Norway racks up high gas production while pursuing decarbonisation with CCS and offshore wind
With energy security concerns continuing to plague Europe, Norway’s role as natural gas exporter becomes more entrenched, with the country keeping up high gas production while giving its stamp of approval for many new oil and gas development projects to boost its hydrocarbon reserves. Embracing the energy transition to low-carbon and green sources, Norway is also working on curbing its carbon footprint by pursuing carbon capture and storage (CCS) along with renewable energy such as offshore wind.
Following the Ukraine crisis, Norway became Europe’s largest exporter of natural gas, as a consequence of the EU’s goal to reduce imports of Russian gas. According to the Norwegian Petroleum Directorate (NPD), gas production through the first five months of 2023 amounts to 50.5 billion standard cubic metres (Sm3).
The country has also ramped up its oil output, with 43 million Sm3 (270 million barrels) of oil produced from the Norwegian shelf during the first five months of this year. This is a bit higher than in 2022 due to Johan Sverdrup phase 2 coming on stream in the North Sea towards the end of last year while additional fields have also started to produce in the first six months of 2023.
Torgeir Stordal, NPD’s Director general, remarked: “Norway has fortified its role as a predictable and long-term supplier of energy to Europe, not least as regards gas. Production for the first four months was about on par with last year’s level, which was the year when we delivered the most energy in the form of gas. Maintenance work in May has led to somewhat lower production.”
Furthermore, Norway is actively working on upping its exploration ante and the efforts seem to be paying off as these activities have yielded many hydrocarbon discoveries. With exploration activity being on the high end of the scale so far this year, the country saw 18 exploration wells drilled, 12 out of these completed are wildcat wells, with discoveries made in more than half or seven wells to be exact.
Norway believes that the high exploration activity will continue through the autumn period, as a total of just under 40 wildcat and appraisal wells are expected this year. This means that exploration is holding steady at a high level and new discoveries total between 9 and 32 million Sm3 oil equivalent (oe).
“Most of the wells are being drilled near infrastructure, which could yield valuable additional resources for existing fields. At the same time, it’s important that the companies also drill wells in less-explored areas,” added Stordal.
As part of the award in pre-defined areas 2022 (APA 2022), the Norwegian Ministry of Petroleum and Energy offered production licenses to 25 companies for further exploration activity on the Norwegian continental shelf (NCS). As outlined by the NPD, out of the 47 production licenses, 29 are in the North Sea, 16 in the Norwegian Sea, and 2 in the Barents Sea.
Moreover, 20 of these production licenses are additional acreage for existing production licenses while more new areas were added in this year’s APA in May, with an application deadline in late August. In the meantime, production started from fields such as Bauge, Fenja, and Hyme, which were tied back to the Njord A platform.
While 24 new projects have been greenlighted so far, Norway gave the go-ahead at the end of June 2023 to 19 oil and gas projects on the Norwegian shelf with total investments in excess of NOK 200 billion (currently almost $18.8 billion). These projects include new developments, further developments of existing fields and investments in projects to promote improved recovery from existing fields.
“Production of oil and gas on the Norwegian shelf will decline naturally after 2025, but these projects will help curb the fall. At the same time, the projects provide a foundation for high activity in the Norwegian supplier industry, and fortify the position of the Norwegian shelf as a stable oil and gas supplier for many years to come,” explained Stordal.
Meanwhile, Norway has taken multiple steps to decarbonise its oil and gas industry and reach its net-zero targets. When it comes to the country’s energy transition tools, it is putting electrification of oil and gas assets, offshore wind, carbon capture and storage (CCS), and hydrogen to work as primary drivers of emission reductions.
In line with this, the NPD highlights the growing interest in carbon capture and storage on the NCS, with two areas announced so far this year while the authorities have awarded two exploitation licences for CO2 storage.
“Capture and storage of CO2 is an important climate measure which can also bring exciting opportunities for value creation. The NPD possesses unique expertise and knowledge about the subsurface on the shelf. We use this knowledge to map where CO2 storage is suitable,” underlined Stordal.
In line with its net-zero goals, Norway is putting the wheels into motion to expand its knowledge about offshore wind and the NPD has continued its efforts to conduct pilot surveys for offshore wind this year in Sørlige Nordsjø ll and Utsira Nord.
While the data acquisition in Sørlige Nordsjø ll started in mid-April with data processing well underway, the data acquisition in Utsira Nord started in early June. This will provide important knowledge for the future placement of offshore wind turbines.