NPD Says Norwegian Shelf Exploration Sluggish

The Norwegian Petroleum Directorate is concerned about the low level of exploration activity on the Norwegian shelf. According to the NPD's official figures, 19 exploration wells were spudded in 2002 and as of the beginning of 2003, only about 15 exploration wells are planned for this year. This represents the lowest level of exploration activity since the early 1970s.

An exploration well is either a wildcat well or an appraisal well. There are several factors that make it difficult to predict the exact number of exploration drilling operations during the course of a year. If discoveries are made, they will often lead to appraisal wells that were not initially planned, and even firm plans can change during the course of a year depending on new information, access to drilling rigs, delays, etc.

Budget estimates
The NPD's estimates are based on what has been adopted in the firm budgets in the various licenses, and we expect that approximately 15 - 20 exploration wells will be drilled this year - in other words, the same activity level as in 2002. Of these, approximately 10-12 are wildcat wells.

Three wells have been completed so far this year, including two discoveries (link), while two exploration wells are currently being drilled. The NPD has also received five new drilling programs with start-up planned for May - June.

Of the six production licenses awarded in the 17th licensing round, so far only one or two drilling operations are planned for this year.

Exploration drilling is important
About 60 percent of the Norwegian shelf has been opened to exploration activity, but only nine percent of this area is covered under current production licenses. The NPD's calculations indicate that the volume of undiscovered resources hidden on the Norwegian shelf is at least as large as the volume that we have produced and sold over the past 30 years.

Enormous gains can be realized through good resource management. Two potential future paths for Norwegian petroleum production were introduced in Storting White Paper No. 38 - On the oil and gas activities; the decline path and the long-term development path. Up to the year 2050 the difference in value creation between these two scenarios is more than 2 000 billion kroner at current oil prices.

The authorities and the industry agree that the goal is the long-term development path. However, the way forward is difficult and challenging, and many exploration wells will have to be drilled to prove new resources.

Company: Norwegian Petroleum Directorate more info
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