DISCLAIMER Portions of this document may be illegible in electronic image products. Images are produced from the best available original document. Facts 2002 The Norwegian petroleum sector Ministry of Petroleum and Energy Visiting address: Einar Gerhardsens plass 1 Postal address: P 0 Box 8148 Dep, N-0033 Oslo Tel c47 22 24 90 90 Fax +47 22 24 95 65 http://www.mpe.dep.no (English) http://www.oed.dep.no (Norwegian) E-mail: [email protected] Editor: Tore Fugelsnes, MPE English rditur: Rolf E Gooderhani Edition completed: March 2002 Iayout/design: Marketing Serviccs AS Illustration: Inger Farvik Photos: Q Terjc S Knudsen, Norsk Hydro ASA, 0 Oy-vind Hagm, Statoil ASA, field photos from operators’ archives. Paper: Cover: Munken Lynx 240 g. inside pages: Uni Matt 115 g. Printer: BK Vestfold Grafiskr Circulation: 14 000 Norwegian/Y 000 English ISSN-1502.5446 Foreword Even after 30 years of petroleum production from terms of both maturity and challenges between its the Norwegian continental shelf (NCS), we estimate various areas. A broad spread of companies will help that only about 24 per cent of these resources have to meet the rnnltiplicity of challenges facing 11s. been produced. Remaining recoverable resources Wiile the oil majors are relatively well represented are put at 10.6 hn scm of oil equiv;rlent, and could today, small and mediurn-sized players have a provide the basis for another 50 years of oil produc- weaker involvement. The prequalification system tion and a century of gas output. The petroleum is a new and important measure, which will make sector will thereby remain a major source of value it easier for new players to become established on creation for the Norwegian community. the NCS. The average estimated recovery factor for Norway wants a stable oil market with prices Norwegian oil fields rose by alniost 10 per cent at a reasonable level. The market weakened from 1990 to 1997, hut has flattened out in recent considerably during 2001, with pressure on prices years at roughly 44 per cent. Considerable value expected to persist without action to cut the supply can be created through further improvements in of crude. On that basis, it was decided to reduce recovery. The government's aim is to achieve an Norwegian crude production by an average of 150 average recovery factor of 50 per cent for oil and 000 barrels per day from 1 January to 30 June 75 per cent for gas. These are very high proportions 2002. in an international context. The petroleum business is moving steadily Gas market developments are important for further north and closer to land. For this reason, the future level of activity and value potential on the govcrnmcnt wants to undertake an impact the NCS. A number of blocks in the current 17th assessment of year-round offshore operations offshore licensing round could yield large new northwards from the 1,ofoten Islands. A unified gas discoveries. Opportunities for finding gas in management plan for the Barents Sea is also to he the Norwegian Sea coincide well with the growth drawn up. This will help to secure the stability and in European demand for this fuel. predictability which the petroleum industry The transition to a new gas regime was one of needs. last year's challenges. Norway's Gas Negotiating Committee (GFU) system was discontinued with effect from 1 January 2002. A new system for gas administration, adapted to the new conditions, has accordingly been sought. I believe the Gassco company has every prospect of becoming a first-class operator, and will contribute to good utilisation and further development of the transport system to the benefit of offshore value creation. We also face changes in pipeline ownership. The Storting (parliament) has requested that a unified solution be sought for owning Norway's offshore transport system. This work is well in hand, and I look forward to early results. Einar Steensnzs The NCS is becoming more diver Minister of Petroleum and Energy 5 Contents Foreword 5 CHAPTER 1 -Summary 10 CHAPTER 2 -A brief history 12 North Sea 14 Norwegian Sea 15 Barents Sea 15 CHAPTER 3 -State organisation of petroleum operations 16 Ministry of Petroleum and Energy 17 Ministry of Labour and Government Administration 18 Norwegian Petroleum Directorate 18 State participation 19 CHAPTER 4 -Petroleum operations in the Norwegian economy 22 Investment 23 Other key figures 23 CHAPTER 5 -State revenues 26 Tax and royalty system 27 SDFl 27 CHAPTER 6 - Industry, employment and technology development 30 Petroleum-related industry 31 Employment in the petroleum sector 31 The significance of technology development for value creation and competitiveness in the petroleum sector 33 CHAPTER 7 - Petroleum resources 36 CHAPTER 8 - Production 40 Production 2001 43 