Norway combined oil, gas output to dip

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Norway combined oil, gas output to dip

14 mins ago
Reuters Gwladys Fouche

Norway’s combined oil and gas production fell by 1 percent in 2009 from 2008 and is expected this year to continue its gradual decline resulting from dropping oil output from maturing fields. Skip related content

Gas sales, however, are set for another record year in 2010.

The Norwegian Petroleum Directorate (NPD) said on Friday Norway’s oil output will drop to 1.87 million barrels per day in 2010 from 1.99 million last year and 2.11 million in 2008. Gas sales are seen at 105 billion cubic metres from 103.5 bcm.

The government agency’s top priority is to increase recovery from existing fields, but it said that oil companies active on the Norwegian shelf have so far been cool to such pressure. They keep costs down to levels suited to a past era of cheap oil rather than spend more to extract less accessible deposits.

“The industry is in many ways conservative,” NPD Director General Bente Nyland told Reuters in an interview.

“They are still living in the low oil price scenario. They are reluctant to work on higher (forecasts for) oil prices.”

The NPD said that present development plans envisage recovery rates of 46 percent, meaning that 54 percent of the oil will remain in the reservoirs.

“A mere one percent increase in the recovery rate can generate an income of 100-150 billion crowns (10.8 – 16.2 billion pounds) for Norwegian society,” the NPD said, adding that production was not replaced by finds “to a sufficient extent.”

Energy Minister Terje Riis-Johansen said he had told state-owned oil company Petoro, which manages the government’s stake in Norwegian oil and gas fields, to back projects aimed at raising recovery rates to slow the decline in oil production.

“Petoro… will argue and work and vote for decisions which positively impact the start of processes on more recovery,” he told Reuters. “From now on, this will be on Petoro’s agenda.”

GAS OUTAGES

Riis-Johansen said Norway was doing everything possible to find out what caused a number of its natural gas facilities to break down in early 2010, to ensure that disruptions in flows that triggered gas balancing alerts in Britain were not repeated.

“I am sure that everything that is possible to do will be done to find out why this happened and ensure it will not happen again,” he said. “It is extremely important for Norway to be looked at and to be a reliable producer and exporter of gas.”

Norway’s Petroleum Safety Authority also said on Friday it asked operators of the gas facilities for details surrounding the outages, which were blamed on cold weather.

Norway aims to discover some 5 billion barrels of oil in the 2005-2015 period, but over the past four years it has discovered new reserves of about 1.85 billion barrels, the NPD said.

“The production will not appear magically,” Nyland said. “The Norwegian Petroleum Directorate is putting pressure on the oil companies to increase production from existing oil fields.”

Officials say it is easier to boost recovery rates now than in five or 10 years’ time because mature oilfields still in operation can more easily serve as hubs for recently found nearby smaller reservoirs. Once the oilfields shut down for good, it will be more costly to bring smaller finds on stream.

The NPD said that an “impressive” 72 exploration wells were completed last year leading to 21 new discoveries in the North Sea and seven new discoveries in the Norwegian Sea.

“However, most these discoveries are small,” it said.

Total oil and gas output, counted in units of oil equivalent, is expected to slip to 236 million cubic metres in 2010 from 238.6 million last year. The 2009 figure represents a 9.3 percent fall from peak production in 2004.

By 2014, Norway’s oil and gas output was seen down to 223 million cubic metres, the NPD said.

(With additional reporting by Wojciech Moskwa, Richard Solem and Ole Petter Skonnord in Oslo, Editing by Anthony Barker)

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