The Norwegian Petroleum Directorate (NPD) believes that oil reserves could grow by 1200 million standard cubic metres (Sm 3 ) over the next ten years. The new target was launched when the NPD presented its resource report on 3 April.
The report provides an overview of the resources in fields and discoveries on the Norwegian shelf and describes the opportunities for creating maximum value from the remaining resources. So far, the petroleum industry has created values worth more than NOK 11 000 billion for the Norwegian society.
More than 60 per cent of the remaining resources are located in fields and discoveries, while the rest have not yet been discovered.
The NPD’s forecasts estimate growth in oil reserves of 950 million Sm3 over the next ten-year period. The new target represents an additional increase. To realise this, future developments will have to be larger than indicated in current plans, more measures must be implemented to improve recovery and new discoveries must be made.
More than 400 discoveries have been made on the Norwegian shelf since the very first discovery in 1967 through the end of 2013. Half of these have either been developed or are undergoing development, while 24 per cent are being considered for development. Development is unlikely for the remainder of the discoveries.
With the exception of Johan Sverdrup and Johan Castberg, the discovery portfolio mainly consists of smaller discoveries.
So far, around NOK 3000 billion ($502 billion) has been invested in installations, pipelines and facilities on the Norwegian Shelf. Continued exploitation of this infrastructure is essential for future value creation on the shelf. The expectation is that most of the discoveries will be developed with seabed solutions to nearby fields, so they can make use of established infrastructure.
“This will mean lower unit costs and extended field lifetime, which also means that we can implement improved oil recovery measures,” says director Jan Bygdevoll of the NPD.
The NPD estimates that oil production will remain stable, and that gas production will increase somewhat in the years to come. Future developments will gradually contribute an ever-increasing share of the production.
“Cost trends in the petroleum industry pose a challenge, both for developing discoveries and for project commitments that can increase recovery from a field. For example, drilling costs have more than doubled during the last 10 years. This cost growth could threaten profitability of future projects,” says Bygdevoll.
While a high cost level means substantial challenges, there are also significant remaining resources on the shelf. This is an important motivation for finding solutions and realising resources. The industry has faced major challenges before, and has found solutions. On this basis, the NPD takes a positive view of further development of the Norwegian shelf. The NPD’s forecasts presume that the oil companies can develop and implement profitable projects, and that established infrastructure on the Shelf will be utilised soundly.