NORWAY'S PETROLEUM PRODUCTION WILL UP
NPD - The Norwegian Petroleum Directorate's forecasts show that, after a minor decline in 2019, oil and gas production will increase from 2020 and up to 2023. Overall production will then approach the record year of 2004.
"The activity level on the Norwegian Shelf is high. Production forecasts for the next few years are promising and lay a foundation for substantial revenues, both for the companies and the Norwegian society. There is considerable interest in exploring for oil and gas," says NPD Director General Bente Nyland.
Exploration activity was considerably higher last year in than in the two previous years. The number of exploration wells has increased dramatically, and 87 new production licences were awarded, which is a new record.
A total of 53 exploration wells were spudded last year, compared with 36 in 2017. The companies' plans show that this number will probably remain at the same high level in 2019. Eleven discoveries were made, with a preliminary resource estimate of 82 million standard cubic metres of recoverable oil equivalents (o.e.). This is higher than each of the three previous years.
"The high level of exploration activity proves that the Norwegian Shelf is attractive. That is good news! However, resource growth at this level is not sufficient to maintain a high level of production after 2025. Therefore, more profitable resources must be proven, and the clock is ticking," says Nyland.
She notes that nearly two-thirds of the undiscovered resources are in the Barents Sea. This area will be important for maintaining high production over the longer term.
Norway is an important long-term supplier of gas to Europe. Gas can contribute to more sustainable development in three ways: by providing reasonable and stable access to energy, by displacing use of coal and by supporting renewable energy production.
"In the time ahead, there will be more available capacity in pipelines and other infrastructure for gas. This means that it is more attractive to explore for gas, and it is important that the industry exploits this opportunity," says Nyland.
At year-end, there were 83 producing fields on the Norwegian Shelf. One of these – Aasta Hansteen – came on stream in 2018. Simultaneously with start-up of Aasta Hansteen, the Polarled pipeline commenced operation to route gas in to the process facility at Nyhamna in Møre og Romsdal county. Aasta Hansteen and Polarled provide new infrastructure in the northern part of the Norwegian Sea, thus opening up new opportunities in this part of the Shelf.
The companies submitted plans for development and operation (PDOs) for three new projects last year, while nine plans were approved. Seven of the plans relate to field developments linked to existing infrastructure.
"Good exploitation of infrastructure and cooperation across production licences mean lower development costs and make it possible to develop small and medium-sized discoveries in a way that is profitable. This is becoming increasingly important as the Shelf matures."
Reserves are resources for which development plans have been adopted. Last year, for the first time, reserve growth for oil exceeded the Norwegian Petroleum Directorate's ambitious curve for reserve growth for the period 2013 - 2023. The reasons for this very positive development are that more fields are being developed and more good work is being done to improve recovery on fields in operation.
Investments on the Norwegian Shelf in 2018 were at approximately the same level as the previous year, but several of the developments that are underway, led by Johan Sverdrup and Johan Castberg, will contribute to substantial growth in 2019.
The industry has done good work on cost control and efficiency in recent years, which has led to a considerable reduction in both exploration, development and operating costs. This is important to ensure that the Norwegian Shelf is competitive and has good resource management.
"A lower cost level is also reflected in the new projects that are approved. These are projects that are profitable for both the companies and the Norwegian society. The general scenario is that the new development projects will be profitable with significantly lower oil prices than the current level," says Nyland.
Increasing oil and gas production in the next five-year period
The Norwegian Petroleum Directorate's production forecast up to 2023 shows an increase from 2020. Start-up of new fields, including Johan Sverdrup, will more than offset the natural reduction from operating fields. Total production of oil and gas is projected to approach the record year of 2004, with gas accounting for about half. It will be challenging to maintain such a production level up to 2030.
Figure 2-1 Actual and projected sale of petroleum 1971-2023
Preliminary figures show that 226.7 million standard cubic metres oil equivalents (Sm³ o.e.) were sold in 2018. This is 9.5 million Sm³ o.e. or 4 per cent less than in 2017. Gas sales are somewhat reduced and certain oil fields have produced less than expected. Total production of petroleum in 2019 is expected to be 222 million Sm³ o.e.
In 2018, 121.7 billion Sm³ gas (119.3 billion Sm³ 40 megajoule gas) was sold. This is a slight reduction from the record level in 2017. The forecast for short-term gas sales (Figure 2-2) shows an expected high and stable level with a slight increase over the next few years.
Figure 2-2 Actual and projected gas sales through 2023
A total of 86.2 million Sm³ oil (1.49 million barrels per day) was produced in 2018, compared with 92.2 million Sm³ (1.59 million barrels per day) in the previous year, a reduction of 6.3 per cent.
The forecast for 2018 showed an expected slight decline in oil production compared with the previous year. This decline proved to be greater than expected. This is due, in part, to the fact that certain newer fields are more complex than previously assumed, and certain other fields delivered below the forecast, mainly due to the fact that fewer wells have been drilled than expected.
For 2019, we estimate that oil production will be reduced by an additional 4.7 per cent, to 82.2 million Sm³ (1.42 million barrels per day). Production is expected to show a substantial increase in 2020, e.g. as a consequence of Johan Sverdrup. The uncertainty in the production forecasts is mainly linked to the drilling of new wells, start-up of new fields, the ability of the reservoirs to deliver and regularity for producing fields.
Production from operating fields and approved projects accounts for 90 per cent of expected production in the five-year period 2019-2023 (Figure 2-3). The remaining ten per cent are primarily expected to come from improved recovery measures on the fields. Wells that have not yet been approved and optimisation of recovery strategies are the main contributing factors. Towards the end of the five year period, production is also expected from discoveries which do not yet have a firm development decision.
Figure 2-3 Oil production 2014-2023 distributed by maturity
Table 2-1 Production forecast distributed by the various products for the next five years
Total production up to 2030
Production will remain relatively high over the next decade and going forward to 2030, production from undiscovered resources is expected to have increasing significance.
Figure 2-4 shows the most recent production forecast compared with what was presented one year ago, in The Shelf in 2017. The forecast reveals a relatively flat production development up to 2020. As from that time, it is assumed that all projects currently under development will contribute to a considerable production increase up to 2023.
The production level is somewhat lower in 2019, compared with the previous forecast; approximately unchanged in the period from 2020-2025 and somewhat higher going forward to 2030. The increase in the estimate up to 2030 compared with last year’s forecast, is due in part to the fact that more new measures have been identified on the fields; mainly more wells included in the forecasts.
Figure 2-4 Historical and forecast production 2010 – 2030
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