Norwegian E&P activity continuues to flourish

Despite the recent loss of two oil ministers, the Norwegian sector continues to flourish, with activity remaining high on the exploration, development and production fronts. Both Statoil and Saga Petroleum celebrate their 25th anniversaries this year, having established themselves as enterprising companies with promising futures.

Norway's reputation for political stability has not suffered despite the ministerial turnover. Jens Stoltenberg left to become finance minister, while his successor Grete Faremo hardly had time to get her feet under the table before allegations of irregularities by the security forces at the justice ministry, where she had been minister, forced her resignation.

Effective policy

The slack rig market of a couple of years ago has been transformed into an ultra-tight market in which operators are looking to long-term contracts and sharing arrangements to ensure rig availability. Demand is kept strong by high exploration and development activity, with a premium on the modern units required by frontier exploration drilling.

The outcome has been a sudden rush of long-term contracts which have enabled Smedvig to plan three newbuild units - a fifth-generation semi and two drillships for ultra deepwater work. Odfjell, too, is in negotiations for the long-term contract which will enable it to complete construction of its half-built Bingo 8000 semisubmersible.

Renewed exploration

Altogether 35-40 exploration and appraisal wells will be drilled this year. In 1996, when 22 wildcats were completed or suspended, 10 discoveries were made, containing an estimated 380-700 MMboe, of which about 60% is oil.

Last year's count does not include the most exciting current finds, Saga's Lavrans and Kristin gas condensate structures off mid Norway. Lavrans was estimated to hold some 600 MMboe before the latest appraisal was spudded in January. In mid March the Kristin discovery well was about to be tested - the field appears to be of a similar size to Lavrans.

Barents renewal

The biennial re-assessment of recoverable resources by the NPD has led to a 16% increase to a total of 12.5 billion cu metres of oil equivalent, made up of 6.5 bcm of oil and 6.0 bcmoe of gas. However, the bulk of this increase is attributed to improved recovery from discovered fields, and the estimate of undiscovered resources has been raised only marginally to 3.5 bcmoe.

With 13 fields currently approved for development, and a couple of dozen others preparing to seek approval, production is expected to continue rising for some time yet. It is likely to remain well above 3 MMb/d well into the 21st century. This year has already seen Saga's Vigdis field come on stream nearly six months early and more than 10% under budget.

With supplies from the giant Troll gas field now flowing, gas production is set to more or less double by the early years of the next century.

Production will be further boosted by the start-up later this year of Esso's Balder, Norsk Hydro's Njord, Statoil!s Norne, and Saga's Tordis East fields.

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