Offshore Norway
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Offshore Norway 2002 Offshore Norway 2002 THE NORWEGIAN PETROLEUM DIRECTORATE ANNUAL REPORT 2 3 Offshore Norway 2002 Offshore Norway 2002 PART 1 SIGNALS 2 Health, Environment and Safety 48 2.1 Personal injuries 48 Value is not found but created 4 2.2 Work-related diseases 49 A visible NPD - value and dilemma 7 CONTENTS Renewal required on the NCS 11 2.3 Damage to load-bearing structures Those who seek will find 14 and pipelines 50 In the shadow of two fatalities 16 2.4 Hydrocarbon leaks and fires 51 Published by: The Norwegian Petroleum 2.5 Diving activity 52 Directorate Prof. Olav Hanssensv.10 P.O.Box 600 3 The Petroleum Activities and NO-4003 Stavanger PART 2 FACTS the Environment 53 Norway 1 Resource Management 20 Tel: +47 51 87 60 00 Fax: +47 51 55 15 71 1.1 The Resource accounting 20 PART 3 CO-OPERATION AND ORGANISATION E-mail: [email protected] 1.1.1 Resource accounting for 2002 20 Internet: www.npd.no 1.1.2 Resource status 20 Editorial team: 1.2 Exploration licenses 24 Projects 56 Inger Anda 1.3 Exploration activities 24 International Co-operation 60 Arne Bjørøen Britt-Laila Dahlberg 1.4 Production licenses 25 Organisation 65 Thor Gunnar Dahle 1.5 Exploration activty 25 Øystein Dretvik 1.5.1 Exploration drilling 25 Rune Goa 1.5.2 Exploration costs 32 Tarjei Moen Janne-B. Carlsen N’jai 1.6 Development and operations 33 1.6.1 Development drilling 39 Printed by: Gunnarshaug Trykkeri AS 1.6.2 Cessation plan 40 Appendix 1 68 1.7 Transportation systems 40 Appendix 2 78 Paper: 1.8 Production of oil and gas 42 Appendix 3 80 Lessebo Linne hvit, 1.9 Sale and taxes 42 150/250 g 1.9.1 Sale of petroleum 42 1.9.2 Production royalty 42 1.9.3 Area fees 43 1.9.4 CO2 -tax 45 1.10 Natural gas market 46 OFFSHORE NORWAY ON THE INTERNET: www.npd.no 4 5 The NPD’s overall aim is to contribute to creating the highest possible value for society from oil Value is not found but created and gas activities founded on sound management of resources, safety and the environment. PART 1 Offshore Norway 2002 The Norwegian continental shelf is now in a phase in which identifying opportuni- ties for enhanced value creation and areas where measures need to be applied has the highest priority. SIGNALS Good resource management offers huge gains. Report no 38 to the Storting (parliment) on oil and gas activities outlined two scenarios for the future of Norwegian petroleum pro- duction – decline and long-term. The differ- ence in value creation between the two comes to more than NOK 2 000 billion up to 2050, at today’s oil prices. Content The pessimistic decline scenario is based on government and industry resting content with what Norway has achieved so far. New capital spending and funds for research and develop- ment are cut, and the country simply reaps the benefit of earlier investment. In such a case, oil production will quickly decline to almost zero around 2020. Total output, including oil, gas and natural gas liquids, will approach zero around 2050. However, the government’s objective is to ensure that offshore development follows the long-term scenario. This assumes higher an- nual production and larger total volumes, and requires an aggressive and effective approach to resource development. Exploration wells must be drilled, expertise maintained, research intensified and heavy investment decisions taken – within a framework which includes many uncertain factors. But the socio-economic rewards of success will be very great. The NPD carried out a study in 2002 which reviewed 41 produc- The NPD management ing fields to analyse the opportunities for team, from left: Finn enhanced value creation. This survey found Carlsen, Gunnar Nybø, that roughly half the identified potential called Bente Nyland, Gunnar for the realisation of new technology. And 75 Østebø, Magne Ognedal, per cent of required measures are time-criti- Anne Vatten, Gunnar cal – in other words, possible new investment Berge, Eva Halland, must be approved soon. Ensuring that the Rolf Wiborg and Øyvind necessary decisions are taken will be a priority Tuntland. in 2003. (Photo: Emile Ashley) Continued p 6 → OFFSHORE NORWAY ON THE INTERNET: www.npd.no 6 7 A visible NPD – value and dilemma PART 1 Offshore Norway 2002 Measures least because cutting back on such spending as part By Gunnar Berge, director-general of the NPD The challenges facing Norway relate on the one hand of a planned run-down can hinder improved recov- to measures for lowering the level of risk and reduc- ery projects. An overall objective for the NPD is to be visible ing threats to life and material assets. This must be and have a high profile. But such visibility can paralleled by an emphasis on improving recovery to These issues are particularly relevant for the mature also be a two-edged sword. get more out of existing fields, cutting costs on these part of the sector, and illustrate the importance