Norwegian Petroleum Directorate ANNUAL REPORT 1998 NPD Annual Report 1998 1 The Norwegian Petroleum Directorate shall provide for a highest possible creation of value and contribute to a safe conduct of the petroleum activities and a sound exploitation of the resources, while having due consideration for the environment. The Norwegian Petroleum Directorate was established in 1972 and has approximately 350 positions. The Norwegian Petroleum Directorate answers to the Ministry of Petroleum and Energy with regard to resource management and administrative matters, and to the Ministry of Local Government and Regional Development for matters relating to safety and working environment. Within the area of CO2 tax, the Norwegian Petroleum Directorate exercises authority on behalf of the Ministry of Finance. The most important tasks of the Norwegian Petroleum Directorate are to have the best possible knowledge concerning discovered and undiscovered petroleum resources on the Norwegian continental shelf, to carry out supervision to ensure that the licensees manage the resources in an efficient and prudent manner and to supervise regulatory compliance so that a responsible safety level and working environment are established, maintained and further developed. The Norwegian Petroleum Directorate also has an important role with regard to influencing the industry to develop solutions which serve the best interests of society as a whole. The Norwegian Petroleum Directorate provides advice to supervising ministries and has been delegated the authority to issue regulations and make decisions regarding consents, orders, deviations and approvals pursuant to the regulations. Through its activities, the Norwegian Petroleum Directorate shall contribute towards making Norway a leader in environmental issues. The Norwegian Petroleum Directorate shall also provide neutral information concerning the petroleum activities to the industry, the media and to society at large. Norwegian Petroleum Directorate Telephone: 51 87 60 00 Internet: http://www.npd.no Prof. Olav Hanssensvei 10 Fax: 51 55 15 71 E-mail: [email protected] P.O. Box 600 « 51 87 19 35 X400: c=no a=telemax p=npd s=postboks 4003 Stavanger 2 NPD Annual Report 1998 Preface Resource growth and production The industry cooperation forum FORCE had yet The total resource growth in fields and discoveries on the another active year, and agreement was reached in 1998 to Norwegian shelf in 1998 has been estimated to be continue FORCE until the end of 2001. A number of approximately 287 million Sm3 o.e., divided between 92 seminars were arranged under the direction of the forum million Sm3 liquid (oil, NGL and condensate), and regarding topics related to increased recovery. These approximately 196 billion Sm3 gas. The resource growth seminars were of high technical quality, and were very well as a consequence of new discoveries in 1998 is presumed attended. Several new cooperation projects have been to amount to 45-75 million Sm3 oil (including NGL and started during the year. The Norwegian Petroleum condensate) and approximately 45-85 billion Sm3 gas. Of Directorate believes that these are important measures in these volumes, only the 6507/5-1 discovery of 34 mil- order to realize even more of the identified recovery lion Sm3 oil and 34 billion Sm3 gas has been recorded un- potential for oil. As of 31 December 1998, this has been der new discoveries, Resource Class 7. The other estimated at 670 million Sm3 oil. discoveries are still in an early evaluation phase, and have In 1997, the Norwegian Petroleum Directorate therefore not yet been recorded under new discoveries. awarded its IOR prize for the first time. The prize went to In technical accounting terms, these volumes are still in the Troll-Oil project with Norsk Hydro as operator, in the undiscovered resources group. recognition of courage and innovation in connection with New estimates show a reduced potential for resources increasing recovery from the thin oil zones on the Troll from potential future measures for increased recovery of field. It is the intention of the Norwegian Petroleum about 100 million Sm3 o.e. At the same time, the estimated Directorate that the prize will be awarded annually, if there average rate of recovery for the oil resources in oil fields are worthy candidates. in production and under development has increased from approximately 43 per cent in 1997 to approximately 44 Development per cent in 1998. A new review of the undiscovered The Norwegian Petroleum Directorate has considered the resources has been made during 1998. The estimate has plans for development and operation of Snorre B Phase II, been changed, mainly on the basis of a review of the areas Gullfaks Satellites Phase II, Brage, Yme Beta Vest, as well in the Barents Sea and confirmation of new exploration as a supplement to the PDO for well group T in the Troll play models in the Vøring Basin. The