Drilling Cost in Norway Higher Than in UK

An expert group established by the Norwegian Ministry of Petroleum has in its report revealed that drilling costs in Norway are much higher than in other North Sea nations.

“The report from the rig commission lays the basis for taking the measures need to increase the future availability of mobile units on Norway’s continental shelf,” says Gro Brækken, director general of the Norwegian Oil Industry Association (OLF).

Appointed in December 2011, the commission of inquiry submitted its report to petroleum and energy minister Ola Borten Moe today, 16 August 2012. The minister expressed concern over the results of the research conducted by the group.

“This report makes it clear that drilling rig costs are significantly higher on the NCS than in other North Sea nations,” says Brækken.

“Compared with the UK, for example, the commission finds that costs are about 40 per cent higher in Norway. It’s also harder to move rigs from the UK, for instance, to the NCS than vice versa.”

“These conditions have been known for a long time and studied by several earlier inquiries. If we’re going to make progress, it’s important that the measures identified by this report are taken seriously and implemented.”

The expert group was set up by the Ministry of Petroleum and Energy to study and identify possible obstacles which limit rig and drilling capacity on the NCS.

According to the expert group, one main reasons for the price gap with other countries include the need for substantial modifications to mobile units moving to the NCS to comply with Norwegian regulations.

The other is the high operating costs imposed by special Norwegian arrangements on working time.

“This report documents where the problems lie,” says Brækken. “It’s now important that the government, the industry and the unions work together to bring down costs without reducing safety. Increasing rig availability at lower cost is crucial for getting the maximum out of the petroleum resources on the NCS. We’re talking about billions of kroner in value creation.”

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Offshore Energy Today Staff, August 17, 2012