Oil production continues to fall. Making a determined effort to recover the oil resources from the large fields has become an urgent matter. If the licensees do not make the necessary decisions, profitable resources could be lost.
With the plans currently in place, 54 per cent of the oil will remain in the reservoirs. A mere one per cent increase in the recovery rate can generate an income of NOK 100-150 billion for the Norwegian society. The production is not replaced by new reserves to a sufficient extent.
Of the authorities' objectives of a reserve growth of 800 million standard cubic metres (Sm3) of oil (five billion bbls oil) from 2005 to 2015, 64 million Sm3 (402 million bbls) of oil were recorded as new reserves in 2009. So far, a growth in oil reserves of 294 million Sm3 (1.85 billion bbls) has been achieved since 2005.
”The production will not appear magically. The Norwegian Petroleum Directorate is putting pressure on the oil companies to increase production from existing oil fields. This is good resource management, and it makes social economic sense,” says Director General Bente Nyland.
She is pleased that a record number of exploration wells were drilled last year, a total of 65 were spudded. An impressive 72 exploration wells were completed, leading to 21 new discoveries in the North Sea and seven new discoveries in the Norwegian Sea, which is also a record. However, most these discoveries are small.
Exploration well record
• 65 explorationwells
- 44 wildcatwells
- 21 appraisalwells
- 72 explorationwellshave beencompleted
• The North Sea: 46 explorationwells - 21 discoveries
• The NorwegianSea: 19 explorationwells - 7 discoveries
The NPD's prognosis for exploration wells in 2010
• 40 - 50 explorationwells
- The North Sea: 29 -35
- The NorwegianSea: 9-12
- The Bartens Sea: 2-3
Companies: Statoil, Det norske oljeselskap, Wintershall, Lundin, Talisman, ConocoPhillips , Centrica, Nexen, Eni, Premier, BG, Total, Noreco, Shell, Exxon Mobil
Discoveries in 2009
• 28 newdiscoveries
- The North Sea: eight oil discoveries, four oil/gas discoveries, two gas/condensate discoveries, three gas discoveries
- The NorwegianSea: one oil discovery, one oil/gasdiscovery, one gas/condensate discovery, four gas discoveries
• Provenresources
- 36 -94 million Sm3 recoverable oil/condensate
- 37 -154 billion Sm3 recoverable gas
Exploration players: spudded exploration wells in 2009
- Statoil ASA: 29
- ExxonMobil, Lundin, Marathon, Det norske oljeselskap: 5
- BG Norge AS: 4
- Wintershall: 3
- Shell, Talisman: 2
- Noreco, Petrocanada, GDF Suez, Total, VNG: 1
Resources overview as of 31 december 2009
• Total resourcesapprox. 13 billion Sm3o.e. (Range of uncertainty 10-16 billion Sm3o.e.)
• 5.3 billion Sm3o.e. produced
• 4.8 billion Sm3o.e. remaining proven resources
• 3.3 billion Sm3o.e. undiscovered (expected value)
Status of fields and discoveries as of 31 December 2009
• 65 fields in production
• 8 fields being developed
• 82 discoveries being evaluated
• Approximately289 projectsfor improvedrecoveryin existingfields
• 76 million Sm3o.e. with positive development decisions in 2009
Geological CO2 storage
• The NPD maps suitable areas for storage of CO2
• Joint European regulations for such storage will be in place by June 2011. In a longer term perspective, import of CO2 from Europe to the Norwegian shelf may be of interest.
• CO2 is currently being stored on the Norwegian shelf, at Sleipner in the Utsira formation and at Snøhvit in the Tubåen formation
• CO2can be used to extract more oil from the fields
• Shut-down fields can be suitable locations for storing CO2
The shelf in 2009
Petroleum production
In total, 238.6 million saleable standard cubic metres of oil equivalents (Sm³ o.e.) were produced in 2009. This is 24.6 million Sm³ o.e. less than in the record year 2004. The figure represents a one per cent decline from 2008, but exceeds the production forecast for 2009.
Total production of petroleum in 2010 is expected to be about 236 million Sm³ o.e. Production is then expected to taper off to about 223 million Sm³ o.e. in 2014. During the five-year period up to 2014, a production of 1140 million Sm³ o.e. is expected. In the five-year period 2004-2008, production amounted to about 1225 million Sm³ o.e. The gas percentage of the total petroleum sales is expected to increase from 43 per cent in 2009 to 50 per cent in 2014.
In 2009, 103.5 billion Sm³ gas was sold, 102.7 billion Sm3 40 MJ gas. This is an increase of 4.3 billion Sm3 compared with 2008 (+4 per cent). Gas sales are expected to continue to rise in the coming years.
