Recent activity

In recent years, the activity level on the Norwegian shelf has been high. Licensees have decided to develop many new discoveries, and many field development projects are now nearing completion or have started production. In addition, large investments have been made in fields that are already on stream in order to improve recovery. At year end, 80 fields were on stream, and had produced a total of 230.6 million Sm³ o.e. in 2016.
In recent years, the activity level on the Norwegian shelf has been high. Licensees have decided to develop many new discoveries, and many field development projects are now nearing completion or have started production. In addition, large investments have been made in fields that are already on stream in order to improve recovery. At year end, 80 fields were on stream, and had produced a total of 230.6 million Sm³ o.e. in 2016.
Production levels Ongoing field developments Johan Sverdrup Investments Outlook

Since production started on the Norwegian 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 13% less than in the peak year 2004 and one per cent more than in 2015. For the third time since 2001, oil production rose in 2016 compared to the previous year.

In recent years, activity on the Norwegian shelf has reached record levels. Many new discoveries were decided to be developed, and many field development projects are now nearing completion or have started production. In addition, large investments have been made in fields that are already on stream in order to improve recovery.

What is produced on the Norwegian shelf?

The production (wellstream) 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 sulpher, 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.

Photo: Ministry of Petroleum and Energy

Production levels

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 fields that are already producing. It is expected that the volumes of gas and oil (including NGL and condensate) produced will be roughly equal to current level in the next few years. In the longer term, the number and size of new discoveries will be of crucial importance for the level of production.

Historical and expected production in Norway, 1970-2021

Updated: 21.02.2017

Source: Norwegian Petroleum Directorate

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Historical and expected production in Norway, 1970-2021
In the longer term, the number and size of new discoveries will be of crucial importance for the level of production

At the end of 2016, 80 fields on the Norwegian shelf were in production. Many of them are ageing fields, but some of them still have substantial remaining reserves. Moreover, the resource base for existing facilities increases when small satellite discoveries are tied in to existing infrastructure. The activity level on existing fields will therefore remain high in the years ahead, and these fields will account for the bulk of production in the near future.

At the same time, it is possible to improve recovery from many of these fields beyond what is currently planned. About 150 projects to improve recovery from existing fields are now being assessed. It is important for the oil companies 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 make use of the resource potential 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

Updated: 21.02.2017

Gas is given in 40 MJ

Source: Norwegian Petroleum Directorate

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Production history and forecast distributed per resource category, 2010-2030 – 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.

Ongoing field developments

In 2016, Goliat and Ivar Aasen fields started their production. At the end of the year, seven fields were under development; five of these in the North Sea and two in the Norwegian Sea. In addition, there are over 77 discoveries that could be, or are being, considered for development. Most of them are small and will be developed as satellites to established fields. Independent development is planned for the largest discoveries, but a number of smaller fields may also collaborate on building new infrastructure.

In recent years, activity on the Norwegian shelf has reached record levels

One new plan for development and operation (PDO) was approved by the authorities in 2016, for the development of Oseberg West Flank in the North Sea.

The table below shows the estimated reserves in fields that are under development.

Reserves in fields under development (PDO approved fields)

All volumes in million Sm3 o.e.

Source: The Norwegian Petroleum Directorate

Print table Download data Reserves in fields under development (PDO approved fields)

Reserves in fields under development (PDO approved fields) – All volumes in million Sm3 o.e.

GOLIAT'S ARRIVAL AT HAMMERFEST, APRIL 2015

Source: Eni Norge

GOLIAT'S ARRIVAL AT HAMMERFEST, APRIL 2015 | Source: Eni Norge

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% of the Norwegian oil production by the mid-2020s.

Other significant discoveries have also been made in the same area. Gina Krog field is under development, and Edvard Grieg and Ivar Aasen started production late 2015 and late 2016, respectively. Based on the current development plans, resources in these fields total 435 million Sm3 o.e.

Johan Sverdrup-field

The Johan Sverdrup field was discovered in 2010 and is the largest discovery on the Norwegian shelf for 30 years. It is estimated that it contains between 1.7 and 3.0 billion barrels of oil. Production is expected to last for 50 years, and when it is at its highest production level by the mid-2020s, the field will account for 30% of the production on the Norwegian shelf. Johan Sverdrup covers an area of about 200 km2.

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 reserves in mature parts of the Norwegian shelf.

The field is to be developed in several phases. The first phase includes four platforms connected by bridges: a process platform, a drilling platform, a riser platform and living quarters. In addition, three subsea templates are to be constructed for water injection. The living quarters will have accommodation for up to 560 people. A plan for development and operation (PDO) for this first phase was approved by the authorities in 2015. The operator Statoil is now also working on the second stage of the development, and a PDO for the second phase is expected to be submitted towards the end of 2017.

Investment costs for the first phase will come to around NOK 114 billion. The Johan Sverdrup field is located on the Utsira High, together with three other fields – Ivar Aasen, Gina Krog and Edvard Grieg. A joint solution for supplying power from shore to all these fields is to be established, and will be in place by 2022 at the latest.

Concept drawing of the Johan Sverdrup-field (phase 1)
Concept drawing of the Johan Sverdrup field (phase 1). Photo: Statoil ASA.

The Johan Sverdrup discovery and other discoveries show that the mature areas on the Norwegian shelf can still contain significant undiscovered resources. This has helped to maintain a high level of interest in the “Award in Predefined Areas” (APA) licensing rounds. The 2016 APA-round resulted in a large number of applications, and 56 production licences are offered to oil companies: 36 in the North Sea, 17 in the Norwegian Sea, and three in the Barents Sea. In total, 29 companies were offered awards in one or several production licences, and 17 of these were offered operatorships.

By the mid-2020s, the Sverdrup field will account for 30% of Norwegian oil production

Investments

In the next few years, investment costs will decrease from the levels we have seen in recent years. Excluding exploration, investment costs are expected to total around NOK 115-125 million a year up to 2020. The level of investment in new fields will remain fairly steady in this period as a result of investments related to Johan Sverdrup.

See article about investments for more detailed information.

The plattforms at the Valhall field
Valhall field (Photo: BP)

Outlook

The overall picture for the years ahead is thus a combination of the start of production on large new fields and continuation of production on ageing fields. Production is therefore expected to remain relatively stable in the years ahead.

In addition, there will be a high level of exploration activity in new interesting areas. New commercially viable discoveries will be necessary to ensure the continuation of regular activities in the decades ahead. This means that the level of exploration activity must be maintained.

Even though new projects are being postponed in response to high costs and the recent sharp drop in oil prices, the level of activity is expected to remain high in the years ahead. Thus, the petroleum industry will continue to be Norway’s largest and most important industry for the foreseeable future.

Updated: 21.02.2017