FACTS 2006 7 Foreword by the Director General of the Norwegian Petroleum Directorate, Gunnar Berge
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FACTS THE NORWEGIAN PETROLEUM SECTOR 2006 Ministry of Petroleum and Energy Visiting address: Einar Gerhardsens plass 1 Postal address: P O Box 8148 Dep, NO-0033 Oslo Tel +47 22 24 90 90 Fax +47 22 24 95 65 www.mpe.dep.no (English) www.oed.dep.no (Norwegian) E-mail: [email protected] Norwegian Petroleum Directorate Visiting address: Prof. Olav Hanssens vei 10 Postal address: P O Box 600, NO-4003 Stavanger Tel +47 51 87 60 00 Fax +47 51 55 15 71/+47 51 87 19 35 www.npd.no E-mail: [email protected] Editors: Ane Dokka (Ministry of Petroleum and Energy) and Øyvind Midttun (Norwegian Petroleum Directorate) Edition completed: March 2006 Layout/design: Janne N’Jai (NPD)/PDC Tangen Cover illustration: Janne N’Jai (NPD) Paper: Cover: Munken Lynx 240g, inside pages: Uni Matt 115g Printer: PDC Tangen Circulation: 8,000 New Norwegian/7,000 English New Norwegian translator Åshild Nordstrand, English translator TranslatørXpress AS by Rebecca Segebarth ISSN 1502-5446 Foreword by the Minister of Petroleum and Energy, Odd Roger Enoksen Status of petroleum sector and its value for Record-high activity in 2005 the Norwegian society The level of activity on the Norwegian continental shelf The petroleum sector is extremely important to was very high in 2005. More than 250 million stand- Norway. This industry is responsible for one ard cubic metres of oil equivalents were produced, fourth of all value creation in the country, and equal to the annual energy consumption of more than more than one fourth of the state’s revenues. 100 million Norwegian households. In 2005, produc- Nearly 80,000 people are employed in petroleum- tion commenced from the Kristin and Urd fields, related activities, and the spillover effects to other bringing the total number of producing fields up to industries are substantial. The global society is fifty. also dependent on Norwegian petroleum products, Petroleum-related investments in the Norwegian as we are the world’s third largest exporter of oil petroleum sector were record high in the past year. and gas. More than NOK 80 billion was invested in 2005, Norway has acquired knowledge and exper- and there are good indications that this level will be tise in efficient recovery of petroleum resources maintained in 2006. The level of investment is a major over the course of nearly 40 years of oil and gas determining factor for future petroleum activities and activities. Less than one third of our estimated it is thus important that the authorities support this petroleum resources have been produced, which development. indicates that the Norwegian continental shelf still There is considerable interest in the Norwegian has much to offer. continental shelf. In 2005, nine new companies were Some areas of the Norwegian continental shelf prequalified as licensees or operators, and several more can be considered mature. These areas require companies are currently being evaluated. more innovation and further development of tech- The authorities provide companies with access to nology. Even so, there are many opportunities new exploration area through annual licensing rounds. to be found in mature areas. Oil companies have In the Awards in Predefined Areas (APA) in 2005, the made significant progress in developing technology companies were offered 45 new production licenses in to increase recovery from fields already in pro- mature areas. The interest in the 19th licensing round duction, and the recovery rate on the Norwegian has also been considerable. This indicates that many continental shelf is high compared with other areas players still believe there are interesting prospects on in the world. It is important that we continue this the Norwegian continental shelf. positive trend, and to facilitate this the Ministry Several significant discoveries were made in 2005, of Petroleum and Energy has recently established despite the fact that the exploration activity was lower regulations on use of facilities by others. The than expected. 2005 also brought discoveries in less- objective of these regulations is to achieve efficient explored areas in the Norwegian Sea. The tight rig use of existing platforms and pipelines to ensure market is the main cause of fewer exploration wells more exploration for and production of petroleum. being drilled in 2005 than were expected at the begin- This is particularly important in mature areas of ning of the year. the continental shelf. The high activity level can, in part, be explained by the high price of oil, but other factors are also involved. The task of the authorities is to ensure that there are 6 well-adapted and predictable framework conditions in place for the players in the petroleum sector. This requires close cooperation between the authorities and the other players in the industry. Commitment areas in 2006 There are many signs that the high level of activity will continue in 2006, but this will not happen