The production of oil in 2009 will probably end up at 115.5 million Sm³ (1.99 Mbbls per day) compared to 122.7 million Sm3 (2.11 Mbbls per day) in the preceding year. 58 fields contributed to oil production in 2009, in addition to a discovery which is undergoing test production. Continued focus on drilling of new development wells and other actions to improve recovery are important for the oil production on the Norwegian shelf.
The oil production in 2009 will likely be 4 per cent higher than the estimates prepared by the Norwegian Petroleum Directorate in the autumn of 2008.
The Norwegian Petroleum Directorate prepares forecasts with a confidence interval of 80 per cent. This means that there is a 10 per cent likelihood of the production being lower than the lowest estimate and a 10 per cent likelihood that the production will be higher than the highest estimate.
For 2010, the Norwegian Petroleum Directorate predicts that oil production will be somewhat lower than in 2008, 108.7 million Sm³ (1.87 Mbbls per day). The uncertainty in 2010 is estimated at +/- 13 per cent. The uncertainty is in particular related to the reservoirs' ability to deliver, drilling of new development wells and the regularity of the fields in operation.
For 2010, forecasts for production of condensate and NGL have also been prepared, 4.2 million Sm³ and 8.9 million tonnes, respectively. Total liquid production has therefore been estimated at 129.9 million Sm3 o.e. (2.24 Mbbls o.e. per day).
During the period 2010-2014, oil production is expected to fall compared with the preceding five-year period, i.e. an estimated total production of 491million Sm³ oil. This is 160 million Sm³ less than in the previous five-year period. 99 per cent of the oil production during the period is expected to come from fields in operation or from fields which have been approved for development. This includes measures to improve recovery from the same fields. Production which has been approved will account for 91 per cent.
The resource accounts (preliminary figures as of 31 December 2009)
There are no significant changes in the total estimate for the petroleum resources on the Norwegian shelf as of 31 December 2009. The estimate is 13 billion standard cubic metres of oil equivalents (Sm3 o.e.) The accounts show an increase in gross oil reserves of 64 million Sm3.
5.3 billion Sm3 oil equivalents (o.e.) have been produced. 82 discoveries and almost 289 projects for increased recovery from fields in production, along with approved projects, results in a portfolio of 4.8 billion Sm3 o.e. of remaining, proven resources.
The gross increase in oil reserves in 2009 was 64 million Sm3. The largest increases in oil reserves come from the Oseberg, Alvheim and Åsgard fields. In addition, the resources in Goliat and Oselvar have matured into reserves.
Of the authorities' goal of maturing 800 million Sm3 of oil to reserves within 2015, 64 million Sm3 of oil (or about 403 Mbbls) have been recorded as new reserves in 2009. During the period 2005 to 2009, the total growth in reserves has been 294 million Sm3 of oil.
Exploration
In 2009, 28 new discoveries were made and 65 exploration wells were spudded on the Norwegian continental shelf. This is nine more exploration wells than in 2008 and a new record.
Of the 65 exploration wells, 44 are wildcat wells and 21 are appraisal wells. 72 exploration wells were completed. 21 of the new discoveries were proven in the North Sea, while the remaining seven are located in the Norwegian Sea.
Focus on the exploration in the North Sea
The exploration activity level has been the highest in the North Sea, and this is also where the majority of the discoveries have been proven. The discoveries are generally small, and close to existing fields.
In the south, Talisman Energy Norge AS has proven oil in wildcat well 15/12-21 north of the Varg field.
Further north, near the Sleipner Vest field, Statoil Petroleum AS has proven gas/condensate in development well 15/9-B-1, which also had exploration targets.
In the neighbouring block, north of Sleipner, ExxonMobil Exploration & Production Norway AS has proven minor amounts of gas/condensate in well 15/6-10. These discoveries were made in rocks from the Jurassic Age.
East of this area, in the southeast part of the North Sea, BG Norge has delineated the old 17/12-1 Bream discovery, proven in 1972 in Jurassic reservoir rocks, with wells 17/12-4, A and B. Extensive data acquisition and sampling took place. In addition, a successful production test was carried out.
Further north, southwest of the Utsira height, Lundin Norway AS has delineated the 16/1-8 (Luno) discovery, proven in 2007, with two wells. The first the well, appraisal well 16/1-10, came in as expected. The second, wildcat well 16/1-12, was drilled in a new segment south of the discovery. Here, oil was proven in complex reservoir rocks of jointed bedrock.
In the Utsira height, in the eastern neighbouring block, Statoil has proven oil and gas in well 16/2-5. The discovery was made in a sandy conglomerate of Jurassic/alternatively Triassic/Permian rocks.
South of the Alvheim field, Maraton Petroleum Norge has proven oil in well 24/9-9 S in the Hermod formation in Paleocene rocks. The discovery was immediately delineated with the wells 26/8-9 A and B.
