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Oil and gas production in Norway
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According to OGJ, Norway had 73.6 trillion cubic feet (Tcf) of proven Natural Gas reserves as of January 2005. The North Sea holds the majority of these reserves, but there are also significant quantities in the Norwegian and Barents Seas. Norway is the eighth-largest natural gas producer in the world, producing 2.59 Tcf in 2003. However, because of the country's low domestic consumption, which totaled only 146 billion cubic feet (Bcf) in 2003, Norway was the world's third-largest net exporter of natural gas in 2003, behind Russia and Canada.
As is the case with the Oil sector, Statoil and Norsk Hydro dominate natural gas production in Norway. Several international majors, such as ExxonMobil and BP, also have a sizable presence in the NCS gas sector, though they often work in partnership with Statoil or Norsk Hydro.
Norway has begun to slowly reform the midstream and downstream gas sectors. In June 2001, the Norwegian government eliminated controls on natural gas prices. Also in 2001, the government created Gassco, a state-owned company responsible for administering the natural gas Pipeline network. Previously, Statoil and Norsk Hydro had controlled the network; it is hoped that placing control of the system with an independent company will ensure fair, indiscriminate access for all companies.
The company also manages Gassled, the network of pipelines and receiving terminals that exports Norway's natural gas production to the United Kingdom and continental Europe.
Exploration and Production of Natural Gas in Norway
A small group of fields account for the bulk of Norway's total Natural Gas production. The single largest field is Troll, which produced 930 Bcf in 2004 and represents about one-third of Norway's total natural gas production. Other important fields include Sleipner Ost (450 Bcf), Asgard (360 Bcf), and Oseberg (250 Bcf). These four fields compose over 70 percent of Norway's total gas production (see chart).
Despite the maturation of its major natural gas fields in the North Sea, Norway has been able to sustain annual increases in total natural gas production by incorporating new fields. In October 2004, the Kvitebjorn field came onstream with an expected production level of 710 million cubic feet per day (Mmcf/d).
Statoil expects to bring the Halten Bank West project onstream in October 2005, which includes estimated reserves of 1.2 Tcf spread among five fields (Kristin, Lavrans, Erlend, Morvin, and Ragnfrid).
Over the long term, Norway is counting on non-North Sea projects to provide significant natural gas production. In the Norwegian Sea, Norsk Hydro is currently developing the Ormen Lange field. The project consists of an offshore production facility and a subsea Pipeline linking the field to the gas processing terminal in Nyhamma.
In addition, the Ormen Lange project includes a pipeline linking Nyhamma to Easington, England (see below). Ormen Lange holds an estimated 14 Tcf of recoverable reserve and will have a full production capacity of 710 Bcf per year. Shell will take over as Operator of the project from Norsk Hydro in the production phase, which is scheduled to begin in 2007.
Also in the Norwegian Sea, Shell announced in 2005 that it had made a major discovery in the Onyx prospect, west of the company's existing Draugen field. According to the Norwegian Petroleum Directorate (NPD), the find could contain as much as 2.1 Tcf of recoverable gas reserves.
In the Barents Sea, Statoil is developing the Snohvit project, which contains an estimated 5.7 Tcf of proven Natural Gas reserves. Snohvit will combine production from three gas fields (Snohvit, Albatross, and Askeladd), a Pipeline connecting these fields to an onshore receiving terminal near Hammerfest, and a liquefied natural gas (LNG) export terminal.
According to Statoil, first production from the Snohvit field should occur in 2007, with production from the other two fields beginning in over the following 5-10 years. Norway is the second-largest exporter of natural gas to the EU, behind Russia. According to Statistics Norway, the country exported an exported 2.0 Tcf of natural gas to the EU in 2004. Germany is the largest source of Norway's gas exports, followed by France, the United Kingdom, and Belgium.
Oil exploration and production in Norwegian sector of the North Sea
According to Oil and Gas Journal (OGJ), the five countries in the North Sea region had 14.8 billion barrels of proven oil reserves in 2005. Norway contains the bulk of these reserves (57 percent), followed by the UK (30 percent). Total oil production for the North Sea region, including on- and offshore, was 5.9 million barrels per day (bbl/d), down 5.6 percent from peak production in 1999. Norway and the UK are the largest producers, though Denmark is also a net exporter.
During the first 6 months of 2005, Norway's oil production averaged 2.95 million bbl/d. The bulk of Norway's oil production occurs in the North Sea, with smaller amounts in the Norwegian Sea. Norwegian oil production rose dramatically from 1980 until the mid-1990s, but has since remained flat.
The largest oil field in Norway is the Troll complex, operated by Norsk Hydro, which produced 306,000 bbl/d in 2004. Other important fields include Ecofisk (ConocoPhillips), Snorre (Statoil), Oseberg (Norsk Hydro), and Draugen (Shell).
There is a great emphasis on increasing production from existing projects, including the incorporation of smaller satellite fields. Statoil, for example, plans to bring the Svale and Staer fields online by the end of 2005, a project that will take advantage of existing infrastructure at the Norne field. The company is also developing satellite wells at the Asgard field.
Industry analysts consider the Norway Continental Shelf (NCS) a mature oil producing region. Most of the country’s flagship oil fields have peaked, with production remaining flat or declining slightly. For example, the Oseberg complex produced 503,000 bbl/d in 1993, but only 229,000 bbl/d during the first five months of 2005.
Companies are still discovering oil in the NCS, but none of the recent finds have been significant. In 2003, the Norwegian Ministry of Petroleum and Energy (MPE) reported that oil companies made eleven new discoveries, potentially holding 189-566 million barrels of oil, far less than what the country produced for the year.
There are about 60 oil and Natural Gas discoveries that are still undeveloped, representing about 4.4 billion barrels of liquids and 16 trillion cubic feet (Tcf) of natural gas. Drilling activity on the NCS in 2004 was the lowest it has been in a decade. At the time, many blamed the low drilling rate on a four-month rig strike; however, during the first half of 2005, the rate of exploratory drilling was similar to that of 2004.
Because Norway shares the North Sea region with the United Kingdom, the two must coordinate efforts when dealing with reserves that straddle the division of each countries' respective zone. In April 2005, the two countries signed a bilateral treaty detailing the handling of such resources. The treaty was the first step toward a general framework for inter-boundary oil projects, as previous projects have been governed by separate, one-time treaties and negotiations.
Answer the following questions:
1. The majority of natural gas reserves are in
the Norwegian Sea
the Barents Seas
the North Sea.
2. What is Gassco responsible for?
3. What international companies work in cooperation with Statoil-Hydro?
4. What are the largest gas fields?
5. How has Norway been able to increase annual gas production?
6. What does the project Ormen Lange consist of?
7. What countries does Norway export its gas to?
8. The largest oil producer in the North Sea is
Denmark
The UK
Norway
9. Do you agree that NCS is a mature oil producing region? Prove your point.
10. Have there been any significant oil discoveries recently?
11. Why and what for did Norway and the UK sign a treaty?
Translate the following passage into Russian:
There is a great emphasis on increasing production from existing projects, including the incorporation of smaller satellite fields. Statoil, for example, plans to bring the Svale and Staer fields online by the end of 2005, a project that will take advantage of existing infrastructure at the Norne field. The company is also developing satellite wells at the Asgard field.
Industry analysts consider the Norway Continental Shelf (NCS) a mature oil producing region. Most of the country’s flagship oil fields have peaked, with production remaining flat or declining slightly. For example, the Oseberg complex produced 503,000 bbl/d in 1993, but only 229,000 bbl/d during the first five months of 2005.