6. Production forecasts: Assessment of uncertainties in the future oil production

Assessment of uncertainties in the future oil production

The period 1997 to 2000

Fig. 6.12
Plateau production for selected fields.

In the immediate years ahead, the production from fields that are already onstream, dominate the Norwegian oil production. Figure 6.11 shows the distribution of the expected oil production from 1997 to 2000. In this period, about 94% of the production will come from fields which, as of January 1997, are in production or are decided to be developed. Most of these fields, including the Statfjord, Gullfaks and Oseberg fields, are within, or approaching, their decline phase (Fig. 6.12), which produces a great deal of uncertainty regarding their short-term production level.

In 1996, approximately 65% of Norwegian oil production came from fields that are in their plateau phase, but in 2000 it is expected that just less than 30% will be from such fields (Fig. 6.13).

In the case of sandstone fields, it is assumed that the production during the decline phase will drop by between 15% and 40% compared with the year before. Uncertainties associated with the decline phase are therefore of great importance for the uncertainty regarding production from fields that are onstream. Advanced wells contribute to the production during the plateau phase. This is because the wells are in contact with greater portions of the reservoirs and, hence, individual wells achieve higher well rates. Because of prolonged plateau production, a higher decline rate is expected.

Measures to improve resource exploitation, including possible additional resources being connected to the field during the decline phase itself, will, however, reduce the decline rate. Of the expected production during the period 1997 to 2000, 5% is predicted to come from projects on the fields that have not yet been initiated, or decided upon. Measures to improve resource exploitation increase the proportion of resources that are produced during the plateau phase up to just less than 60% in 2000 (Fig. 6.14). There is considerable uncertainty regarding these measures, both whether they will be decided upon and implemented, and the effect they will have.

Oil production from discoveries that are expected to be developed, comprises 4% of the expected production in the period from 1997 to 2000. Decisions on whether to develop most of this discovery portfolio are expected within two years (Fig. 6.8). This means that most of the discoveries will be in their plateau phase simultaneously. Uncertainty will therefore be linked to just when the fields will begin production and the production level. If start of production in several discoveries is considerably delayed, this will reduce the production level from about the year 2000. Additional resources in prospects which, assuming discoveries are made, will be connected to a field, comprise 2% of the expected oil production during the period from 1997 to 2000. There is considerable uncertainty regarding the size of the undiscovered resources and whether possible discoveries are commercial or not.

The period 2001 to 2010

During the period 2001 to 2010, it is expected that about 60% of the oil production will come from fields that are in production or approved for development as of 1.1.1997 (Fig. 6.14). Of this, about 20% is expected to come from future measures to improve resource exploitation. About 2003, it is expected that all the fields which, as of 1.1.1997, are in production or approved for development, will be in their decline phase. The uncertainty in this period will therefore be especially linked to the duration of the plateau phase and the proportion of resources which are produced during the plateau phase (Fig. 6.14).

Production from discoveries for which a decision to develop is expected in the next 2 years, constitutes about 13% of the total production, whereas discoveries which will be approved for development during the next 10 years, will only comprise 2% of the expected production between 2001 and 2010. The uncertainty in production forecasts is associated with the estimate of recoverable resources. As in the case of fields that are in production, the uncertainty will be linked to the effect which technological development will have on the recovery factor for the resources, and on possible additional resources which can be connected to the discoveries. The long-term basic scenario for undiscovered resources covers about a quarter of the expected oil production from 2001 to 2010. The forecasting of production from future discoveries is based on a number of preconditions and assumptions which, individually, are extremely uncertain. The forecast presupposes that on average three new discoveries will be put into production each year. There is uncertainty regarding both the number and the size of the discoveries which are put into production.

Quantifying the uncertainty in the future oil production

Uncertainty in production forecasts is indicated by a high and a low forecast, in addition to expected forecasts of oil production reported by the companies. Historically, the range of the uncertainty has been underestimated.

It is assumed that in 1999, production from fields that are approved for development as of 1.1.1997, will be between 175 and 225 mill. Sm³ with an expectation of 200 mill. Sm³ (Fig. 6.15). In 2010, the production from fields whose development is approved, is expected to be reduced to between 25 and 55 mill. Sm³ with an expectation of 40 mill. Sm³. This forecast includes measures to improve resource exploitation which are expected to be approved within the next 10 years. The figure reveals uncertainty in the forecast for each individual year. In other words, it does not show different production profiles, and actual production may, in principle, exceed the expectation for part of the period and be below it for another part.

There will probably be a correlation between the resource estimates for the various fields owing to technological development, the price of oil, methodological errors, strategic assessments in each oil company, etc. This correlation will increase as a function of time. When assessing the uncertainty for production in fields that are onstream, and whose development is approved, it is therefore assumed that a gradual transition will take place from no correlation between the estimates now and total correlation between the estimates at the end of the period.

Fig. 6.16
Range of uncertainty for the basic scenario for oil production on the Norwegian continental shelf.

Figure 6.16 shows the basic scenario for the total oil production, with an uncertainty range. The oil production in the year 2001 is expected to be at its peak at 215 mill. Sm³, with an uncertainty range from 185 to 255 mill. Sm^3.. In 2010, the production is estimated to lie between 55 and 150 mill. Sm³, with an expectation of 100 mill. Sm³.

Figure 6.17 shows the total cumulative oil production, including the uncertainty, for the period from 1997 to the end of 2010. According to the basic scenario for 1997 up to and including 2010, between 2000 and 2800 mill. Sm³ of oil are expected to be produced with an expectation of 2400 mill. Sm³.

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