of a SIGNALS and exploring for new resources in areas where the holistic approach which integrates the need for sound infrastructure is still in place. health, safety and environmental (HSE) measures The oil industry and the Norwegian community with resource management concerns. expect the NPD to play a clear and prominent role Ekofisk, Frigg, Statfjord, Gullfaks, Oseberg and Troll in managing the country’s offshore resources and contain so much oil and gas that the licensees found Two tragic fatal accidents on the NCS in 2002 served for HSE. Being conspicuous in both these areas is it profitable to opt for stand-alone developments with as a sombre reminder of the dramatic consequences also an important objective for the agency. dedicated process facilities and transport solutions. which can follow from breaches of prevailing proce- As these fields gradually move into a final phase, pro- dures and regulatory requirements. But this visibility can easily become a dilemma, duction declines while operating costs remain high. because another of the NPD’s roles is to provide Against that background, it is important to stress that advice to its political masters – the Ministry of Pe- 1 See tables 1.1.5 and Maintaining good value creation from the large fields a culture based on short-sightedness will never be troleum and Energy for resources and the Ministry 1.1.6, appendix 1. on the NCS depends on reducing operating costs beneficial in the long run. On the contrary, all experi- of Labour and Government Administration on the and improving recovery. The potential is particularly ence suggests that companies which invest heavily HSE side. high in the Tampen area of the Norwegian North in HSE can also show the best financial results over Sea, which embraces such fields as Statfjord, Gullfaks time. The NPD’s high profile has certain limitations in and Snorre. Here, the authorities have challenged the relation to these ministries, which require a dif- operator and licensees to assess possible coordination Accidents and undesirable incidents carry heavy ferent professional approach. In this context, its across field and licence boundaries to ensure maxi- costs. So a lack of focus on HSE can have a specific analyses will above all form the basis for political mum recovery of the remaining reserves. impact on value creation. In addition to the cost- decisions – and the visibility of these decisions saving aspect, a conscious commitment to HSE can must take precedence over the technical input on The NCS contains a relatively large number of small be directly remunerative because it contributes to which they rest. and medium-sized discoveries which have yet to be increased regularity, robustness against undesirable developed, but which collectively contain a great deal incidents, greater flexibility and increased efficiency. An appreciation of this “directorate dilemma” is of oil and gas1. A number of these finds depend on crucial to understanding the role of the NPD. being tied back to existing infrastructure to achieve Investment in HSE also has a strategic aspect. A acceptable economics. company’s reputation on safety is increasingly taken Communicate into account by customers, and good results in this Ownership of the Norwegian continental shelf is In that respect, the North Sea represents the most area can yield competitive advantage both nationally vested in the state. Having an agency which can time-critical area since many of the fields there are and internationally. communicate on professional terms – on the basis in their final phase. If small discoveries fail to be ex- of existing oil policy – with players in all phases of ploited while the big installations remain in operation, Collaborating the offshore industry is absolutely essential for the there is a risk that they may never be profitable. The authorities in the North Sea nations are col- government. This responsibility has been delegated laborating with the industry to establish regulatory to the NPD. The challenge in the Norwegian Sea is to find good regimes which make it easier to move drilling units transport solutions for the small gas discoveries. across offshore boundaries. A professional dialogue between companies and Once again, these test the ability of licensees to government authorities is very important for cooperate. A template for applications to use mobile drilling resource management, where corporate interests units was developed in 2002 as a basis for official do not always coincide with more general social Costs consideration in all the North Sea countries. considerations. Older installations demand a great deal of mainte- nance, while improved recovery measures require This will also make an important contribution to en- The dialogue between the NPD and the industry new investment – although this can reduce operating hanced value creation because greater flexibility and on HSE is at least as important.