estimate for Vest gas province. undiscovered resources is now approximately 1.4 billion The plan for installation and operation of the Jotun gas Sm3 oil and 2.3 billion Sm3 gas, or a total of 3.7 billion pipeline has also been considered. Sm3 o.e. This is an increase of about 200 million Sm3 o.e. As a result of the somewhat extensive development since last year. This means that the total recoverable plans that were submitted from the autumn of 1995 and up resources have been adjusted upwards by 400 million Sm3 to the spring of 1997, activities in the industry reached a o.e. and are now 13.2 billion Sm3 o.e., divided between historic high in 1998. This led the Ministry of Petroleum approximately 6.5 billion Sm3 o.e. oil/NGL and approxi- and Energy to see a need for adjusting the timing of star- mately 6.7 million Sm3 o.e. gas. ting new projects. As regards the Norwegian Petroleum In 1998, approximately 169 million Sm3 oil (2.91 mil- Directorate, the focus has been on consolidating and lion barrels per day), approximately 8 million tonnes NGL/ supplementing the decisions that have been made in order condensate and approximately 43 billion Sm3 gas were to meet the strong increase in gas deliveries to the produced for export. Gross gas production, including gas Continent. Therefore, the spotlight has been aimed at tak- for injection, fuel, etc., amounted to approximately 73 ing care of the injection needs on the shelf so that the billion Sm3. The production of oil and NGL/condensate overall oil and gas resources can be exploited in the best in 1998 was approximately 8 million Sm3 o.e. lower than possible manner. This challenge has been reinforced by in the previous year. The most important causes of this falling oil prices throughout the year. were the production regulation resulting in a 3 per cent The work of paving the way for further development of cut which was implemented from and including the month time-critical discoveries and exploitation of existing of May, delayed production start for new fields, technical infrastructure has been followed up through consideration problems on the installations and well problems. of the plans submitted, and through announcement of blocks in the North Sea Round. Increased recovery During 1998, the Norwegian Petroleum Directorate New discoveries continued its focus on the challenges connected with A total of eight discoveries were made on the Norwegian measures to increase recovery. In particular, extended use shelf during 1998, two in the Norwegian Sea and six in the of gas injection was evaluated and viewed in context with North Sea. 32 exploration wells were completed during overall gas management on the shelf. A study of thin and the course of the year: 21 wildcat wells (of which one marginal oil zones on the shelf showed that efforts in the well failed and was completed before it reached its target) years to come should primarily be aimed at Troll, Sleipner and 11 appraisal wells. Vest, 7121/4-1 Snøhvit and 6407/1-3 Tyrihans Nord. Exploration for oil and gas in the deep-water areas in NPD Annual Report 1998 3 Preface the Norwegian Sea continued in 1998. Four exploration The fields’ final phase wells were drilled in these areas. Three of the wells were Some of the larger fields on the Norwegian shelf are now dry. BP, as operator of well 6305/7-1, proved substantial approaching the time for cessation of production. Factors gas resources in the southern part of the Ormen Lange such as oil price, tariffs and remaining resources may have dome. The Norwegian Petroleum Directorate regards this significance for the final shutdown date. The Norwegian well as an appraisal of the deposit discovered by Norsk Petroleum Directorate places special emphasis on ensuring Hydro in 1997. The resource estimate for this structure that the remaining resources are produced to the greatest is 315 billion Sm3 gas. This is a clear increase compared degree possible prior to shutdown. with last year’s estimate, which was 100 billion Sm3. The Norwegian Petroleum Directorate has undertaken Amoco, as operator of well 6507/5-1, made a an evaluation in connection with the recovery potential significant oil and gas discovery on the Dønn terrace. The and timing of cessation for Gyda and Ula, and has made a discovery has been named Skarv. Saga, as operator of well recommendation for changes in the existing agreements. 6406/2-6, made a discovery of gas and condensate south- The cessation plan for Albuskjell has been processed. The west of the Åsgard field. There is great uncertainty as to Norwegian Petroleum Directorate is concerned with the size of this discovery, and further exploration drilling ensuring that the installations that are removed from is necessary before the size can be established. production are disposed of in a way that is in accordance In the North Sea, Norsk Hydro proved oil southwest with national and international framework conditions.