Page 4 - Euroil Week 02 2020

EurOil COMMENTARY EurOil
Norway awards APA blocks
Production dipped in 2019 but is on track to near its all-time record in 2024
NORWAY
Norway saw increased drilling, more discoveries and a record number of fields in production last year.
NORWAY has awarded 28 oil and gas compa- nies a total of 69 offshore licences to explore for petroleum in mature areas of its continental shelf, the Norwegian Petroleum Directorate (NPD) revealed on January 14.
The APA 2019 contest resulted in 33 licences being issued in the North Sea, a further 23 in the Norwegian Sea and 13 in the Barents Sea. The companies that picked them up ranged from international majors such as Shell, ConocoPhil- lips and France’s Total to Norway-focused play- ers like Equinor, DNO, Aker BP and Vaar Energi. Private equity-backed firms such as Chrysaor and Neptune Energy was were also among the winners.
The NPD said the results were a “vote of con- fidence” in Norway’s offshore potential.
“The companies show great interest in further access to new exploration acreage. This means that the industry believes in future value crea- tion on the NCS,” Norwegian Energy Minister Sylvi Listhaug said in a government statement.” “The companies show great interest in further access to new exploration acreage. This means the industry believes in future value creation on theNCS.”
The annual APA licensing rounds focus on areas of the Norwegian shelf adjacent to pre- viously explored or developed acreage. Their aim is to find more oil and gas in places where it could easily be tied to existing infrastructure, keeping costs low and maximising value from that infrastructure.
Authorities are eager to see more new fields brought on stream to support production, already projected to rise sharply over the next several years thanks to the Johan Sverdrup oilfield.
“Hopefulyl, the exploration in the awarded acreage will result in new discoveries,” Listhaug said. “This is important to ensure employment, value-creation and future government revenue for Norway’s largest industry.”
Norway also conducts numbered licens- ing rounds for frontier areas of its shelf, where exploration is naturally more risky. The gov- ernment intends to announce its next num- bered round ahead of Norway’s 2021 general election. But first it must agree on an updated plan on areas that should be made exempt because of environmental concerns, mainly in the Arctic.
The Barents Sea has relatively little infrastruc- ture, as development of its oil and gas resources only began around seven years ago. State gas transport system operator Gassco released a study this week calling for Norway to build either a new pipeline or a second LNG facility to
increase exports from the Barents region. Building this infrastructure would “require co-operation across production licences, and it’s therefore important to maintain the exten- sive collaboration between the players in these waters,”Gasscosaid.“Theanalysesinourreport provide a detailed and updated factual basis for
further work in this region.”
Notably, Gassco estimates that the gas trans-
port options it is suggesting would likely be profitable based on proven resources alone, excluding gas yet to be discovered.
2019 in review
Activity on the shelf was high last year, the NPD said in its annual report last week, pointing to increased drilling, more discoveries and a record number of fields being in production.
“We have a good foundation for continued high value creation from the oil and gas industry for a long time to come,” the directorate’s general director Ingrid Solvberg said in a presentation.
Some 57 exploration wells were sunk off Nor- way last year, versus 53 in 2018.
“It is reassuring that the industry still has sig- nificantfaithintheNorwegianshelf;in2020,we expect about 50 exploration wells,” Solvberg said.
This drilling led to 17 new oil and gas discov- eries, up from only 11 in the previous year. 10 finds were made in the North Sea, six in the Nor- wegian Sea and one in the Barents Sea.
While several of the discoveries were rela- tively small, according to the director, minor fields can still be developed if close to existing infrastructure. Around 503mn barrels of oil equivalent has been identified each year since 2011, according to the NPD.
“The last two years have seen a marked increase in proven volumes compared with the three previous years,” Solvberg explained. “This shows that there is a connection between the number of exploration wells drilled and discov- eries made.”
A record 87 fields were also in production at the end of last year, with output slated to reach a near all-time peak in 2024, just below the record 4.55mn boepd that was produced in 2004. Fur- ther increases at Johan Sverdrup and the launch of the Johan Castberg field in 2022 will be chiefly responsible for this growth.
Norwegian output dipped last year, owing to cutbacks in gas supply as a result of field main- tenance and low gas prices in Europe. Hydro- carbon production in the first 11 months of the year – the most recent data available – came to around 195mn cubic metres of oil equivalent, down 7% y/y. But the NPD said it expected a reversal in 2020.™
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