Upstream regulator the Norwegian Offshore Directorate on Aug. 21 renewed calls for constructing a gas pipeline connection to the Barents Sea, saying unlocking Arctic resources would be key to maximizing the country’s hydrocarbon production potential.
In an annual resource report, the NOD emphasized the need to both maximize recovery from existing oil and gas fields, and to foster new exploration, particularly in the Barents Sea, where drilling interest has plummeted. It estimated Norway’s undiscovered hydrocarbon resources at 22 billion barrels of oil equivalent, while resources already discovered and yet to be produced total around 23 billion boe. Further oil and gas development was compatible with climate goals, the report said, noting decreasing levels of carbon emissions from new upstream projects thanks to subsea cables bringing low-carbon energy to installations, as well as Norway’s carbon capture and storage projects.
The latest NOD estimate forecast a peak in Norwegian hydrocarbon production in 2025, reflecting the expected start of decline at the giant Johan Sverdrup field, which currently accounts for more than a third of Norwegian oil output. The Sverdrup partnership has said it expects decline to begin in late 2024 or early 2025, following peaks of around 740,000 b/d. NOD statistics suggest Sverdrup may already be declining, with March the peak month for the current year, with output of 737,000 b/d on average.
Analysts at S&P Global Commodity Insights have said they expect Norwegian oil output to peak in 2025.
The NOD set out three scenarios for Norwegian oil and gas production levels, with the central, “base” scenario forecasting a two-thirds drop in oil and gas output by 2050 to 1.43 million b/d of oil equivalent — it did not break down the volume into separate oil and gas levels. The “high” scenario foresees a more gradual fall to half 2025 levels in 2050, and the “low” scenario foresees a rapid drop to near zero production in 2050.
The Norwegian shelf “still holds vast oil and gas resources, more than sufficient to ensure production, export and value creation to benefit the country for a long time to come. However, realization of these resources requires an ambitious path that will need careful consideration,” the report said. “Smart exploration and robust investments will be needed … If investments falter, the stage will be set for a rapid dismantling of our petroleum sector.”
“There is no question that exploration is a profitable activity. The Norwegian Offshore Directorate conducted an analysis of exploration activity over the past 20 years which confirmed that exploration for oil and gas … helps deliver incredible value,” it added.
Building a gas pipeline to the Barents Sea, which currently relies on liquefaction facilities at Hammerfest to export gas, would encourage broader development of the sector in Norway’s far north, the NOD said, reiterating calls that have faced opposition from some industry figures doubtful the area holds sufficient resources. “The Norwegian Offshore Directorate’s projections indicate that nearly two-thirds of all undiscovered resources are in the Barents Sea … Without a firmer commitment to increase gas export capacity, these gas resources and values could remain locked in the subsurface for quite some time,” it said.
Depressurization warning
Elsewhere, the report warned of one potential risk attached to Norway’s newfound status as Europe’s largest single gas supplier since the cutting of Russian pipeline deliveries: that operators seeking quick returns would too quickly turn to commercially producing the gas held in oil reservoirs, and thus depressurize the fields early, limiting oil output.
“Several fields that have been injecting gas for improved oil recovery have halted this injection in recent years. For many fields, halting injection in this manner can be the first step toward gas blowdown on the field, and thus increased gas production,” the NOD said, noting a couple of fields that had ceased gas injection: Visund and Gina Krog. “Once gas injection ends and gas production increases, most fields will see a minor increase in oil production, but in most instances, total oil recovery would have been higher if gas injection had continued.”
Norway is the source of several crude blends used in the Platts Dated Brent price assessment process. Dated Brent was assessed at $79.50/b on Aug. 20. Platts is part of S&P Global Commodity Insights.
Source: spglobal.com