Friday 15 January 2021

Activity on the Norwegian continental shelf last year remained at a high level, despite the ongoing pandemic. The year has been characterised by high production and significant investments in developments and projects on the fields.

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14 discoveries were made, and 4 new fields came on stream. Substantial resources remain in both fields and discoveries, and there is still more to be found in all sea areas.

"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", Director general Ingrid Sølvberg in The Norwegian Petroleum Directorate (NPD) says.

Many discoveries

31 exploration wells were spudded in 2020. 14 discoveries were made, 7 in the North Sea and 7 in the Norwegian Sea. Around 50 exploration wells were planned last year. Some of these were postponed, primarily due to the pandemic. This year, the NPD expects around 40 exploration wells will be drilled.

The companies have exhibited great interest in exploring in mature areas, and there were many applicants in the APA round (Awards in Predefined Areas) announced in the autumn. Awards will probably be announced in the near future.

Small discoveries also create value

History over the past 20 years has shown that smaller discoveries, with volumes up to 25 million standard cubic metres of oil equivalent (MSm3 o.e.), together contribute to more value creation than the larger discoveries made during the same period.

Unit costs tell us something about profitability. This is the cost per barrel, and it includes all costs associated with exploration, development and operation.

According to the NPD’s calculations, the average unit cost in the period from 2010-2019 was USD 21 per barrel, while the average oil price during the same period was nearly USD 80 per barrel. This difference underlines the vast values generated during the period.

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. 

These are the types of field developments we will see even more of in the future. Therefore, it is essential that the infrastructure is maintained and made available for phase-in of additional resources.

High production

As expected, oil production was higher in 2020 than the previous year. Production from the Johan Sverdrup field is 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.

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. 

 the petroleum resources on the Shelf and from a united Norwegian energy sector", Sølvberg says.

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