High costs and weaker oil prices could drive cost cuts, which, while leading to a short-term drop in activity, would strengthen Norway's petroleum industry over the long-term, according to the Norwegian Petroleum Directorate (NPD).
The NPD's Director General Bente Nyland says the basin still has considerable reserves remaining to be exploited and saw the third highest number of wells spudded in 2014.
Image: The Ekofisk complex.
"A cost reduction now could lay the foundation for ensuring robust profitability over time," she said.
According to the NPD, 56 exploration wells were spudded in 2014 and 22 new discoveries were made – two more than the year before. Eight were in the North Sea, five in the Norwegian Sea and nine in the Barents Sea.
The resources in the new discoveries amount to 40-110 MMscm of oil/condensate and 25-75 billion scm recoverable gas.
Total oil and gas production peaked at 216.7 MMcum saleable oil equivalents, 47.4 MMcm oil equivalents less than in the record-setting year 2004, and 1.4% more than in 2013.
Nyland said new wells had produced more than expected and uptime had also improved.
According to the Norwegian Petroleum Directorate's preliminary figures, NOK 172 billion was invested in the petroleum activities on the Norwegian shelf last year. Investments are projected to drop around 15% from 2014 to 2015 and by an additional 8% to 2017, and will then plateau with a moderate increase from 2018.
Eleven fields were under development at the end of last year: nine in the North Sea, one in the Norwegian Sea and one in the Barents Sea, a record-high number which will result in considerable investments over the next few years, said the NPD.
However, in 2014 only one Plan for Development and Operation (PDO) was submitted, for the 34/10-53 S gas discovery near Gullfaks Rimfaksdalen in the North Sea.
"There are currently 79 producing fields on the Norwegian shelf. These are profitable fields where both the State and the companies are making money, and this is how it will stay, even if the oil price should drop further," says Bente Nyland.
"55% of Norway's total oil and gas resources remain in place, waiting to be produced," said the NPD. "These remaining resources provide a basis for continued significant value creation and high activity level for many years to come, she points out."
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