The demise of the North Sea doesn’t essentially imply the tip of Norway’s petroleum period—removed from it. Still, regardless of important reserves within the Barents Sea, Norway is about to embark upon a protracted interval of structural decline as its benchmark fields inch nearer to depletion and its reserves taper earlier than our very eyes.
The common Norwegian may not even understand the distinction between an oil-rich Norway and one that’s previous its prime. The nation’s large exterior and financial web place, in addition to its full power independence because of hydropower, permits for nice flexibility concerning future insurance policies. Yet its oil employees should put together for a future that’s far more Arctic, smaller-scale and gas-based.
There’s ample proof to conclude that each one the candy spots of Norway’s continental shelf have been discovered. The newest shelf licensing spherical (24) elicited a weak response, with solely 11 corporations making use of for manufacturing licenses. There was a lot to bid for—102 blocks had been up for grabs (by no means earlier than did the Norwegian Petroleum Directorate provide a lot, with an awesome majority of them within the Barents Sea), however resulting from their remoteness from formations deemed to be probably the most hydrocarbon-rich, bidders had been solely half as quite a few as they had been in the course of the earlier licensing spherical in 2015.
Other components additionally contributed, together with ongoing authorized disputes whether or not drilling within the Arctic breaches Point 112 of Norway’s structure (“pure sources needs to be managed primarily based on long-term concerns, safeguarded for future generations”) and questions over the admissibility of drilling in Russia-disputed Svalbard waters (10 blocks) might need scared away an investor or two.
The vicissitudes of oil manufacturing have additionally soured Norway’s outlook for 2017. Its producers have underperformed this 12 months (Jan-Oct information point out a median of 1.605 mbpd towards NPD’s forecast of 1.621 mbpd). This was largely resulting from Goliat’s travails, the primary Norwegian area within the Barents Sea to be introduced on-stream. Goliat was shut down for a month in September 2017 for upkeep works; nevertheless, October witnessed one other unplanned layoff as Norwegian authorities ordered ENI (the operator) to halt actions in view of great deficiencies within the platform’s electrical system. Plagued by false alarms and energy outages, the platform’s future hung thick within the air as Norwegian authorities performed an intensive evaluation earlier than manufacturing could possibly be restarted as soon as once more, for the eighth time because it began producing in early 2016.
Taking into consideration the doubling of the Barents Sea reserves estimate, Norway’s continental shelf nonetheless holds as much as 12.four BBbl of undiscovered oil reserves. This implies that two-thirds of Norway’s untapped oil is positioned within the Barents Sea, which is more likely to change into topic to far more meticulous public scrutiny.
Claims by Greenpeace and different campaigners that offshore Arctic drilling breaches the Norwegian structure is a dangerous one for the State—nearly 200 000 jobs are at stake if the courtroom acknowledges even partially the legality of the environmentalists’ calls for. All the extra so now that just about all new promising oil initiatives are positioned within the northernmost Barents Sea.
After 2001, Norwegian oil output recorded 12 consecutive years of falling manufacturing. The present section may finest be described as a lull earlier than the (presumably) final long-term manufacturing enhance in its historical past, anticipated to occur within the early 2020s. Much will rely on the 2 “Johans” Norway will convey on-line within the early 2020s: Johan Sverdrup (recoverable reserves price 2-Three BBbl) and Johan Castberg (zero.5 BBbl).
Much has been achieved to render Johan Castberg worthwhile at present value ranges—from an preliminary degree of 80 USD/bbl, Statoil and the opposite shareholders have introduced it to an alleged 35 USD/bbl. Against the background of falling oil providers prices, this has entailed a number of cost-cutting measures, most notably scrapping any type of semi-submersible…