Helge Lund during the ONS 2012 opening, Stavanger, Norway

Australia and Norway are the No. 1 and No. 2 markets for investments in mature and developing basins despite historic “triple risks” of cost, regulatory and demand pressures, ONS 2012 conference-goers heard Tuesday.

“The risk appetite has changed,” said John Avaldsnes, partner and oil gas team leader in Ernst and Young’s 200-strong Stavanger office, yet “(high-cost Norway and Australia) are still first and second.”

Speaking about the short-term through the next 25 years, he said large new finds (Sverdrup, Geitung and Goliat) might have fuelled a belief that the technology used to produce here will be transferred to other global basins and help address a need for 47 million barrels per day over the next 20 years.

Before a transfer of technology and capital could be made, oil companies faced constrained capital access and uncertainty on more fronts than ever, Avaldsnes said. Volatile and increasingly regional oil and gas markets have built in jitters.

“There’s less consensus and confidence that oil prices will rise again and on gas prices,” he said.

His comment was echoed by ONS 2012 conference chairman, Jørgen Kildahl, and by Statoil chief exec Helge Lund.

“Gas seems to experiences a difficult life existing as it does alongside nuclear and coal,” said Kildahl, who said he was raising an energy paradox. Gas projects often need regulatory help to get going.

"(Gas) does need government subsidies," said Lund.

International Energy Agency numbers put gas demand growth at 1.7 percent annually, with oil demand growth rising 0.7 percent. World demand, the IEA reported this year, would need to be met by $20 trillion in investments from the oil and gas industry to 2035 if the fossil fuel needs of a future 8.6 trillion are to be met.

Power generation, including the replacement of nuclear by gas in Germany and Japan, is seen fanning the flame of gas growth, with supply coming from Russia and U.S., Chinese and Canadian unconventional operations.

Long-term, by about 2030, unconventional oil and gas are seen stealing the North Sea’s glory: supply is seen rising threefold to nine percent of the energy mix. Interestingly, Mexico was seen as a major reason unconventional gas begins a surge in 2020 to 29 percent of the mix by 2030.

Tags: Ernst & Young LLP's Energy Center