Activity on the NCS set to remain high

The level of activity in Norway’s petroleum industry has been rising sharply in recent years, buoyed by high energy prices, a positive trend for discoveries and upgrading requirements on older fields. While the peak will be passed this year, investment and activity on the Norwegian continental shelf (NCS) will remain at a historically high level and continue to require substantial capacity at both oil companies and suppliers.

These conclusions are drawn in the business trend report for 2014 from the Norwegian Oil and Gas Association. This notes that the world economy is still fragile six years after the global financial crisis began, energy demand has moderated and oil prices are at their lowest level for four years.

At the same time, costs on the NCS have risen substantially since 2004, a development very much shared with other petroleum provinces. This trend had contributed to a reduction in the robustness of a number of potential field developments. The 2014 report has accordingly been entitled Time for consolidation.

As early as our report for 2012, we assumed that 2014 would be a peak year because a number of the large producing fields on the NCS were then set to complete their biggest modifications,” says Bjørn Harald Martinsen, manager for economics at the Norwegian Oil and Gas Association.

“The current decline in investment therefore represents to a great extent an anticipated correction. Total capital spending on the NCS is estimated to fall from NOK 221 billion this year to NOK 197 billion in 2015, measured in fixed 2014 kroner. It will thereafter lie between NOK 190 billion and just over NOK 200 billion per annum until 2019. “At the same time, estimates for capital spending are relatively robust for oil prices around today’s level over the next few years.

 

After a decade with an overall decline in production from the NCS, a high level of exploration and new discoveries mean that the industry faces a turning point where output could once again recover somewhat. If a return to a clearly declining trend for production is to be avoided from the start of the next decade, however, it will still be necessary to make new discoveries.

A step-by-step expansion of operations based on knowledge, technology and experience has historically been an important yardstick for developing Norway’s petroleum sector. New areas are now awaiting their turn. Following the postponement of a decision on an impact assessment for the waters off Lofoten and Vesterålen until 2017, much of the future for Norwegian petroleum activities will lie in the Barents Sea.

But demanding climatic challenges, restrictions on drilling activity and remoteness from infrastructure also lay the basis for new cost challenges. While these must be overcome by the industry, they call at the same time for government measures which help to bridge the gap between socio-economic and commercial profitability.

Related news

Latest news

Nemko Publishes Short Notes on China

Nemko has published a some updates related to China and new initiatives regarding standards, product safety and cyber security. 

Technip and FMC Technologies Shareholders Approve Business Combination

FMC Technologies Inc. and Technip S.A. have announced that the companies' respective shareholders have voted to approve the proposed business combination of Technip and FMC Technologies.

Nordsild

The fishing vessel "North Herring" belonging to Norsild Havfiske AS with factory from Melbu Systems was in August ready for cod fishing.

One of the Strongest Earthquakes in New Zealand in 200 years

NORSAR reports that New Zealand’s South Island was struck by one of the strongest earthquakes the country has observed in the past 200 years November 13, 2016.

Jotne Subsea Gas Lift for Balder Field

In April 2015, Jotne E&P was awarded an EPC contract to build the subsea gas lift manifold for Exxon Mobil on the Balder Field.

Jotne Awarded Contract for Subsea Protection Structure

In January 2016, Jotne E&P was awarded a contract for the delivery of a subsea protection structure and GRP cover for a Xmas tree at Balder field. The contract was awarded by Ocean Installer.

UiB and CMR in high-tech collaboration

Students from UiB last month joined an experiment with an ultra-high-speed camera. This was a part of the troubleshooting of the Field Kelvin Probe currently under development.

Hatteland Display at International Workboat Show 2016

Hatteland Display are highlighting its diverse portfolio of maritime displays and panel computers on its booth (#1658) at the International Workboat Show 2016 (IWBS 2016) this week.

Servogear Announces Upcoming Events

Servogear announces a busy end of November, beginning of December. They will be participating at important international exhibitions.