Since production started on the Norwegian continental shelf in 1971, oil and gas have been produced from a total of 106 fields. At the end of 2018, 83 fields were in production: 63 in the North Sea, 18 in the Norwegian Sea and two in the Barents Sea. Overall production from these fields in 2018 was about 226.7 million standard cubic metres of oil equivalents (Sm3 o.e.). This is about 14 per cent less than in the peak year 2004 and 4 per cent less than in 2017.
The production (well stream) from different reservoirs contains oil, gas and water in various combinations. To get marketable products, the production from the reservoirs 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, and the quality of the oil, including how light or heavy (viscous) the oil is, depends on the composition of the hydrocarbons as well as the contents of other substances, such as wax and sulphur.
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, but also a little ethane.
Wet gas, or NGL (Natural Gas Liquids), consists of a mixture of heavier gases (ethane, propane, butanes and naphtha). In addition, there are heavier condensates which some classify as a separate product. Naphtha and condensate are liquid at room temperature, while the lighter wet gas components can be made liquid either by cooling or by adding pressure.
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 few 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. Production is assumed to increase from 2020, and in 2023 is estimated to be close to the record-breaking year 2004. 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. While mostly oil was produced in 2004, gas will account for about half of the production in 2023. 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, 1970-2023
Source: Norwegian Petroleum Directorate
At the end of 2018, 83 fields on the Norwegian shelf were in production. Several of the large 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 next few years. In the early 2020s, production is predicted to increase and stay relatively high for the next decade.
See article about production for more detailed information.
In 2018, Aasta Hansteen came on stream. At year-end, 14 field developments were ongoing: eight in the North Sea, five in the Norwegian Sea and one in Barents Sea.
In addition, there were about 85 discoveries that could be, or are being, considered for development at year-end. 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 2018, the authorities approved nine plans for development and operation (PDO).
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 third 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.
When Johan Sverdrup was proven in 2010, it was the largest discovery made on the Norwegian continental shelf for 30 years. 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 authorities approved the plan for development and operation (PDO) for the first phase in 2015; the PDO for the second phase was delivered in August 2018.
Investment costs for the first phase will be around NOK 98 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 investments for the second development phase, including the area solution, is around NOK 42 billion. The total reserves from the entire field are about 425 million Sm³ o.e., of which about 94 million Sm³ o.e. are related to the second phase. Startup of the first production phase is scheduled for 2019, and of the second phase for 2022. Johan Sverdrup is the third largest oil field on the Norwegian continental shelf, and production is expected to last for 50 years. The production is anticipated to be at its highest level in the mid-2020s, and will then account for more than 30 per cent of the Norwegian oil production.
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. A record high number of applications were submitted in APA 2017, and the interest is about the same for APA 2018.
In 2018, investment numbers have levelled off, and investments are expected to increase slightly to about NOK 140 billion in 2019 (not including exploration). After 2019, investments are expected to decrease to around NOK 110-115 billion in 2022-23. Several ongoing projects, both related to new field developments and fields in operation, will contribute to keeping the activity level relatively stable in 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. New projects on fields in operation, as well as extensive infill drilling, will result in a high level of activity. In addition to the activities on existing fields, there are several new fields under development and others that are expected to be decided for development.
There will also be significant exploration activities in new, interesting areas. Commercially viable discoveries are required to maintain a stable activity level in the long term, and high exploration activity is a prerequisite.
The petroleum industry will continue to be Norway’s largest and most important industry for the foreseeable future.