The same company has also made two minor discoveries near the Alvheim field. Well 25/4-10 S proved oil, while well 25/4-10 A proved gas. Both discoveries are in Paleocene reservoir rocks.
In the Balder/Jotun area, ExxonMobil has proven two new oil discoveries in wildcat wells 25/8-16 S and 17 S. Both discoveries were made in the Heimdal formation in Paleocene rocks. Both were delineated with disappointing results.
Further north, in the area around the shut-down Frigg field, Statoil has proven two new discoveries. Just east of the field, in wildcat well 25/2-17, Statoil has discovered oil in the Frigg formation in lower Eocene rocks, while northeast of the field, in wildcat well 30/11-7, gas/condensate was discovered in the Brent group in Jurassic rocks. The discovery was delineated with well 30/11-7 A.
In the Oseberg area, Statoil has made four new discoveries. In the southern part of the area, oil and gas have been proven in wildcat well 30/9-22 in Jurassic reservoir rocks. In the block west of well 30/8-4, oil has been proven in the Brent group in Jurassic rocks. In the block north of well 30/5-4 S, a 550-metre gas column has been proven in one reservoir with varying quality, belonging to the Hegre group in Triassic rocks. Well 30/5 4 A, drilled as a sidetrack, proved gas in the Heather formation in rocks from the Late Jurassic.
Northeast of the Oseberg area, in block 35/12 near the Fram field, Wintershall Norge ASA has discovered oil and gas in wildcat well 35/12-2. Oil and gas were proven in the Sognefjord formation in the Late Jurassic, and oil in the Brent group in the Middle Jurassic.
In the Tampen area, Statoil Petroleum AS has made three new discoveries in Jurassic rocks. Southeast of the Gullfaks field, oil was proven in the Statfjord formation in wildcat well 34/7-34. South of the Visund field, discoveries were made in the two wells 34/8-13 S and A. Both discoveries were made in the Brent group. In the same area, the discovery 34/8-14 S was also proven in 2008, and was delineated with the wells 34/4-14 B and D.
In the northern North Sea, discovery 35/1-1, proven in 2007, has been delineated by well 35/1-2. The deposit was tested with good results.
Further east, in the vicinity of the old Agat discovery, proven in 1974, VNG Norge has proven gas in wildcat well 35/3-7. The gas was found in reservoir rocks from the Middle Cretaceous.
New discoveries in the Norwegian Sea
Exploration in the Norwegian Sea has taken place in both deep-sea areas and around the fields. In the far west, A/S Norske Shell has proven gas in wildcat well 6603/12-1. The discovery, named 'Gro', is scheduled for delineation in the near future.
Somewhat further north, Statoil has found gas in wildcat well 6705/10-1. Both discoveries were made in rocks from the Late Cretaceous.
Furthermore, Shell has delineated the Ormen Lange field with well 6305/5-3. Gas was encountered in the Egga reservoir unit. The result from this well makes it uncertain whether the original upside potential can be realised.
Near the fields, five new discoveries have been made by Statoil Petroleum AS, all in rocks from the Jurassic Age. In wildcat well 6407/8-5 S, west of the Draugen field, oil has been found in the Båt group. Further north, on the Mikkel field, minor amounts of gas have been proven in the Rogn and Garn formations. South in the Åsgard area, oil and gas were proven in well 6407/2-5 in the Garn and Ile formations.
Further north in the area, between the Skarv and Norne fields, two minor gas discoveries have been made. In wildcat well 6507/3-7, gas was proven in the Fangst group, while wildcat well 6507/3-8 proved gas in the Fangst and Båt groups.
West of this area, Total E&P Norge AS has delineated gas discovery 6506/6-1 (Victoria) with well 6506/9-1. The well confirmed that the discovery is complicated, and the estimate of the discovery's size has been reduced.
About 17 kilometres north-northeast of the Norne field, the discovery 6608/10 -12 S, proven late in 2008 in the Åre formation, was delineated with well 6608/10-12 A.
One well in the Barents Sea
There has been little exploration activity in the Barents Sea. Only one well was completed. This was well 7223/5-1, which delineated the discovery 7226/2-1 (Obesum), proven in 2008.
The exploration activity level is expected to fall from last year. The number of exploration wells will probably be between 40 and 50.
Investments
In a year where the financial crisis resulted substantial reductions in incoming orders in several industries, the investments in the petroleum sector remained at a historically high level. In that regard, the petroleum sector was an important buffer for the Norwegian economy in a troubled year for the international economy.
Of the investments on the Norwegian shelf, a large share is related to long-term contracts. Decisions made in 2008 and earlier have delayed the petroleum sector's response to falling oil prices into 2009. At the same time, scheduled and potential new projects have been assessed in light of falling oil prices and changes in the international economy.
