Extending petroleum access could mean big spending boost

Download summary of the report here.
Download the report here

Petroleum output from the NCS is set to decline from 2015, the KonKraft report notes. Decisions taken today – or postponed for various reasons – will thereby have big consequences for the level of production and activity beyond 2020.
Covering production development on the NCS, the report was submitted to Mr Riis-Johansen at the Top Management Forum on 2 December 2008.
“This study focuses on measures which can combat a future decline in oil and gas output,” says Per Terje Vold, chief executive of the Norwegian Oil Industry Association (OLF).
“It also shows that Norway stands to lose substantial revenues, expertise and investment if today’s politicians fail to make wise choices over the next couple of years. The report identifies opportunities for limiting the expected production fall.”

Measures
KonKraft makes proposals for specific measures to help curb a rapid decline in oil and gas production from the NCS.
These aim in part to extract as much as possible of the resources in areas already open to the industry by maximising recovery from existing fields, maintaining a high level of exploration and making a continued commitment to new technology and modes of operation.
“The report also points out that making large discoveries is imperative if levels of production and investment are to be maintained,” says Mr Vold. “Opportunities for new finds are greatest in areas currently closed to petroleum activities.”

Impact
The report calculates the possible impact of opening the Nordland VI and VII areas as well as Troms II for exploration in 2012, and finds that it could generate development spending of NOK 200-250 billion in 2022-40. This represents a doubling of the estimated investment level in 2028.
Should access to these areas be postponed to 2020, a substantial reduction in activity is likely with a consequent low level of investment in the 2020s.
That in turn could result in a scaling-back of important activities, leading in the longer run to the loss of knowledge and expertise in key industry areas.
Production on the NCS could fall to roughly 1.6 million barrels of oil equivalent per day by 2030, a decline of roughly 60 per cent from the current level.
If the areas in question remain closed, investment on the NCS could fall dramatically to 20 per cent of the present level from 2030. 
These calculations are based on a long-term oil price of USD 60-100 per barrel.

Best basis
“A strong petroleum industry represents the best basis for developing a diversified energy cluster in Norway, which also pays growing attention to renewable sources,” emphasises Mr Vold.
 The petroleum sector contributes a third of the Norwegian government’s revenues and accounts directly and indirectly for roughly 250 000 jobs in Norway.
 If the report’s recommendations are adopted and lead to good decisions, this industry is likely to continue playing an important role for the country beyond 2040.

Further information from
Per Terje Vold, chief executive, OLF, tel: +47 91 61 77 26
Kjetil Hjertvik, communications adviser, OLF, tel: +47 92 23 70 69

NOTES TO EDITORS
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About KonKraft

KonKraft is a collaboration forum for the Norwegian Oil Industry Association (OLF), the Federation of Norwegian Industries, the Norwegian Shipowners Association and the Norwegian Confederation of Trade Unions (LO).

Its principal focus is on contributing to the continued competitiveness of the Norwegian continental shelf, including efforts to ensure that these waters remain an interesting area for investment by national and international players.
The KonKraft reports were commissioned by then petroleum and energy minister Odd Roger Enoksen. These are being produced by players in the petroleum industry.

List of projects:
 Energy nation Norway (published May 2008)
 Production development on the Norwegian continental shelf (published December 2008)
 Internationalisation (published August 2008)
 The petroleum industry and environmental issues
 The oil and gas industry in the far north
 Local and regional side-effects of the petroleum industry
The last three of these reports are due to be published in early 2009.

In addition, the Ministry of Petroleum and Energy is pursuing a separate project on structural changes in the petroleum industry.