Norway's Big Three Oil Companies Team Up for Exploration

Written by Martin Lynch, European News Editor for IIR News Intelligence (Sugar Land, Texas)

Summary

As oil and gas production on the Norwegian Continental Shelf (NCS) faces decline, heavy hitters Equinor, Var Energi and Aker BP have agreed to work together to find the next major discoveries.

Norway's Equinor, Var Energi and Aker BP have agreed to team up to find the next major oil and gas discoveries on the Norwegian Continental Shelf (NCS), where production is facing decline. 

They will work together to pursue some of the largest remaining opportunities on the NCS to increase their chances of major discoveries that will be big enough to support new standalone field developments for long-term production. They have agreed to combine expertise, data, technology and exploration capacity to pursue "selected high impact exploration opportunities." Over the next four to five years, the companies plan to mature and test a portfolio of approximately 20--25 exploration opportunities, with an ambition to drill around five high-impact exploration wells annually. According to Industrial Info Resources data, there are almost 400 oil and gas projects underway in Norway's waters with an investment value of US$41 billion. 

Why now?

The reasoning behind the alliance comes down to risk, costs and declining output from the NCS in the coming decade. The partners agree that some of the largest remaining opportunities come with higher geological uncertainty, greater complexity and larger investment requirements. They claim it has made it "increasingly challenging to establish partnerships around high-impact prospects." By sharing risk and combining capabilities, they expect to be able to explore and test more of the potential discoveries than they would alone. It may also guarantee long-term survival.

The NCS in Decline

Over the decades the amount of oil and gas found in the NCS "has changed dramatically," according to Equinor. "Before 1986, discoveries could reach as much as 170 million barrels. From 1987 to 2013, the average find was about 30 million barrels, and today it's closer to 10 million barrels. The days of giant discoveries are likely behind us; the future of Norway's continental shelf lies in many smaller and mid-sized projects. Even with new activity, overall production is expected to gradually decline over the coming years. Analyses show that without new finds and tiebacks, production could drop sharply by 2035."

Maximizing Potential

Kjetil Hove, executive vice president for Exploration & Production Norway at Equinor, said: "By combining our expertise and exploration portfolios, we can high-grade the best opportunities, move faster and do more. This allows us to focus our efforts where the potential is greatest and will increase our chances of finding the fields of the future. Near-field exploration remains crucial, but we also need to pursue the bigger opportunities to sustain activity and value creation beyond 2035." Karl Johnny Hersvik, CEO, Aker BP, added: "The NCS still holds substantial undiscovered resources. By bringing together three strong exploration organisations, we can pursue more of the most promising opportunities and increase the chances of significant new discoveries. New technologies could open new, significant plays."

Key Takeaways

• Oil and gas majors Equinor, Var Energi and Aker BP have agreed to work together to find the next major discoveries on the Norwegian Continental Shelf (NCS).
• The companies plan to mature and test a portfolio of 20--25 exploration opportunities, with "an ambition to drill" five promising exploration wells annually.
• Industrial Info Resources data is tracking almost 400 oil and gas projects underway in Norway's waters with an investment value of US$41 billion. 

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).