Norway: 2020 was still strong for oil and gas despite pandemic
Despite the ongoing coronavirus pandemic, activity on the Norwegian continental shelf last year remained at a high level with high production and significant investments in developments and projects on the fields, the NPD said.
The Norwegian Petroleum Directorate (NPD) said on Thursday that 14 discoveries were made and 4 new fields came on stream in the past year. Substantial resources remain in both fields and discoveries, and there is still more to be found in all sea areas.
NPD director general Ingrid Sølvberg said during a video presentation: “While 2020 has been an unusual year in many ways with the pandemic and the decline in oil prices, investments on the Shelf are at the same level as previous years“.
During 2020, 31 exploration wells were spudded. Of the 14 discoveries, 7 were in the North Sea and 7 were in the Norwegian Sea. Around 50 exploration wells were planned last year – some of which were postponed, primarily due to the pandemic. In 2021, the NPD expects around 40 exploration wells to be drilled.
The Directorate emphasised that there was still great interest in exploring in mature areas and that there were many applicants in the APA round announced in the fall.
Record number of fields in operation
There were 90 producing fields on the Norwegian shelf at year-end. Four fields came on stream last year – Tor, Skogul, Ærfugl, and Dvalin. All four utilise existing infrastructure in mature parts of the Shelf.
NPD believes that these types of fields will be even more prevalent in the future. Therefore, the infrastructure must be maintained and made available for phase-in of additional resources.
Oil production was higher in 2020 than the previous year, in line with expectations. NPD said that production from the Johan Sverdrup field was the most important reason for this.
Production in 2020 was somewhat lower than the NPD expected due to the production regulation introduced last summer, project postponements, as well as the shutdown on Snøhvit and the market situation for gas.
But oil production is expected to rise over the next few years from the current 1.7 million barrels per day to more than 2 million barrels per day in 2025. Gas accounts for just over half of petroleum production. This production has held steady at a high level for many years, and this will continue for the next eight to ten years.
Also, one of the largest improved recovery projects on the Norwegian shelf in recent years, Snorre redevelopment, came on stream in 2020.
Recovery from the field will increase by more than 195 million barrels of oil. This represents an increase in reserves of around 10 per cent, or volumes equivalent to one Goliat field.
Production to rise, emissions to fall
According to NPD’s statement, petroleum production will increase in the years to come, while at the same time, emissions have started to decline. One important reason for this is the expectation of increasing use of power from shore.
Given the current approved plans, CO₂ emissions will be around 3.2 million tonnes lower per year in 2023 than would otherwise have been the case. Additional projects are also being planned.
“Declining emissions from production and a great capacity for storing CO2 could give the Norwegian shelf an important role on the path toward the low-emission society“, Sølvberg added.
NPD still sees high investments
In 2020, investments amounted to around $17.7 billion, not including exploration. This is an increase of a bit more than two per cent, compared to 2019.
Investments in 2021 are expected to be around $16.5 billion. A decline is expected in 2022, after which they are expected to rise again. The expected investment level for the next five-year period is higher than the NPD’s estimate one year ago. There are more projects underway on operating fields, and the temporary tax adjustment adopted by the Norwegian Parliament contributes to the increased investments.
The NPD also expects to receive a high number of new plans for development and operation (PDOs) throughout 2021 and 2022.
It is worth noting that half of the resources on the Shelf have been sold and delivered so far. About 25 per cent of the estimated resources on the Shelf still remain to be found. For the Shelf as a whole, the expected value of undiscovered resources is about 3,900 million Sm3 o.e.
“Our estimates indicate that there is enough oil and gas on the Shelf for the petroleum industry to create value for a long time to come“, Sølvberg said.
NPD to oversee possiblity for seabed mineral extraction
One potential new activity on the Norwegian shelf is the extraction of seabed minerals. The NPD has been assigned the task of mapping deposits of seabed minerals on the Shelf and managing the collected data.
The Government has initiated an opening process for mineral activity on the Shelf. The NPD will take part in the impact assessment and resource assessments.
Last year, the NPD completed an expedition which included securing core samples at water depths of more than 3,000 metres. The results from the analysis of the core samples will be available during the first half of 2021. This will be important for our resource assessments. A new expedition is planned for later this year.
“In the Norwegian Petroleum Directorate, we are prepared to do our part of the job in contributing to the greatest possible values for society. Cooperation will be important for continued long-term, high socio-economic value creation, both from the petroleum resources on the Shelf and from a united Norwegian energy sector“, Sølvberg concluded.