Since production started on the Norwegian continental shelf in 1971, oil and gas have been produced from a total of 102 fields. At the end of 2016, 80 fields were in production: 62 in the North Sea, 16 in the Norwegian Sea and two in the Barents Sea. Overall production from these fields in 2016 was about 230.6 million standard cubic metres of oil equivalents (Sm3 o.e.). This is about 13per cent less than in the peak year 2004 and one per cent more than in 2015. In 2016, oil production increased from the previous year for the third time, following a continuous decline since 2001.
In recent years, activity on the Norwegian shelf has reached high levels. Many new discoveries were approved for development, and several ongoing field development projects are now close to completion. In addition, large investments have been made in producing fields in order to improve recovery.
The production (well stream) from different reservoirs contains oil, gas and water in various combinations. To get marketable products, the production from the reservois must be separated and treated. The production from different reservoirs varies from oil with low gas content to almost dry gas (methane with only small amounts of other gases).
Crude oil is a fluid that is a combination of different types of hydrocarbons. The composition varies from field to field. The quality of the oil depends on several factors, for example how much and which substances, such as wax and sulphur, it contains. The composition also determines how light or heavy (viscous) the oil is.
Rich gas, or crude natural gas, is a mixture of various gases. When necessary, the gas is separated from the oil before the rich gas is treated in a processing facility that separates the dry and wet gas components. Dry gas is often referred to as natural gas, and consists mainly of methane. Wet gas, or NGL (Natural Gas Liquids) as often referred to, consists of a mixure of heavier gases such as ethane, propane and butane. There is a gradual transition between the heaviest gas components which are called naphtha and condensate, and oil. Similar for them all is that they are liquid at room temperature, and are often mixed in, and sold as oil.
Not all gas that is produced is sold. Some of the gas is used to generate power on the fields, and small amounts are flared for safety purposes. On some fields, gas is reinjected into the reservoirs. Reinjection is often used to maintain reservoir pressure and displace the oil. This results in efficient recovery of the oil, and the gas is stored for possible recovery in the future.
For the next 10 years, production on the Norwegian shelf is expected to remain relatively stable, as production from new fields that come on stream will compensate for the decline in production from already producing fields. It is expected that the ratio between produced gas and liquids (saleable oil, NGL and condensate) will remain roughly equal in the next few years. In the longer term, the number and size of new discoveries will be of crucial importance to the production level.
Historical and expected production in Norway, 1970-2021
Source: Norwegian Petroleum Directorate
At the end of 2016, 80 fields on the Norwegian shelf were in production. Several of the aging fields still have substantial remaining reserves. Moreover, the resource base for existing facilities increases when small neighbouring discoveries are tied in to the existing infrastructure. The activity level on producing fields will remain high in the years ahead, and these fields will account for the bulk of production in the near future.
It is also possible to increase recovery from many of these fields beyond current plans. About 150 projects are currently being assessed to improve recovery from existing fields. It is important for the licensees to find profitable ways of improving recovery and making operations more efficient on existing fields. In addition, existing and new commercially viable discoveries need to be tied in to existing infrastructure to utilise the production and transport capacity in mature areas in the years ahead.
See resource management in mature areas for more detailed information.
Production history and forecast distributed per resource category, 2010-2030
Source: Norwegian Petroleum Directorate (Gas is given in 40 MJ)
With a high number of fields in production and several new fields coming on stream in the next few years, production is expected to remain relatively stable in the years ahead.
See article about production for more detailed information.
In 2016, the fields Goliat and Ivar Aasen started their production. At the end of the year, seven fields were under development: five in the North Sea and two in the Norwegian Sea.
In addition, there are about 80 discoveries that could be, or are being, considered for development. Most of them are small and will be developed as satellites to existing fields. Stand-alone developments are planned for the largest discoveries, but a number of smaller discoveries could build new infrastructure through collaborated development solutions.
In 2016, the authorities approved one plan for development and operation (PDO), for Oseberg Vestflanken in the North Sea.
The table below shows the estimated reserves in fields under development.
Reserves in fields under development
All volumes in million Sm3 o.e.
Source: The Norwegian Petroleum Directorate
The Johan Sverdrup field
The largest single project on the Norwegian shelf is the development of the Johan Sverdrup field, which is located on the Utsira High in the North Sea. This is the fifth largest oil discovery ever made on the Norwegian shelf. It is expected that the field will account for over 30 per cent of the Norwegian oil production by the mid-2020s.
Other significant discoveries have also been made in the same area. The Gina Krog field is under development. Edvard Grieg and Ivar Aasen started production late 2015 and late 2016, respectively. The resources in these fields total approximately 500 million Sm3 o.e.
When Johan Sverdrup was proven in 2010, it was the largest discovery made on the Norwegian shelf for 30 years. The field is estimated to contain between 2 and 3 billion barrels of oil and the production isexpected to last for 50 years. By the mid-2020s – when the field is expected to reach its peak production level – Johan Sverdrup will account for more than 30 per cent of the Norwegian oil production.
Johan Sverdrup covers an area of about 200 km2, about half the size of the city of Oslo.
The discovery was made in an area that has been regularly explored since the mid-1960s. Earlier exploration wells missed the deposit by only a few metres. This shows that there can still be large undiscovered resources in mature areas on the Norwegian shelf.
The field will be developed in several phases. The first phase is a field center consisting of four platforms connected by bridges: a process platform, a drilling platform, a riser platform and living quarter. In addition, three subsea templates are to be constructed for water injection. The living quarter will accommode up to 560 people. The authorities approved the plan for development and operation (PDO) for the first phase in august 2015. Production start-up is scheduled for late 2019. The licensees are working on the second phase of the development, and a PDO for this phase is expected to be submitted in late 2018.
Investment costs for the first phase will be around NOK 97 billion, and the estimated break-even price is less than 20 USD per barrel. The Johan Sverdrup field is located on the Utsira High, together with the fields Ivar Aasen, Gina Krog and Edvard Grieg. A joint area solution for supplying power from shore to these fields is to be established. This arrangement will be in place by 2022 at the latest.
The discovery of Johan Sverdrup shows that the mature areas on the Norwegian shelf can still contain significant undiscovered resources of high economic value. This has helped to maintain a high level of interest in the “Awards in Predefined Areas” (APA) licensing rounds. The 2016 APA round gained significant interest, and resulted in the offer of 56 production licences to companies: 36 in the North Sea, 17 in the Norwegian Sea and three in the Barents Sea. In total, 29 companies were offered ownership interests in at least one production licence, and 17 of these were offered operatorships. In the APA 2017 round, a record high number of applications for new acreage had been submitted, and at the beginning of 2018, the authorities will announce which companies will receive new production licences.
Over the next few years, investment costs will decrease slightly from the levels we have seen in recent years. Excluding exploration, investment costs are expected to total around NOK 115-125 billion per year until 2021. Investments related to the development of the Johan Sverdrup field are contributing to maintain the investment level in new fields for the coming years.
See article about investments for more detailed information.
In the coming years, the petroleum industry will be characterised by a high activity level. In addition to existing fields, a number of new fields will come on stream. Production is expected to remain relatively stable in the years ahead. After a significant decline in investments, this trend is predicted to reverse. New projects on producing fields and investments related to new field developments will contribute to this.
In addition, there will be a high level of exploration activity in new, interesting areas. New commercially viable discoveries are necessary to ensure the continuation of regular activities in the decades ahead. This means that the level of exploration activity must be maintained.
The petroleum industry will continue to be Norway’s largest and most important industry for the foreseeable future.