Crunch Year Ahead For Norway's Arctic Oil Adventure

Article title
Rising costs, lack of infrastructure and a string of poor exploration results may mean Norway's Arctic oil exploration peaks this year, energy officials say.

Reuters

HAMMERFEST, Norway, April 1 (Reuters) - Rising costs, lack of infrastructure and a string of poor exploration results may mean Norway's Arctic oil exploration peaks this year, energy officials said on Tuesday.

Drilling in the Barents Sea will reach a record high this year with 12 wells but the sector could quickly shift its focus to more promising regions if the heavy investment fails to pay off, especially as firms around the world are already cutting back capital spending plans.

"There are dark clouds gathering on the horizon because of rising costs and investment cuts by energy companies," oil minister Tord Lien told Reuters on the sidelines of a conference. "This could be a critical year for projects in the Barents Sea."

"Costs are rising too high and too fast and the Norwegian costs have increased a bit more than elsewhere," he added.

Exploration in 2013 was mixed and the few notable successes were more than offset by either dry wells or small gas discoveries, which tend to be uncommercial because the area lacks the extensive pipeline infrastructure found in places like the North Sea.

"The cost per produced unit (of oil and gas) in Norway has increased dramatically, by tenfold over the past 10 years," said Bente Nyland, the director of the Norwegian Petroleum Directorate.

"The problem is that we have a lot of small discoveries but no means of getting out the gas."


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