auto- matically. The decisions we make today determine the conditions for further development of the oil and gas activities, and are therefore important fac- tors when it comes to shaping the future scenario. As one of the key players in this connection, it is essential that the authorities work on the basis of a long-term perspective. Ensuring constructive interaction between the players in the petroleum industry is also important. In its “Soria Moria declaration”, the coalition government lays out the course for oil and gas sector. The government’s primary objective is to discharges to sea. Active development of technol- maintain high levels of value creation, employment ogy and introduction of the CO2 tax resulted in a and expertise in the industry. This will be accom- substantial reduction in emissions of greenhouse plished by means including reinforcing active gases from the Norwegian continental shelf. With exploration for oil and gas, and by increasing pro- regard to discharges to sea, the authorities and duction from fields in operation. By establishing a the industry have established a joint objective of proactive strategy for the northern areas, the gov- zero environmentally hazardous discharges, and a ernment wants to strengthen cooperation across number of measures are now being implemented national borders and contribute to transboundary to minimise such discharges. sharing of expertise. A strengthened and long- As we continue to develop the future of oil and term commitment to the northern areas will also gas sector in Norway, I will work to pave the way yield positive effects for outlying regions. so that the players are able to carry out efficient The government aims for Norway to lead the and environmentally friendly production of Norwe- world when it comes to technology and the envi- gian oil and gas for many, many years to come. ronment. It is important that we work together to ensure that petroleum activities do not conflict with consideration for the environment. The efforts to establish a value chain for CO2 constitute an impor- tant step in the right direction, in addition to other measures designed to reduce emissions to air and Minister of Petroleum and Energy FACTS 2006 7 Foreword by the Director General of the Norwegian Petroleum Directorate, Gunnar Berge There are still enormous values to be found in fields The Norwegian Petroleum Directorate manages on the Norwegian continental shelf, and our goal is to large volumes of information related to the activity on ensure that as much as possible of these resources are the Norwegian continental shelf. Each year, the oil produced. Development of technology is an important companies report resource estimates, planned produc- prerequisite in this connection. Today, it is possible tion, measures to improve recovery, environmental to produce oil and gas which was previously either emissions/discharges and costs for fields and discov- very difficult to recover or not profitable. Improved eries. This information constitutes an important basis mapping and reservoir management, combined with for the authorities’ work on the national budget. The extended reach horizontal wells, are examples of Norwegian Petroleum Directorate utilises these fig- methods that have yielded good results. As many as ures for studies, prognosis and analyses, as well as to eight of ten developed fields have achieved higher prioritise follow-up of production licences. Our goal is estimated recoverable resources after the fields to employ good resource management to contribute to started producing. This increase in resources is 60 creating the greatest possible value for the Norwegian percent on average. The value potential of a field also society from the oil and gas industry. increases when smaller deposits around the field are In the autumn of 2005, the Norwegian Petroleum developed and tied in to existing infrastructure, thus Directorate and the Ministry of Petroleum and Energy extending the life of the field. established a new system to follow up the operating ”Five billion barrels of extra oil reserves before companies on the Norwegian continental shelf. The 2015.” This is the new target set by the authorities for authorities want a tool that enables better monitoring the Norwegian continental shelf for the next ten-year of progress and activity on the respective fields, and period. This target implies that a number of projects which indicates whether the oil companies are doing must be realised before 2015, including measures to what they should in order to create value for the society improve the recovery from fields already in production, at large. Among other things, the new system entails as well as development of discoveries - in short, greater dialogue with the companies regarding key indicators value creation from mature areas on the continental such as growth in reserves, production, investments, shelf. Proving and developing previously undiscovered exploration and a number of qualitative parameters. resources will also help us to achieve this goal.