Norway still holds ‘valuable’ gas resources but uncertainty looms over development for some

The Norwegian Petroleum Directorate (NPD), which will change its name to the Norwegian Offshore Directorate next month, has conducted a mapping of gas resources that have yet to be developed, leading it to conclude that the Norwegian Continental Shelf (NCS) still has a significant level of “valuable” untouched gas resources.

While about 65% of the overall gas resources on the NCS have not yet been produced, some of the remaining gas resources face a variety of challenges that could complicate production, but several of these discoveries could be produced in a manner that is profitable from a socio-economic perspective, according to the NPD.

Kjersti Dahle, the NPD’s Director for Technology, Analyses and Coexistence, commented: “Despite gas having a significantly higher recovery rate than oil, we’ll never be able to produce all the gas. There are normally good reasons for low recovery rates in gas fields. We believe that the licensees are doing a good job to maximize recovery rates. It’s challenging to extract extra gas beyond this.

“Identifying which gas resources are difficult to develop, and what’s needed to ensure that the resources are produced, gives us a sound basis for dialogue and potential measures along with the industry so that these resources can be recovered.”

Based on the current plans and projects, the NPD expects gas production on the Norwegian shelf to be maintained at a high level over the next five years. However, production is expected to decline afterward at a fairly rapid rate.

“There are considerable gas resources in discoveries and fields in operation. It makes sense to think that higher gas prices can drive necessary technology development, coordination and new infrastructure in order to realize this gas, as long as there is the will and ability to do this,” added Dahle.

At the end of December 2022, there were 84 gas discoveries on the NCS with 1,273 GSm³ of gas in place, which were found in reservoirs with different degrees of complexity, making them difficult to develop. While the NPD’s calculations show a significant value potential for many of these discoveries, it is highly uncertain how much of this can be produced due to challenges in the subsurface, such as tight reservoirs, high pressure and temperature, challenging gas quality, and/or low pressure.

In addition, export options, cost levels, and future gas prices also affect which resources can be developed. On top of this, the lack of gas infrastructure capacity is an issue in the Barents Sea, since Melkøya is fully booked until after 2040. Therefore, the NPD believes that there is a need for coordination and new capacity to transport and export the gas.

Even though the NCS is one of the mature areas regarding petroleum activity, the interest in the APA 2023 round was in line with Westwood’s forecast from June 2022, which underscored that exploration activity would continue to thrive in Norway.