Without Investments, Norway Sees Oil Production Plummeting

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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--Although recent data show oil and gas production outpacing the government's expectations, Norway said it expects output to drop considerably after 2025 without significant investments.

"Total production from reserves in existing fields is expected to decline after 2025, in line with depletion and pressure drop in reservoirs," the Norwegian Offshore Directorate (NOD) said in an annual resource report, published Thursday. "Based on current knowledge, production from operating fields is expected to drop by more than half during the period through and including 2033."

Norway is among the world's more prolific oil and natural gas suppliers but draws on renewable energy to power its own economy. More recently, the use of electricity over diesel at offshore rigs is helping to decarbonize the sector.

Since the outbreak of war in Ukraine in 2022, meanwhile, Norway's regional role as an oil and gas producer has grown in importance. Russia before the war was the main supplier of natural gas to the broader European market, but that's since changed.

NOD, which governs offshore oil and gas activity, reported the nation produced an average of 12.7 billion cubic feet per day (Bcf/d) in natural gas last month, 4.1% higher than June levels and 12.3% above the government's expectations.

Data from the European Commission, meanwhile, showed Norway had a 54% share of the European gas market, compared with just 17% for Russia.

Norwegian gas production was suppressed last year relative to an historic average. In its base-case scenario, the government said it still expects multiple discoveries in its territorial waters, which would be accompanied by investments necessary to stimulate production at existing fields.

"Despite this, resource growth will not be sufficient to offset the overall gradual decline, due to diminishing production from the major, mature fields," the government said.

For natural gas, the offshore regulator said 44% of the total expected reserves have already been produced. Of the fields already in production, the Troll field in the North Sea is the field with the most potential for future reserves, followed by the Snohvit field in the Barents Sea and Ormeen Lange in the Norwegian Sea.

"When Troll eventually comes off plateau, there are no other fields or discoveries large enough to offset this decline," the government said.

For oil, it's the multi-phase Johan Sverdrup field in the North Sea that has the most oil potential, followed by Johan Castberg. Johan Castberg is expected to come onstream later this year.

The government maintained that exploration and production was a lucrative business. The value of discoveries over the last five years is more than twice the exploration cost. Investing in what's left, however, is key to a gradual decline.

"Smart exploration and robust investments will be needed to curb this decline," the regulator said. "If investments falter, the stage will be set for a rapid dismantling of our petroleum sector."

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