O I^ the Norwegian Petroleum Sector
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O i^ H- -^ 3L o co '• ' • :.* The Norwegian Petroleum Sector ETDE-NO-20086204 32/ 32 PLEASE BE AWARE THAT ALL OF THE MISSING PAGES IN THIS DOCUMENT WERE ORIGINALLY BLANK DISCLAIMER Portions of this document may be illegible in electronic image products. Images are produced from the best available original document. Facts 2000 The Norwegian petroleum sector Ministry of Petroleum and Energy Visiting address: Einar Gerhardsen plass 1 Postal address: P O Box 8148 Dep, N-0033 Oslo Tel +47 22 24 90 90 Fax +47 22 24 95 65 http://www.oed.dep.no E-mail: [email protected] Telex: 21486 oedep n Editor: Odd Reistad Solheim, MPE English editor: Rolf E Gooderham Edition completed: March 2000 Layout/design: Fasett AS, www.fasett.no Photos: ©Leif Berge and ©0yvind Hagen.Statoil. Field photos from operators' archives. Paper: 240 g Munken Lynx/115 g Galeri Art Silk Printer: Gunnarshaug Circulation: 15 000 Norwegian/10 000 English ISSN-1501-6412 Foreword The past year was challenging for the petroleum Norwegian crude oil production averaged 2.9 industry. Oil prices at the beginning of 1999 were million barrels per day in 1999.This output will about a third of the level they reached at the end. peak in the near future, and then begin to decline. We can also expect to see big oil price fluctuations But the Norwegian continental shelf nevertheless in future. Out of consideration for a stable develop- represents a substantial resource base. That applies ment of the oil market, the Norwegian economy to fields in operation, under evaluation and yet and the administration of the country's petroleum to be discovered. Recovering the bulk of these resources, the government resolved in December resources calls for new investment.They accordingly 1999 to continue the reduction of 200 000 barrels form a basis for continued activity, employment per day in Norway's crude oil production in the and government revenues from the industry. first quarter of 2000. In the years to come, maintaining the Norwegian Our most important ambition for the oil industry continental shelf as an attractive region for new is to maximise value creation for the Norwegian investment will be an important task. community while taking care of environmental The Norwegian oil and gas business has devel- and safety considerations. Petroleum revenues oped into an internationally competitive industry account for a very important part of the govern- In many areas - such as subsea production - it ment's overall income. From 1995, a growing ranks with the world leaders. Exports of petroleum- proportion of these earnings have been transferred related goods and services have expanded sharply to the Government Petroleum Fund.The greater in recent years. part of the revenues from the petroleum industry Our 16th offshore licensing round is now immi- are now being converted to financial assets at nent.The blocks placed on offer in the autumn the disposal of later generations. of 1999 will be awarded in the spring of 2000. \cu-cf ft. Marit Arnstad Minister of Petroleum and Energy 21 February 2000 -ti •'.' Contents Foreword 5 Concepts and conversion factors 11 CHAPTER 1-Summary 12 Petroleum resources 13 Exploration 13 Development 13 Oil and gas production 13 Proceeds from oil and gas sales 13 CHAPTER 2-A brief history 14 North Sea 15 Norwegian Sea 16 Barents Sea 16 CHAPTER 3 - State organisation of petroleum operations 18 Ministry of Petroleum and Energy 19 Ministry of Local Government and Regional Development 20 Norwegian Petroleum Directorate 20 State's direct financial interest (SDFI) 20 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 SDFI 27 CHAPTER 6 - Mainland operations, technology and petroleum research 30 Offshore supplies industry 31 Employment effects 31 Technology and petroleum research 32 CHAPTER 7 - Petroleum resources 34 CHAPTER 8-Production 38 Forecast production 41 CHAPTER 9 - Market status for Norwegian petroleum products 42 Norm price 43 Norwegian crude on the world market 43 Sales of natural gas liquids (NGL) 45 Dry gas sales 45 Refining 47 Retail sales 47 Petrochemicals 48 CHAPTER 10 - Environmental aspects 50 Emissions to the air 51 Discharges to the sea 52 Framework conditions 53 Cooperation with the industry 54 CHAPTER 11 - Legal and licensing framework 56 Introduction 57 Main features of the licensing system 57 Key documents and legal provisions in the licensing system 58 Other key legal provisions 59 CHAPTER 12 - Licensing rounds 60 1st-4th licensing rounds 61 5th-10th licensing rounds 61 11th-15th licensing rounds 61 Barents Sea project 62 Awards outside licensing rounds 62 North Sea round 62 CHAPTER 13 - Exploration operations 64 Seismic surveys 65 Exploration drilling 65 Discoveries 67 Future exploration 67 CHAPTER 14-Fields in production 70 Ekofisk area: 71 • Ekofisk 71 • Valhall 74 • Hod 75 • Gyda 76 . Ula 77 • Yme 78 Sleipner area: .. 