and south-west Barents Seas. New seismic data have helped to reduce uncertainty in the geological interpretations, particularly for Troms II.

Recoverable reserves have been calculated for the identified prospects, and the discovery probability estimated. Results from the survey have then been used in a statistical play analysis. Plays have been identified at several levels on the basis of the NPD’s regional understanding of the extent of reservoir and source rocks, traps and seals. Modelling has provided resource estimates, with best estimates and uncertainty ranges, for all sub-areas. The methodology and procedures comply with those used by the NPD for licensing rounds, national budget reporting and resource reports.

Overall, the NPD estimates that 202 million standard cubic metres of oil equivalent (scm oe) could be found in the evaluated area. That corresponds to 1 270 million barrels of oe (boe). These figures refer to recoverable resources. The estimate is naturally uncertain, and the NPD’s analysis indicates a 95 per cent probability of finding at least 76 million scm oe, and a five per cent chance of locating more than 371 million scm oe.

On the basis of this updated resource picture, the NPD has made an economic valuation of the potential petroleum resources. These calculations rest on a number of technical and economic assumptions, including the time when these areas are opened to petroleum operations, exploration activity and development solutions. Such assumptions are necessary when making economic assessments. Based on a statistical model, the expected gross sales value of oil and gas is estimated at roughly NOK 600 billion. The overall expected undiscounted profitability is calculated to be about NOK 480 billion. With a discount rate of four per cent, expected profitability is put at NOK 105 billion.

Geological knowledge of the area remains limited, and the estimate for undiscovered resources is highly uncertain. However, this uncertainty can be reduced over time both through further processing of available seismic data and by drilling exploration wells. Incorporating value created by new information and opportunities to make exploration and development decisions on a step-by-step basis in statistical economic calculations is a demanding process. Scenario methods have also been used to take better account of such added value in the valuation.

Four scenarios – A, B, C and D – have been developed, with the main emphasis on the size of discoveries (large versus small) and the overall volume of resources (above or below expectations). A “wild-card” scenario – X – is also presented. This reflects the high level of uncertainty over the resource outcome in an unopened area, and the possibility of an outcome at the upper limit of the NPD’s resource distribution. Scenario X illustrates this by assuming that the two plays with the biggest resource potential are both confirmed. The value of the resources is calculated for each scenario. Gross sales value for oil and gas varies from NOK 0 in scenario C, with the smallest resources, to NOK 1 800 billion in scenario X. Net present values vary from a negative NOK 7 billion to a positive NOK 650 billion for scenarios C and X respectively. The calculations show that step-by-step exploration of the areas will yield substantial assets.

 

Figure 1. The area evaluated by the NPD in connection with the updating of the management plan. Apart from the areas with a blue border – excluding the western part of Nordland V – the West Fjord (Vestfjorden) also forms part of the area assessed. The map also shows water depth, the base line, production licences with number, and exploration and scientific wells.

Figure 1. The area evaluated by the NPD in connection with the updating of the management plan. Apart from the areas with a blue border – excluding the western part of Nordland V – the West Fjord (Vestfjorden) also forms part of the area assessed. The map also shows water depth, the base line, production licences with number, and exploration and scientific wells.

 

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