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Page added on November 7, 2017

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Norway’s Oil Sector Faces Existential Crisis

Production

Exploration activity in the North Sea – the most mature area of Western Europe’s biggest oil producer – is at an 11-year low this year, which is a concern for the industry’s regulator, the Norwegian Petroleum Directorate (NPD).

“That worries me,” NPD Director General Bente Nyland told Bloomberg in a recent interview, voicing the industry concern that without new oil discoveries, especially in mature areas with well-connected infrastructure, the decline in Norway’s oil production would be even bigger than expected.

Following a continual decline between 2001 and 2013, Norway’s crude oil production rose last year for the third year running, but according to the Norwegian Petroleum Directorate (NPD), oil production this year would be nearly half the volume from the peak in 2000-2001.

Two huge fields discovered in 2010 and 2011, Johan Sverdrup in the North Sea, and Johan Castberg in the Barents Sea, are expected to start operations in 2019 and 2022, respectively, and will lift Norway’s oil production in the early 2020s compared to expected declines in 2018 and 2019.

But after 2025, production and activity are expected to significantly drop off unless there are new discoveries, according to oil major Statoil.

Norway’s Ministry of Petroleum and Energy, and NPD say:

“Production from new fields that come on stream will compensate for the decline in production from ageing fields. However, in the longer term, the level of production will depend on new discoveries being made, the development of discoveries, and the implementation of improved recovery projects on existing fields.

Encouraged by recently opened areas and potentially huge yet-to-be-discovered resources, oil companies launched a record exploration drilling campaign in Norway’s Barents Sea this year. But the drilling campaign was a flop, and even the most promising wildcat yielded no oil.

Companies are vowing to return next year for more exploration in the frontier regions, but they’ve been neglecting the North Sea—the most mature area where Norway’s petroleum history began, and which made the country one of the world’s richest.

The North Sea is still the powerhouse of Norway’s oil with 62 fields in production as of the end of 2016, compared to 16 fields in production in the Norwegian Sea and two fields—Snøhvit and Goliat­—in the Barents Sea.

This year oil companies drilled a record number of wells in the Barents Sea, which is thought to hold 49 percent of Norway’s undiscovered resources, while the North Sea has 24 percent of undiscovered oil and gas, and the Norwegian Sea 27 percent.

The North Sea’s huge fields have pumped oil and gas for decades and are now maturing. Therefore, Norway needs to add more resources in the North Sea before some of the existing infrastructure, including platforms, is folded and decommissioned, according to NPD’s Nyland.

In an overview of the Norwegian Continental Shelf for 2016, Nyland pointed to “a great deal of uncertainty associated with exploration activity going forward.”

“It is very important to maintain exploration activity at a high level in order to maintain stable production in the future,” she said.

The Barents Sea was a large part of exploration activity this year, but results were underwhelming.

“Exploration drilling in the Barents Sea in 2017 and 2018 will help clarify future opportunities in the Barents Sea and the Norwegian continental shelf,” Statoil says, but its chief executive Eldar Saetre also points out that the industry needs to heed what NPD’s Nyland has been saying about neglecting the North Sea.

 

“If we continue to see a trend where we’re not making bigger discoveries, we will have to search more in mature areas,” Saetre told Bloomberg in an interview. “This is an important issue,” he added.

As juicy as it sounds, the Barents Sea holds nearly half of Norway’s undiscovered resources, but the North Sea has the developed infrastructure to link new discoveries to existing fields and make even smaller new finds commercially viable when linked to producing areas. So, returning to the old stomping grounds may ultimately pay off.

oilprice.com



7 Comments on "Norway’s Oil Sector Faces Existential Crisis"

  1. Cloggie on Tue, 7th Nov 2017 6:55 am 

    Kind advise to Norway: with offshore wind never a dry hole.lol

    Unfortunately Norway has little potential for (monopile-based) offshore wind, because no shallow water.

    It is not a coincidence that it is Norway that is promoting floating offshore wind:

    https://www.youtube.com/watch?v=NaBML1FacTk

    (that works with depths up to 1000 m)

    Lucky Danish, German, Dutch and British bastards: economic value North Sea as energy province: 200-300 billion euro (wind, seaweed, algae).

    https://deepresource.files.wordpress.com/2017/01/dieptekaart-noordzee.gif

    Mountainous, icy Norway, now is a very rich country due to oil and gas, but will probably have to resort to sheep farming after the end of the oil age, although they do have an important trump card for the coming renewable energy age:

    https://deepresource.wordpress.com/2012/10/17/norway-wants-to-become-europes-battery/

    https://deepresource.wordpress.com/2013/06/13/norway-europes-green-battery/

  2. Davy on Tue, 7th Nov 2017 6:59 am 

    deepresource is an empty link and a personal blog source. Please give us 3rd party links with words to support your assertions or just call them naked opinions.

  3. Cloggie on Tue, 7th Nov 2017 7:12 am 

    deepresource is an empty link and a personal blog source. Please give us 3rd party links with words to support your assertions or just call them naked opinions.

    What a desperate and insane remark.

    All your posts are naked personal opinion as well!!!! All posts here are. Every newspaper article is.

    What a childish fool you are.

  4. Davy on Tue, 7th Nov 2017 7:29 am 

    You know you hit the spot when an extremist cries, whines, and gnashes his teeth. Cha Ching FRAUD

  5. OFT on Tue, 7th Nov 2017 7:40 am 

    The challenge facing these traditional IOCs and NOCs is the long-term commitment of huge financial resources and time, to develop a market where the future certainty of sales – once a given – is now looking more precarious with each year. Look at the Goliat Field:
    Licencce awarded 1997
    Field discovered 2000
    Development approved 2009
    First oil 2016
    Investors will have the ultimate say.

  6. GregT on Tue, 7th Nov 2017 9:20 am 

    “You know you hit the spot when an extremist cries, whines, and gnashes his teeth. Cha Ching FRAUD”

    Just because you do not agree with him, does not make him an extremist or a fraud, and he didn’t whine or gnash his teeth. Those would be the delusions brought on by your own emotional insecurities clouding your ability to think and behave like a rational adult.

    And, I might add, those emotional insecurities stem from your inability to identify yourself as an individual, while clinging to the false belief that you are a meaningful part of a much larger group, which BTW, doesn’t give a rat’s ass about you, or anything that you say or do, as long as you be a good boy, and continue to play their games, by their rules.

  7. Davy on Tue, 7th Nov 2017 9:34 am 

    “Just because you do not agree with him, does not make him an extremist or a fraud, and he didn’t whine or gnash his teeth. Those would be the delusions brought on by your own emotional insecurities clouding your ability to think and behave like a rational adult.”
    Wow, widdle g, if that wasn’t an “I am an extremist moment then I don’t know what is. You right there admitted to who you are and that is a flaming anti-American nut case. You are a stalker and a prick that supports the worst of the board extremism through mad kat and wow, now, dumb n dutch.

    “And, I might add, those emotional insecurities stem from your inability to identify yourself as an individual, while clinging to the false belief that you are a meaningful part of a much larger group, which BTW, doesn’t give a rat’s ass about you, or anything that you say or do, as long as you be a good boy, and continue to play their games, by their rules.”
    Spare me your amateurish psychological analysis along with your childish view of the greater world. You have been too long up in those lonely hills of BC. BTW, I was wondering if your absence was self-imposed because you were getting rather neurotic before you went awol. Did your therapist advise against internet forums because of your anger issues? Sorry, widdle g, you are a basket case of personal issues.

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