79 • Sleipner East 79 • Sleipner West 80 • Varg 81 Frigg area: 82 • Heimdal 82 • Frigg 83 • Fr0y 85 • Balder ' 86 •Jotun 87 Statfjord area: 88 • Statfjord _ . 88 • Statfjord North 90 • Statfjord East 91 • Murchison 92 . Gullfaks _ .. 93 • Gullfaks South . _ . 95 • Rimfaks . 96 • Gullveig . 97 • Vigdis 98 • Visund 99 • Snorre 100 • Tordis 101 Oseberg and Troll area: . .._ 102 • Oseberg . 102 • Oseberg East 104 • Togi 105 • Veslefrikk 106 • Brage,. _ 107 • Troll Phase II ... 108 • Troll Phase I 110 Norwegian Sea: 112 • Njord .. ...... 112 • Draugen 113 • Heidrun 114 • Nome .. 115 •Asgard 116 CHAPTER 15 - Fields under development 118 CHAPTER 16-Future developments ..... 124 CHAPTER 17 - Pipelines and land facilities _ ........ 138 CHAPTER 18 - Licence interests on the Norwegian continental shelf 154 CHAPTER 19 - Company interests in fields and production licences 176 CHAPTER 20-White Papers, etc .. ... 184 White Papers of general interest _ 185 Proposition (bills) relating to the Act Pertaining to Petroleum Activities 185 Propositions relating to taxation and royalties 186 Propositions 186 CHAPTER 21 - Useful postal addresses 188 Government ... 189 Operators .. 189 Other licensees 190 Other 190 Concepts and conversion factors for fields and discoveries based on new studies or RESOURCES innovations in production technology. Volumes Petroleum resources are a collective term which are given in standard cubic metres (scm) for oil embraces technically recoverable volumes of and gas, and in tonnes for NGLs.Total resources, oil, gas and natural gas liquids (NGLs).They are which combine the various types of petroleum, broken down into discovered and undiscovered are given in scm of oil equivalent (scm oe). resources, with the former further subdivided into Conversion factors for oil equivalent are calcu- fields and discoveries. By definition, a discovery lated from the average calorific value for each is made when an exploration well identifies petroleum type: recoverable petroleum. A discovery will be re- defined as a field when its plan for development 1 scm oil 1.0 scm o.e and operation (PDO) has been approved by the 1000 scm gas 1.0 scm o.e authorities. Undiscovered resources are subdivided 1 tonne NGL 1.3 scm o.e into mapped resources (prospects) and unmapped resources (exploration models). Total resources and reserves were given earlier in tonnes of oil equivalents (toe). RESERVES Gas 1 cubic foot 1 000.00 Btu Reserves are defined in accordance with the 1 cubic metre 9 000.00 kcal Norwegian Petroleum Directorate's classification system, and include recoverable volumes of 1 cubic metre 35.30 cubic foot petroleum as specified in approved plans for fields in production or under development. Crude oil 1 scm 6.29 barrels Reserves may be regarded as the economically 1 scm 0.84 toe recoverable part of the petroleum in a field. A distinction is made between original and 1 tonne 7.48 barrels remaining recoverable reserves. 1 barrel 159.00 litres Estimated resources and reserves change 1 barrel/day 48.80 tonnes/year from year to year as a result of new discoveries, 1 barrel/day 58.00 scm/year production, and adjustments to earlier estimates Scm of Barrels MJ kWh TCE TOE natural gas of oil 1 MJ, megajoule 1 0.278 0.0000341 0.0000236 0.0281 0.000176 1 kWh, kilowat hour 3.60 1 0.000123 0.000085 0.0927 0.000635 1 TCE, tonne coal equivalent 29 300 8 140 1 0.69 825 5.18 1 TOE, tonne oil equivalent 42 300 11 788 1.44 1 1 190 7.49 1 scm natural gas 35.54 9.87 0.00121 0.00084 1 0.00629 1 barrel of crude oil (159 litres) 5 650 1 569 0.193 0.134 159 1 CONCEPTS AND CONVERSION FACTORS 11 Summary PETROLEUM RESOURCES OIL AND GAS PRODUCTION Petroleum resources in the order of 9.6 bn scm Norwegian offshore petroleum production in 1999 oe have been discovered on the Norwegian totalled 227 scm oe, including 168.6 mill scm oe continental shelf (NCS).This figure includes an of oil (2.9 mill barrels per day), 45.4 mill scm oe expected adjustment of about one bn scm oe to of gas and 12.9 mill scm oe of NGL/condensate. the recovery levels from fields and discoveries. Oil and gas production was roughly on a par Of the total, 76 per cent has been proven in with 1998, while NGL/condensate sales rose by the North Sea, 20 per cent in the Norwegian Sea 19 per cent.The Balder, Gullfaks South, Jotun, and four per cent in the Barents Sea. Production Oseberg East.Visund and Asgard projects came on to 31 December 1998 totalled 2.7 bn scm oe. stream during 1999. At present rates of production, In addition, about 3.7 bn scm oe is expected to Norway's remaining discovered oil resources - be found through further exploration.This gives including improved recovery measures - will a total resource estimate of 13.2 bn scm oe.