Resources is a general term for all oil and gas that can be recovered. The resources are classified according to how mature they are with regard to development and production. The main classifications are reserves, contingent resources and unproven resources. What has been produced, sold and delivered is the aggregate production.
The Norwegian Petroleum Directorate’s basic estimate for total proven and unproven petroleum resources on the Norwegian continental shelf is about 14.3 billion standard cubic metres of oil equivalents (Sm3 o.e.). Of this, 6.9 billion, or 48 per cent, have been sold and delivered.
It is expected that 7.4 billion Sm3 o.e. are left to produce. Of this, 4.6 billion Sm3 o.e. are proven resources. The estimate for unproven resources is 2.9 billion Sm3 o.e. Unproven resources constitute about 39 per cent of the total remaining resources.
Original recoverable petroleum resources on the Norwegian continental shelf as of 31.12.2016
Oil, condensate and sum oil equivalents are measured in million standard cubic meters. NGL is measured in million tonnes and gas is measured in billion standard cubic meters.
Source: Norwegian Petroleum Directorate
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 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.
Reserves are remaining recoverable petroleum volumes, where a production decision has been made. This includes both resources where the authorities have approved a Plan for Development and Operation (PDO) and the resources that the licensees (companies in the production licence) have decided to produce, but where they do not yet have the required permits from the authorities.
At the end of the year, reserves amounted to 3 009 million Sm3 o.e. Of this, the gas reserves constitute 60 per cent. Gross reserves, or the licensees’ estimates before production is deducted, increased by 113 million Sm3 o.e. Production in 2016 was 233 million Sm3 o.e. The change in the accounts shows an annual production of 232 million Sm3 o.e. The reason for this is that a fixed conversion factor is used when NGL is converted to Sm3. This resulted in a reduction in the reserves of 119 million Sm3 o.e., or about 4 per cent, in 2016.
Contingent resources comprise proven oil and gas for which a production decision has not yet been made. Petroleum volumes in potential improved recovery projects are included in this category. At year-end, contingent resources amounted to 1 542 million Sm3 o.e. Resources that are not considered commercial are not included in the accounts.
Every year, a portion of the contingent resources are matured and moved to the reserves category. The growth in the contingent resources category comes from exploration activity.
In 2016, the exploration activity resulted in a resource growth estimated at 57 million Sm3 o.e. Thirty-six exploration wells were started, and 18 discoveries were made: two in the Barents Sea, two in the Norwegian Sea and 14 in the North Sea. Many of the discoveries have not been fully evaluated, and the estimates are therefore highly uncertain.
Contingent resources in fields constitute 845 million Sm3 o.e. or 19 per cent of the remaining proven resources. In 2016, there was an increase of 35 million Sm3 o.e. in relation to the accounts in 2015. The increase can be explained through maturing of projects on the fields and new improved recovery projects. The resources in discoveries were reduced by 42 million Sm3 o.e., to 697 million Sm3 o.e., as a result of the PDOs submitted for the discoveries 8/10-4 S Oda, 15/8-1 Utgard, 35/11-13 Byrding, 6406/3-2 Trestakk and 6507/7-14 S Dvalin. They are now classified as reserves. In addition, several of the discoveries in the accounts from last year were not found suitable for development. They are therefore not included in the accounts.
Unproven resources comprises oil and gas that probably exists and can be produced, but that have not yet been proven through drilling.
Unproven resources were estimated at 2 870 million Sm3 o.e. This is a reduction of 50 million Sm3 o.e. compared with the resource accounts for 2015 and almost matches the volume proven in new discoveries in 2016. Unproven resources constitute about 39 per cent of the total resources that remain on the Norwegian shelf. The next update of the estimate for resources that have not been proven will arrive in 2017.