The foundation for probability in the Norwegian Shelf has been laid, according to the Norwegian Petroleum Directorate (NPD).
The NPD said the “adjustment process” for sub-$50 oil had been “extensive” but has since positioned the province to capitalise on what’s left in the basin. Firms have slashed between 30% to 50% of their projects costs on the basin, according to NPD.
“The foundation has been laid for increased profitability in both existing and new projects. This is essential in order to maintain a high activity level for upcoming years,” said director general Bente Nyland.
“We must prevent the focus on short-term profits from coming at the expense of long-term value creation for society.”
Investments on the Norwegian shelf in 2016 amounted to NOK 135billion, about NOK 50billion less than the peak years 2013 and 2014. However, investment is expected to increase in 2017, according to the NPD.
Five Plans for Development and Operation (PDO) were submitted in 2016, with a total investment value of NOK 23billion. Seven development projects with a total value of NOK 233billion are currently ongoing.
A total of 36 exploration wells were drilled in 2016, 20 fewer than the preceding year. Eighteen discoveries were made, one more than in 2015.
“Many of the discoveries are small, but most are located near existing infrastructure. This means that they can quickly become profitable developments if they are tied in to operational fields and facilities,” said Nyland.
“It is very important to maintain exploration activity at a high level in order to maintain stable production in the future.”
All awards in the 23rd round were located in the Barents Sea, and three are located in the recently opened area in the southeastern Barents Sea. The first exploration well in this area will be drilled as early as this year.
The probability of making new big discoveries is also highest in this area, according to Bente Nyland.
“New surveys also indicate significant opportunities in areas that are not open for petroleum activities,” she added.