NPD Seeks 'Maximum Exploitation' of Norwegian Oil Fields

The activity level on the Norwegian shelf is high, with investments expected to rise in the next few years. In spite of this, we see that more than 50 percent of the oil remains in the fields. This is a source of concern for the Norwegian Petroleum Directorate (NPD), which is now calling for tougher measures from the companies to secure these assets.

"The fact that the companies on the Norwegian shelf are not able to achieve maximum exploitation of our fields poses a challenge. Although our recovery rate is among the best in the world, we are still not satisfied. If we manage to recover just one percent more, this would mean revenues in the hundreds of billions for Norway," said Director General Bente Nyland.

The NPD notes that time is running out for the companies to implement measures that can curb the decline in Norwegian oil production. Firstly, the companies must drill their own planned development wells. The companies must also decide to develop reserves and mature resources in discoveries so that they can also be produced. In 2015, a significant portion of our oil production must come from resources in fields and discoveries.

Total production in 2010 fell by four percent compared with the previous year, to 230 million standard cubic meters of oil equivalents. Declining overall oil production with a growing share of gas is the trend. The percentage of gas in total sales of petroleum is expected to increase from 46 percent in 2010 to 51 percent in 2015.

Production is declining in spite of vigorous activity. Not enough new reserves are found to offset current oil and gas production. The volume of undiscovered resources has been reduced from 3.3 to 2.6 billion standard cubic meters of oil equivalents. This decline can mainly be attributed to three factors: 400 million Sm3 o.e. have been discovered since the previous update in 2006. Disappointing drilling results in the deep water areas in the Norwegian Sea account for some of the decrease, while the results of surveys off Lofoten, Vesterålen and Senja also contribute to the write down.

"In light of this, we are eagerly awaiting the opportunity to map a new part of the continental shelf. The NPD has received appropriations of NOK 180 million to map the Norwegian shelf north of the 68th parallel, including the new area between Norway and Russia. We are just waiting on parliamentary ratification of the border by the Norwegian Storting and the Russian Duma," said Nyland.

The Director General is pleased by the 16 discoveries on the Norwegian continental shelf last year – ten in the North Sea and six in the Norwegian Sea. 41 exploration wells were completed in 2010, of which 32 were wildcat wells.

At the same time, the authorities approved plans for development and operation (PDOs) for three fields in the North Sea and one in the Norwegian Sea.

There has been a temporary decline in investments in the petroleum sector in 2010. Investments in 2011 are expected to be around NOK 150 billion, which is slightly higher than the peak year, 2009.

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