With ‘high’ oil & gas activity in 2023, more exploration in frontier areas on Norway‘s wish list

The Norwegian Offshore Directorate (NOD), former Norwegian Petroleum Directorate (NPD), outlines that 2023 saw “robust” exploration and investment moves on the NCS, with 92 fields in operation at year-end, 27 projects under development, and many exploration wells drilled. However, production was somewhat lower last year than previously expected, largely due to unplanned and extended maintenance shutdowns at multiple onshore facilities and fields.

While the consequences for gas production were greatest during the summer months when demand was lower, the production resumed full force starting from early autumn, with November and December 2023 being particularly good months for gas export. The preliminary figures for last month indicate a new export record for a single month, with just under 12 billion standard cubic meters of gas. The interest in the annual awards in predefined areas (APA) is still significant, as 25 companies applied for new acreage in APA 2023.

Furthermore, multiple investment decisions were made for projects that were approved by the authorities last year. Currently, 27 projects are under development, contributing to strong activity in the supplier industry, which serves to show that the temporary tax regime change adopted in 2020 has had “a very positive effect” on the Norwegian supplier industry, based on the NOD’s analysis.

The Norwegian Offshore Directorate pointed out: “As a consequence of high development activity, oil and gas production is expected to remain stable for the next few years. Over the short term, the new fields coming on stream will offset lower production from aging fields. Compared with forecasts presented on the shelf last year, we see a relatively large increase in investments for 2023 and 2024.

“This is a result of factors such as high activity levels in the industry, a weaker Norwegian currency and cost growth. Certain projects have accelerated investments and several fields have gained extended lifetimes and must therefore invest in upgrades.”

There is no refuting the importance of conducting exploration operations around existing infrastructure to ensure discoveries can be tied back and create value while the fields are still in operation. However, the NOD would still like to see companies actively explore more frontier areas to realize more of the resource potential, committing to a greater degree to test new ideas in such areas.

“The high activity level seen in 2023 will continue through 2024. The Norwegian shelf will continue to play an extremely important role for energy security in Europe for many years to come,” emphasized the Norwegian Offshore Directorate.

Interest in carbon storage on the rise

Moreover, the NOD confirms that the interest in storing CO2 on the NCS is continuing to increase, leading to the award of six exploration licenses since 2020, which are expected to be explored soon. In the meantime, several companies have already disclosed plans to seek out projects aimed at establishing value chains for capturing CO2, transport from Europe and storage on the NCS.

As a result, the Norwegian Offshore Directorate concludes that facilitating the award of more exploration licenses where CO2 can be stored will be an “important” next step in sound coexistence with petroleum activities and other offshore industries.

In addition, the Storting, Norwegian parliament, endorsed the government’s proposal to open parts of the Norwegian Continental Shelf for mineral activity on January 9, 2024. A final resolution will be made in the form of a royal decree.

“This means that commercial players can now contribute to clarify the existence of commercially attractive mineral resources, and whether such resources can be recovered in a sustainable manner. A process will now be initiated to announce and award licenses pursuant to the Seabed Minerals Act. At the same time, it will be important to continue the Norwegian state’s work to map resources and the environment,” added the NOD.

The Norwegian Offshore Directorate’s expectations for the NCS are in line with Westwood’s forecast from June 2022, which underscored that exploration activity would continue to thrive in Norway.

Compartir nota:

Contenido exclusivo para socios

¿Todavía no sos socio?