Forecast productiori 43 CHAPTER 9 - Market status for Norwegian petroleum products 44 Norm price 45 Norwegian crude on the world market 45 Sales of natural gas liquids (NGL) 47 Dry gas sales 47 Refin ing 49 Retail sales 49 Petrochemicals 49 CHAPTER 10 - Petroleum operations and the environment 52 Emissions to the air 53 Discharges to the sea 54 National measures 56 7 CHAPTER 11 -Legal and licensing framework 58 Introduction 59 Main features of the licensing system 59 Key documents and legal provisions in the licensing system 60 Other key legal provisions 61 CHAPTER 12 - Licensing rounds 62 Ist-4th licensing rounds 63 5th-10th licensing rounds 63 11th-16th licensing rounds 64 Barents Sea project 64 Awards outside licensing rounds 64 North Sea rounds 65 CHAPTER 13 - Exploration operations 68 Seismic surveys 69 Exploration drilling 69 New discoveries 69 Future exploration 72 CHAPTER 14 - Fields in production 74 Southern North Sea sector 76 Ekofisk (incl Ekofisk, Eldfisk, Embla and Tor) 77 Glitne 80 Gungne 81 Gyda (incl Gyda South) 82 Hod 83 Sleipner West 84 Sleipner East 85 Tambar 86 Ula 87 Valhall 88 Va rg 89 Northern North Sea sector 90 Balder (incl Ringhorne) 91 Brage 92 Frw 93 Gullfaks (incl Gullfaks West) 95 Gullfaks South (incl Rimfaks and Gullveig) 97 Heimdal 99 Huldra 100 Jotun 101 Mu rch ison 102 Oseberg (incl Oseberg West) 103 Oseberg South 105 Oseberg East 106 Snorre (incl Snorre B) 107 Statfjord 109 Statfjord North 111 Statfjord East 112 Sygna 113 Togi 114 Tordis (incl Tordis East and Borg) 115 Troll phase I 117 Troll phase I1 119 Ves lefr i k k 121 Vigdis 122 Visund 123 Norwegian Sea 124 Draugen 125 Heidrun 126 Njord 127 Norne 128 Asgard 129 Fields which have ceased production 131 CHAPTER 15 - Fields and projects under development 134 CHAPTER 16 - Future developments 142 CHAPTER 17 - Pipelines and land facilities 152 CHAPTER 18 - Licence interests on the Norwegian continental shelf 172 CHAPTER 19 - Company interests in fields and production licences 198 CHAPTER 20 - White Papers,etc 206 CHAPTER 21 - Useful postal addresses 21 0 Concepts and conversions 214 9 1 Summary 8h.m of export( . YU Lxploratlon ,; Sh,rre of total rev~nuei 80 Onshore *o Share of GUP - I 5 70 Pipellne5 m Fields f 60 - 30 50 + eStllllatei ejk 70 40 5 30 10 p 20 10 0 0 1971 1976 YR1 1986 1991 1996 2001" Figure 1.1 Macroeconomic indicators for the Figure 1.2 Investment 1985-2001 petroleum sector. fSource.Sratistics Norway1 'Source: Statistics Norwoy) The petroleum sector is highly significant for the average to 3.4 mill barrels oe per day. At 53 mill Norwegian economy. Figure 1.1 presents various scni oe, gas production was also high in 2001. indicators from the national accounts for this Total petroleum output in mill scm oe is shown in sector as a percentage of the total national figure 1.4. economy. Its share of gross domestic product, Oil production is expected to remain more or exports and total government revenues has been less unchanged over the next few years, and then substantial over the past two decades, reaching a to go into a gradual decline. Gas output, on the particularly high level in 2000 and 2001. other hand, should expand substantially over the The principal reason why revenues were so coming decade and is expected to be increasingly high in these two years is a combination of high oil significant in Norwegian petrolcwm output in prices, a strong USD against the KOK and histori- future. cally high petrolcum production. The share of Thc petroleum sector is also a substantial prtroleum investment in total capital spending in player internationally. Norway ranks as the world's the Norwegian economy was at its highest in the sixth largest producer and third largest net early 1990s. exporter of oil. It is also the world's third largest Total investment in the petroleum sector has exporter of pipeline gas, and Norwegian foreign been above NOK 40 bn every year since 1992, and sales of this commodity accounted for about two peaked in 1998 at roughly NOK 80 bn. Capital spend- per cent of global consumption in 2001. Roughly 10 ing declined to around NOK 56.9 bn in 2001. Figure per cent of west European gas consumption is 1.2 shows investment in the petroleum sector by covered from Norway. exploration, land-based petroleum operations, Scveral changes were made to state participa- pipelines and fields. tion in thc petroleum sector during 2001. The Figure 1.3 breaks down the government's net government sold 15 per cent of the statc's direct cash flow from petroleum operations into its financial interest (SDFI) to Statoil, which was also components. This clearly shows that the govern- partially privatised. A further 6.5 per cent of the ment's most important revenue sources in recent SDFI portfolio was sold in 2002.