Commentary 11/12, 2006

Published Nov 28, 2006
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Midlife Crisis?
Crisis? Not really, but it did catch your eye, didn’t it? Now that we have your attention, let’s look at where production on the Norwegian continental shelf (NCS) stands. After all, it’s over-the-hill, heading for decline, right? We wouldn’t be to sure about that.

For some time now, we’ve been hearing how the NCS has become a mature oil province, and for many, that seems to mean that we can close the book, that there’s nothing much to get excited about. We should stop and think about this a bit – it could be that the maturity for the NCS is that it’s just hitting its stride.

June 15, 1971 – an important date for Norway’s oil saga – was the first day of production at the Ekofisk field. During the last 35 years, we’ve seen oil production figures grow to more than 3 million barrels per day and then slack off to under 3 million.

But Ekofisk itself is a kind of barometer for the NCS. Ekofisk has seen peak production, has slacked off, is experiencing decommissioning, yet the field also has experienced recent growth and continues to produce. Tiebacks, satellites and improved technology mean that the field remains active, and continuing investments confirm that the field remains a valuable asset. And that’s after 35 years of production.

In the coming year, we’ll see Ormen Lange and Snøhvit come online. In some ways, we’ve been hearing about (and reporting on) these two for a long time. Wait a moment – it has been a long time. Ormen Lange was discovered almost a decade ago. The point is that it takes a long time for a discovery such as Ormen Lange to come on-line, in particular on the NCS, where conditions are, to say the least, special. The NCS has a reputation for being a proving-ground for innovation that is adapted to some of the most demanding conditions the world has to offer. Even in the best of conditions the road from discovery to production can be long.

Lately, the Barents’ giant, Shtokman, has been big news in Norway’s popular media. You’d think that Shtokman popped up about a year ago or so. Clear away the hype and focus on one small detail: this giant gas field was discovered in 1988, and factors such as politics, economics, technology as well as an on-shore industry that needed to be revitalised, meant that little has been done towards developing the field.

At the moment, Gazprom’s decision to tackle the field alone has been a disappointment for Norwegian operators, but suppliers eagerly await Gazprom’s plans, as suppliers have been a very real force behind the innovation that’s been so successful on the NCS, and they possess the know-how the Shtokman developers will need to tap. Statoil and Hydro’s willingness to help new technology along has been profitable for all and made export possible.

And speaking of the Barents, that’s where the new Norwegian oil frontier lies. Turn the clock back about 30 years on the Norwegian sector of the North Sea and you have a situation similar to the Barents Sea today. Move into the Norwegian Sea – about half way between the developed NCS and the Barents’ frontier – and you have a situation that holds its own promise.

The Norwegian Petroleum Directorate has told us this year that they project that Norway hasn’t even made it half way in the production of its proven reserves of oil and gas. So, you can say mature, but we bet there’s still some surprises out there.

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