Preface

sissel-e
04.05.2016

The Norwegian Petroleum Directorate (NPD) presents updated estimates of undiscovered resources on the Norwegian continental shelf (NCS) at regular intervals. These also occupy an important place in this year’s report. Our previous review of undiscovered resources on the NCS is three years old. Fifty-seven discoveries have been made since the resource report in 2013. At the same time, changes to our overall estimate of undiscovered resources are insignificant. A slight decline in the North and Norwegian Seas is outweighed by a higher estimate for the Barents Sea. That largely reflects the geological information provided by exploration results in recent years.

Fifty years have passed since the first exploration well was spudded on the NCS. Since then, roughly 100 fields have been brought on stream, jobs have been generated and value creation for society has been huge. Forty-seven per cent of the total expected resources have so far been produced, and undiscovered resources amount to 20 per cent. This means that much remains to be found, and that the basis exists for continued production over many decades.

Most of the discoveries made since the 2013 resource report are located close to existing infrastructure, and can be developed simply and cost-effectively through tie-backs to such facilities as platforms and transport networks. That applies particularly to the discoveries in the North Sea and mature parts of the Norwegian Sea, and underlines the importance of exploring in these areas. That discoveries are still being made after 50 years of exploration activity underpins the continuing attractiveness of NCS as a petroleum province. Each exploration well provides more knowledge about and a basis for enhanced understanding of the geology and resource potential of the continental shelf.

To make discoveries, wells must be drilled. The level of activity has been high over the past decade, with an annual average of 40 exploration wells. No less than 56 were spudded in 2015, and about 30 are expected in 2016.

We have conducted an analysis of the full-cycle profitability of exploration in 2000-14, which shows that this activity paid off in socio-economic terms in every part of the NCS during the period. Our calculations indicate that the greatest value creation has clearly taken place in the North Sea, since the levels of exploration activity and investment have been highest there. Access to infrastructure, as in the North Sea, also boosts profitability. Exploration creates great value for society in the Norwegian and Barents Seas, too. In the longer term, new discoveries which contribute to infrastructure development in these regions will lay the basis for a level of value creation similar to that in the North Sea.

Fifty-three companies were involved on the NCS at 31 December 2015. That represents a doubling since 2000. Most of these companies are active in the exploration phase. New players mean greater diversity, which means in turn that more and innovative ideas get tried out. This contributes overall to further discoveries and enhanced value.

An important part of our work is to map unopened areas of the NCS in order to increase understanding of and knowledge about the geology of these areas. Our commitment in recent years has primarily been directed at data acquisition from Barents Sea North and Barents Sea North-East, towards the boundary with Russia. During the summer of 2015, for example, shallow wells were drilled east and north of Kvitøya. Results from these will be important for understanding the geology and resource potential in Barents Sea North, including the area adjacent to the boundary with Russia. Work is now under way to interpret the data we have acquired in recent years.

Exploration is learning, and it takes time to learn. We are now in a period where the industry faces major challenges. Maintaining a long-term perspective is important at such times. The purpose of this report is to provide greater understanding of the resource base on the NCS, and thereby contribute to good choices of direction for future value creation.

 

Sissel Eriksen
Exploration director