Norway's major oil fields are ageing and output has begun to decline just at the time when annual Norwegian gas exports are constantly setting new records.
But it could pay the country to show moderation. If too much gas is sold at too early a stage, large quantities of oil will be lost.
The licensees for cash cows like Troll, Oseberg, Heidrun, Åsgard, Gullfaks, Gullfaks South, Snorre and Grane must soon decide how much longer gas injection should continue on these fields to boost oil recovery, before converting them to full gas export.
A total of 450 billion standard cubic meters of gas had been injected in 28 fields on the NCS up to 31 December 2005--a little more than total gas reserves in the Ormen Lange field. Oseberg, Statfjord, Ekofisk, Åsgard and Sleipner East have received most.
A few fields, such as Oseberg, Ekofisk, Grane and Fram, have secured extra gas from other fields, but injection on the majority has utilized their own production.
The same gas can even be produced and injected several times until, with oil production close to ceasing, it is finally sold to the market.
Converting from oil production with gas injection to gas export is a natural part of the lifecycle on many fields. But its timing will be influenced by a number of factors. These include price expectations and sales prospects for oil and gas.
When gas is produced without being injected, the pressure in the reservoir will fall and it becomes harder to recovery any remaining oil.
Value for society
The government's goal is to recover as much as possible of the resources on the NCS in a manner which creates the largest possible value for Norwegian society.
"So selling gas before we're certain that every conceivable commercial solution for optimizing oil recovery has been exploited would not be good resource management," says principal engineer Leif Hinderaker in the NPD.
Producing residual crude volumes often calls for investment in new measures to improve recovery. And high oil prices mean that many solutions which were previously too expensive have now become affordable.
The NPD introduced a new target in 2005 for oil recovery from the NCS, which specifies that reserves will be grown by about five billion barrels (800 million standard cubic meters) by 2015.
Forecasts indicate that roughly 3.6 billion barrels will be matured to reserves over the decade, so the target calls for a further increase of 1.4 billion. Improved recovery from the major fields will be an important factor here.
Current plans for the 20 largest oil fields on the NCS would mean that roughly 22 billion barrels are left behind when production ceases.
That is more than the total amount of crude produced so far by Norway. These assets can never be fully recovered, but technical advances and new methods will greatly reduce the residual figure.
The recovery factor for Norway's major offshore fields has risen by almost 10 percent over the past decade, from just over 40 percent to roughly 50 percent.
But the current outlook gives grounds for concern, with oil output from these developments expected to decline sharply after 2010.
While Norway will remain a large exporter of both oil and gas for many years, the challenge is to find the right production balance between these commodities to avoid a big loss of crude.
"Taking correct - and bold - decisions on fields where the choice is between gas and oil will accordingly be crucial if we're going to reach our recovery target," says Mr Hinderaker. "We've got to think innovatively and long-term."
Which measures for improved recovery are relevant depends on their profitability and the technology available. Both these factors have changed from the time when oil prices were around USD 15 a barrel.
Yesterday's technological challenges are now solved. Huge strides in exploration, development, production and improved recovery have been made over decades of continuous progress.
"It's impossible to predict which opportunities will be opened up for us by tomorrow's technology," Mr Hinderaker observes.
"That's why it would be wise to exercise a good deal of boldness and a little optimism when taking decisions. Keeping gas in the reservoir longer and focusing instead on improved recovery could yield big rewards for both companies and society."
Section 4-1 of the Petroleum Activities Act - Prudent production
Production of petroleum shall take place in such a manner that as much as possible of the petroleum in place in each individual petroleum deposit, or in several deposits in combination, will be produced. The production shall take place in accordance with prudent technical and sound economic principles and in such a manner that waste of petroleum or reservoir energy is avoided. The licensee shall carry out continuous evaluation of production strategy and technical solutions and shall take the necessary measures in order to achieve this.
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