Resources and production

1.1 Resources

Remaining recoverable resources

The NPD estimated at 31 December 2013 that total recoverable petroleum resources on the NCS corresponded to 14.2 billion Sm3 oe. See figure 1.1. This represents the sum of all petroleum produced and sold since Norwegian petroleum operations began – a total of 6.2 billion Sm3 oe – and remaining recoverable resources estimated at eight billion Sm3 oe.


Figure 1.1 

Figure 1.1 Distribution of total recoverable resources and uncertainty in the estimates at 31 December 2013.

Remaining resources embrace reserves in fields, resources in improved recovery projects yet to be sanctioned on the fields, resources in discoveries and undiscovered resources – in other words, assumed recoverable quantities which have yet to be found. Proven quantities not yet covered by a development decision are designated contingent resources.

The estimate for remaining resources is uncertain, as the bars in figure 1.1 show. The base value utilised is the statistical expected value. Uncertainty over the total remaining resources ranges from 5.6 billion Sm3 oe (P90) to 11 billion Sm3 oe (P10). The P10 estimate – where a 10 per cent probability exists that the quantity will be larger – is almost twice as large as the P90 – where the probability that the quantity will be bigger is 90 per cent. The difference between the P10 and P90 estimates is greatest for the undiscovered petroleum resources, but uncertainty also prevails over how much can be recovered from existing fields and discoveries.

Barents Sea South-East and the continental shelf around Jan Mayen are now included in the estimate for undiscovered resources. The resource estimates for these areas, which were published in early 2013, are 300 and 90 million Sm3 oe respectively. The uncertainty range for these estimates is substantial. While gas accounts for 80 per cent of estimated resources in Barents Sea South-East, the bulk of resources around Jan Mayen is likely to be oil. More information on the undiscovered resources and mapping of the new areas can be found in the Resource report – exploration 2013.


Remaining recoverable resources in fields and discoveries

More than 60 per cent of the remaining recoverable resources are found in existing fields and discoveries. “Field” in this context means both those in production at 31 December 2013 and those where the decision to develop had been taken at that point.

The remaining resources mostly comprise gas, but also include substantial quantities of liquids. While the bulk of the remaining gas is classified as reserves in fields on stream or fields under development, a larger proportion of the liquids is classified as contingent resources in fields and discoveries. See figure 1.2.

*Liquid quantities are defined in this report as the sum of oil, natural gas liquids (NGL) and condensate.


Figure 1.2 

Figure 1.2 Proven oil and gas by various resource categories. The figures outside the topmost pie charts indicate the resources in million Sm3 oe for each category.


Of the proven resources, 66 per cent of the oil and 41 per cent of the gas have already been produced and sold. Forty-two per cent of the remaining oil and 77 per cent of the remaining gas are classified as reserves.

The numbers in figure 1.2 represent the expected value for recovery. Although these resources are proven, the estimates are uncertain. Several factors contribute to this uncertainty, and will vary in line with the maturity and complexity of the projects. The most important relate to geological and flow conditions in the reservoirs and uncertainties about how costs and prices develop. Uncertainty is greatest for resources which have yet to be sanctioned for development.


1.2 Resource developments

Figure 1.3 presents a comparative overview of developments for proven resources from 1973 to the present day. Based on historical data from the NPD’s resource accounts, this figure shows that the addition of new resources, through discoveries and upgrading of estimates for the fields, contributes to the continued existence of large producible quantities.


Figure 1.3 

Figure 1.3 Development in estimates of proven resources over time.


The figure for the development of gas resources shows with particular clarity how the reserves have increased in marked leaps as decisions are taken to develop large fields. Contingent resources are a combination of expected recovery from new discoveries and measures which could be implemented on fields to improve recovery. A marked rise would normally reflect a large new discovery. Falls could occur because further appraisal of discoveries reveals that these are smaller than first assumed. Estimates for each deposit are uncertain, and this uncertainty can vary from year to year. In 1996-2001, the NPD’s expectations for future recovery of gas were over-optimistic because the average recovery factor assumed was too high. Estimates for contingent gas resources were accordingly reduced from 2001. See figure 1.3. 


1.3 Production developments

Oil accounts for 63 per cent of the six billion Sm3 oe already produced from the NCS. The growth in output was particularly strong in the 1985-95 period, reflecting the development of a number of large fields in the 1980s and 1990s. The biggest oil fields were brought on stream before 2000.

Production of oil peaked in 2000 and has since been in decline, while gas output has risen after 1995. See figure 1.4. The increase in gas production reflects the development of large gas fields such as Troll, Åsgard and Ormen Lange, with associated pipelines and land facilities. The big oil fields developed in the 1970s and 1980s, such as Ekofisk, Statfjord, Oseberg and Gullfaks, have been very important for overall oil output from the NCS. Production from these fields has declined markedly over the past decade. One of the principal challenges on the NCS is accordingly to utilise spare production capacity by improving recovery and the phasing-in of nearby discoveries.


Figure 1.4 

Figure 1.4 Historical production with forecasts for the next few years.

The gas 40 MJ value in figure 1.4 represents a normalised volume for gas sold. The gas is sold by energy content rather than volume, and normalised gas has an energy content of 40 MJ per Sm3. This energy content varies from field to field on the NCS. In 2013, the gross calorific value (GCV) for the fields lay between 36.7 and 50.0 MJ per scm depending on the composition of the sales gas. Methane has a GCV of about 37.7 MJ per Sm3.

The NPD expects oil production to remain around its present level over the next few years. Gas output from producing fields is expected to increase somewhat during this period. Several large discoveries made in recent years are expected to come on stream during the next 10 years. This will compensate for the natural production decline from fields in operation, and means that production could grow slightly in the years to come. See figure 1.5.


Figure 1.5 

Figure 1.5 Forecast for petroleum production up to 2030.


Production over the next few years will be dominated by fields on stream or under development, with a gradual increase from discoveries where work on development plans is now under way. The contribution from these discoveries is expected to rise from 2020. While anticipated output from Johan Sverdrup and Johan Castberg will be the primary source, a large number of other discoveries are expected to contribute. New discoveries must be made and developed if the production forecast is to be fulfilled in the longer term.

The production forecast is uncertain, and this uncertainty increases with time. Over the next few years, the development of output from and implementation of projects on existing fields will determine whether the forecast will be fulfilled. The start-up time and pace of drilling on the fields currently under development will also affect quantities. Later, decision-making processes, development solutions and production start-up on new fields will represent the biggest sources of uncertainty. Further down the road, a large share of anticipated production will come from the resources which are yet to be discovered. The uncertainty relates primarily to the number and size of future discoveries, and to whether and when they can be brought on stream.

The NPD’s production and cost forecasts are based on price and cost levels in the autumn of 2013. Significant alterations in these assumptions will cause changes to project execution and thereby to cost and production forecasts. That would also be the case if the companies amend their requirements for the profitability of individual projects.