The Shelf in 2016

12/01/2017 Oil and gas production on the Norwegian shelf is high. The adjustment process has been extensive, but the cost reductions implemented by the industry will lay the foundation for profitable activity for many years to come.

Oil production increased for the third consecutive year in 2016, and gas production was at the same level as the previous year, which was a record year for production. The high level is in part due to good regularity on the fields, and the fact that various efficiency measures have led to substantial reductions in operating and exploration costs.

“The foundation has been laid for increased profitability in both existing and new projects. This is essential in order to maintain a high activity level for upcoming years,” says Director General Bente Nyland. She believes that cost reductions of 30 to 50 per cent in development projects should mean that companies will view more projects as being profitable.

“We must prevent the focus on short-term profits from coming at the expense of long-term value creation for society,” she says.

Investments on the Norwegian shelf in 2016 amounted to NOK 135 billion, about NOK 50 billion less than the peak years 2013 and 2014. Nyland predicts that the current year and next year will also be challenging for the industry, but investments are then expected to increase again. A number of new development projects are undergoing evaluation, and an extensive portfolio of new field developments will be continued and developed over the next few years.

Five Plans for Development and Operation (PDO) were submitted in 2016, with a total investment value of NOK 23 billion. Seven development projects with a total value of NOK 233 billion are currently ongoing.

After several years of high exploration activity, 36 exploration wells were drilled in 2016, 20 fewer than the preceding year. Eighteen discoveries were made, one more than in 2015. Exploration activity was highest in the North Sea, where a total of 14 discoveries were made. Two discoveries were made in both in the Norwegian Sea and the Barents Sea.

“Many of the discoveries are small, but most are located near existing infrastructure. This means that they can quickly become profitable developments if they are tied in to operational fields and facilities,” says Nyland.

According to the Director General, there is a great deal of uncertainty associated with exploration activity going forward. This depends on new discoveries being followed up, and presumes that the industry will be awarded new acreage for exploration.

“It is very important to maintain exploration activity at a high level in order to maintain stable production in the future,” she says.

Despite the decline in the number of exploration wells, the number of applications and awards in the most recent licensing rounds demonstrates that the interest in the Norwegian shelf is still high. Fifty-six production licences were awarded in APA 2015, while ten were awarded in the 23rd licensing round. All awards in the 23rd round were located in the Barents Sea, and three are located in the recently opened area in the southeastern Barents Sea. The first exploration well in this area will be drilled as early as this year.

The probability of making new big discoveries is also highest in this area, according to Bente Nyland.

“New surveys also indicate significant opportunities in areas that are not open for petroleum activities,” she concludes.

 

 


The Shelf in 2016

Updated: 26/01/2017

Latest news

Production figures December 2021
20/01/2022 Preliminary production figures for December 2021 show an average daily production of 2 108 000 barrels of oil, NGL and condensate
APA 2021: 28 companies offered ownership interests
18/01/2022 18 January 2022, 28 companies have received offers of ownership interests in a total of 53 production licences on the Norwegian Shelf in the Awards in Predefined Areas (APA) 2021.
Dry well east of the Ormen Lange field in the Norwegian Sea – 6306/9-1
17/01/2022 Lundin Energy Norway AS, operator of production licence 886, is in the process of concluding the drilling of wildcat well 6306/9-1.
Record-high revenues from the Norwegian shelf
13/01/2022 The combination of high production of oil and gas from a total of 94 fields, significant demand and high commodity prices led to a historically high level on the State's export revenues from petroleum. Much of this is due to record-high gas prices.
Follow the livestream of The Shelf 2021
12/01/2022 Thursday, 13 January 2022 from 10:00 Director General Ingrid Sølvberg gives a summary of the Shelf in 2021.
Oil discovery near the Fram field in the North Sea – 35/10-7 S and 35/10-7 A
07/01/2022 Equinor Energy AS, operator of production licence 630, has concluded the drilling of wildcat well 35/10-7 S and appraisal well 35/10-7 A.
Drilling permit for wells 25/2-23 S, 25/2-23 A and 25/2-23 B
28/12/2021 The Norwegian Petroleum Directorate (NPD) has granted Aker BP ASA a drilling permit for wells 25/2-23 S, 25/2-23 A and 25/2-23 B, cf. Section 13 of the Resource Management Regulations.
Smarter use of data can increase value creation
21/12/2021 The Norwegian Petroleum Directorate (NPD) has taken an initiative to discuss with the industry which steps can be taken to increase value creation through better use of data.
Production figures November 2021
21/12/2021 Preliminary production figures for November 2021 show an average daily production of 1 999 000 barrels of oil, NGL and condensate.
Five companies want to store CO2
16/12/2021 The Ministry of Petroleum and Energy has received applications from five companies in connection with the announcement of two areas associated with injection and storage of CO2 on the Norwegian continental shelf.