Exploration activity

In 2017, 36 exploration wells were spudded on the Norwegian continental shelf and 11 discoveries were made. The resource growth from these discoveries was about 33 million standard cubic metres of oil equivalents. The discoveries are rather small; however, several are located in areas where they can be developed via existing infrastructure.
In 2017, 36 exploration wells were spudded on the Norwegian continental shelf and 11 discoveries were made. The resource growth from these discoveries was about 33 million standard cubic metres of oil equivalents. The discoveries are rather small; however, several are located in areas where they can be developed via existing infrastructure.
Undiscovered resources Resource growth Exploration companies

New commercially viable discoveries will be necessary to ensure the continuation of regular activities in the time ahead. This means maintaining exploration activity at a high level. It will also be important to make new discoveries in mature areas where established infrastructure is still in place. Effective use of existing infrastructure makes it more likely that socially profitable resources will be produced.

Undiscovered resources per sea area

The Storting (Norwegian parliament) has opened most of the North Sea, the Norwegian Sea and the Barents Sea South (including Southeast) for petroleum activities.

The Norwegian Petroleum Directorate has estimated the undiscovered resources on the Norwegian shelf at approximately four billion standard cubic metres (Sm3) of recoverable oil equivalents. This corresponds to around 54 per cent of all the remaining resources on the shelf.

Around 54% of all remaining resources on the shelf are still undiscovered

Undiscovered resources are split as follows between the different sea areas: 18% in the North Sea, 19% in the Norwegian Sea and 63% in the Barents Sea.

Undiscovered resources by area

Updated: 21.02.2017

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The figures in each column show expected recoverable volumes not yet discovered at year end. The uncertainty in the estimates is shown in the slanted line; low estimates on the left, high estimates on the right (Source: Norwegian Petroleum Directorate).

Undiscovered resources by area as of 31 December 2016
Source: Norwegian Petroleum Directorate

Resource growth from new discoveries

Both large and small exploration companies have contributed to the strong resource growth in the last few years. Resource growth was particularly strong in 2010 due to the Johan Sverdrup discovery. This is the largest discovery in recent times and the fifth largest ever made on the Norwegian continental shelf. It was made in an area that has been regularly explored since the mid-1960s, and shows the considerable potential in exploration of mature areas.

In 2017, 36 exploration wells were spudded on the Norwegian continental shelf. Based on the companies' plans, we expect the number of spudded exploration wells in 2018 to remain at about the same level as last year. Over the next few years, we have presumed gradual growth in the number of exploration wells.

There are two types of exploration wells: wildcat and appraisal wells. Wildcat wells are drilled to explore whether there are hydrocarbon deposits under the seabed. When a discovery has been made, appraisal wells may be drilled to obtain more data about the extent and size of the discovery. Of the 36 exploration wells spudded in 2017, 24 were wildcat wells and 12 were appraisal wells.

Exploration wells spudded on the Norwegian continental shelf, 1970-2017

Source: Norwegian Petroleum Directorate

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Exploration wells spudded on the Norwegian continental shelf, 1970-2017

In 2017, 11 new discoveries were made, six of them in the Barents Sea, three in the Norwegian Sea, and two in the North Sea. The discoveries are rather small, and the resource growth is in the order of 24-59 million standard cubic metres (Sm3) of oil equivalents. The largest discovery in 2017 is an oil and gas discovery in wildcat well 7219/12-1 (Filicudi) in the Barents Sea. The size of this discovery is estimated at between 10 and 20 million Sm³ of oil equivalents. Several of the discoveries in the North Sea and the Norwegian Sea are located in areas where they can be developed via existing infrastructure. Here, even small discoveries can contribute significant value creation.

Gross resource growth and number of wildcats (completed), 1990-2017

Updated: 21.02.2017

Source: Norwegian Petroleum Directorate

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Gross resource growth and number of wildcats (completed), 1990-2017

Accumulated resources on the Norwegian continental shelf, 1966-2016

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Source: The Norwegian Petroleum Directorate

Accumulated resources on the Norwegian continental shelf, 1966-2016
Source: Norwegian Petroleum Directorate

About 380 wildcat wells have been spudded on the Norwegian shelf between 2007 and 2017. More than 190 of these resulted in discoveries. These numbers show that the success rate per wildcat well is more than 50%, which is high by international standards.

Diversity and competition on the shelf

A number of the major international companies have a key position on the Norwegian shelf, since they have the expertise and financial resources that has always been needed to undertake large and complex developments.

As further areas have become mature, new and more varied challenges have arisen and the numbers and types of companies engaged in oil and gas activities on the Norwegian shelf have changed. Entry barriers to exploration on the Norwegian shelf are generally low, which encourages a diversity of companies and promotes competition. The reimbursement system for exploration costs has been a contributory factor, as have high oil prices, the availability of interesting areas for exploration and good exploration results in the past ten years.

Exploration costs in production licences according to the size, and number of companies, 2000-2016

Updated: 13.03.2017

Source: Norwegian Petroleum Directorate

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Exploration costs in production licences according to the size, and number of companies, 2000-2016
What is the reimbursement system for exploration costs?

The reimbursement system was introduced in 2005 to reduce the entry barriers for new actors and encourage economically viable exploration activity.

Under this system, companies that are making a loss may choose between requesting an immediate refund of the tax value of exploration costs from the taxation authorities and carrying forward the losses to a later year when the company has a taxable income. If a company chooses the immediate payment option, the exploration costs cannot be deducted from income in later tax assessments.

This system ensures that the value of the tax deduction is the same whether or not a company is liable to pay tax, and that all companies are treated equally.

It takes a long time from a discovery is made until it is developed and put in production. 10-15 years is not uncommon. Carrying forward losses all these years is financially challenging for the companies. The reimbursement system is therefore important for companies that are not yet liable to pay tax.

New exploration companies have been especially prominent in APA rounds, where blocks in mature areas are announced. Exploration in frontier areas, on the other hand, is mainly carried out by the larger companies. The little known geology increases the potential for discoveries, but greater challenges may be met during exploration, development and production.

Exploration costs include costs related to seismic data acquisition to map potential petroleum deposits under the seabed and to drilling exploration wells. In 2017, preliminary estimates of exploration costs on the Norwegian shelf totalled about NOK 19 billion.

Oil price, number of companies on the shelf and spudded exploration wells at year end, 2000-2016

Updated: 13.03.2017

Source: Norwegian Petroleum Directorate

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Oil price, number of companies on the shelf and spudded exploration wells at year end, 2000-2016
Updated: 11.01.2018