However, the oil price in 2009 rose to a level which ensures profitability for a number of projects. At the same time, the high cost level remains a challenge. In the near future, the annual investments are expected to exceed NOK 100 billion by a considerable margin.
Development
In 2009, the authorities approved the plans for the development and operation (PDO) of the Goliat oil field in the Barents Sea and the Oselvar oil and gas field in the North Sea. In 2010, as many as seven new development plans may be submitted for approval.
The Eni-operated Goliat field, 50 kilometres southeast of the Snøhvit field and 85 kilometres northwest of Hammerfest, is the first oil field to be developed in the Barents Sea. The licensees plan to start up in 2013, and a floating facility will process, store and load the oil on the field. The intention is for Goliat to be partially supplied with power from land.
Dong E&P Norge AS is the operator of Oselvar, about 250 kilometres southwest of Stavanger. The field will be developed with a seabed installation with three production wells, and the oil and gas will be sent via pipeline to the Ula platform for processing. The production is scheduled to start in November 2011.
The authorities also approved a PDO for installation of a third rich-gas pipeline from Troll A to the processing facility at Kollsnes, and for gas injection from Troll B. These two projects will contribute to extend the lifespan of the Troll field.
A PDO exemption was granted for Vega Sør Olje and for Snorre Eksport, and Statoil submitted an application for exemption for Njord Nordvestflanken (6407/7-6).
Postponed developments
Several development plans have been postponed, but will probably be processed in 2010. This applies to 6507/2-2 Marulk (operator Eni), 15/3-1 S Gudrun and 15/3-4 Sigrun (operator Statoil), 15/12-19 Pi Nord and 6/3-1 Pi Sør (operator BG) and 1/5-2 Flyndre (operator Maersk Oil), which is a minor discovery on the border between the UK and Norwegian shelf.
PDOs may be submitted for the discovery 34/10-23 Valemon (operator Statoil), but the resource base there is uncertain. Frøy (operator Det norske oljeselskap) is a new development of a shut-down field, where the PDO was postponed in 2008 due to the financial crisis. In addition, the operator ConocoPhillips may submit a PDO for a new living quarters platform on the Ekofisk field.
Due to profitability and/or complexity challenges, three discoveries on the border between Norway and the UK may be postponed for several years. This applies to Statoil-operated 15/8-1 Alpha, which is a subsea satellite to the Sleipner fields, and 6406/3-2 Trestakk - a subsea satellite to either the Åsgard field or Kristin field. It also applies to Lundin-operated 24/6-1 Peik.
Environment
To a large degree, emissions and discharges from petroleum activities are a result of the production. Increased emissions and discharges result from longer distances to the market and extended lifetime for the fields.
Emissions to air consist mostly of exhaust gases from combustion of gas in turbines, flaring of gas and combustion of diesel. The most important of these exhaust gases are carbon dioxide (CO2) and nitrogen oxides (NOx).
The petroleum sector is responsible for about one-fourth of the total Norwegian greenhouse gas emissions. The majority of the emissions from this sector come from energy production on the facilities on the continental shelf.
In general, the emissions vary between fields and over the lifetime of the individual field. According to the forecast from the Norwegian Petroleum Directorate, the CO2 emissions will increase until 2019, and then decrease. The major causes of the increase are extended lifetime as well as longer transport distances to the gas markets.
The Norwegian Petroleum Directorate is in the final stages of the work on Climate Cure 2020. The purpose of Climate Cure 2020 is to identify measures and means which can reduce greenhouse gas emissions in Norway and thus meet the requirements in the Storting's climate settlement.
The Norwegian Petroleum Directorate is responsible for an industry sector analysis which will take a closer look at measures and means in the petroleum industry. In addition, we are preparing a report on capture, transport and storage of carbon dioxide which includes both the petroleum industry and land-based industry with significant emissions. Climate Cure 2020 will be unveiled at a seminar in Oslo on 15 February.
Geological storage of carbon dioxide is a focus area for the Norwegian Petroleum Directorate. Safe repositories must be in place if capture, transport and storage of carbon dioxide is to become a viable method for reducing greenhouse gas emissions. Joint European regulations for storage of carbon dioxide will be introduced in June 2011.
Norway has, from the very beginning of the petroleum activities on the Norwegian shelf, been concerned with reducing gas flaring. Flaring on the Norwegian shelf is minor compared with other petroleum-producing countries. The Norwegian Petroleum Directorate has involved itself in an international cooperation project in order to reduce flaring globally. This may result in both reduced emission of greenhouse gases and increased creation of value in the countries where this work succeeds.
The Norwegian Petroleum Directorate has participated in the work on the comprehensive management plan for the Norwegian Sea, presented to the Storting in spring 2009. In addition, the Norwegian Petroleum Directorate participates in the preparatory work for the management plan for the North Sea and the updated management plan for the Barents Sea and the sea areas off Lofoten.