NORWEGIAN PETROLEUM DIRECTORATE: Embedding New Industries with Valuable Existing Production

Since production started on the Norwegian continental shelf (NCS) in 1971, oil and gas have been produced from a total of 119 fields and at the end of 2021, just short of 100 fields were in production: 71 in the North Sea, 21 in the Norwegian Sea and two in the Barents Sea. Production from the North Sea has been dominated by large fields such as Ekofisk, Statfjord, Oseberg, Gullfaks and Troll, all of which have been key to the development of petroleum activities in Norway and the establishment of infrastructure, enabling tie-in of a number of other fields. 

Overall production from these fields in 2021 was 231 million standard cubic metres of oil equivalents (Sm³ o.e.), a 2% increase on 2020’s values. In recent years, activity levels on the Norwegian shelf have been high, with licensees deciding to develop multiple new discoveries, alongside several ongoing field development projects close to completion or having recently come on stream.

Simultaneously, large investments have been made on producing fields to improve recovery and to position total production to remain relatively stable for years to come. “There will be a high activity level in the industry the coming years, and the petroleum industry will continue to be Norway’s largest and most important industry for the foreseeable future,” relays Norwegian Petroleum, a collaboration between the Ministry of Petroleum and Energy and the Norwegian Petroleum Directorate (NPD).

“New projects on fields in operation, as well as infill drilling, will result in a relatively high level of activity. In addition to the activities on existing fields, there are several new fields under development and others that are expected to be decided for development.”

BROADENING REMIT

The NPD was established in 1972, based in Stavanger with a second location in Harstad, and is responsible for managing and making available petroleum data from the NCS. This work of collecting and making data available has given the NCS a competitive advantage, the NPD asserts, compared with other areas of the world where oil and gas are found.

“Our primary objective,” Director General Ingrid Sølvberg outlines of the directorate’s main areas of responsibility, “is to contribute to the greatest possible values from the oil and gas activities to the Norwegian society, through efficient and prudent resource management. We also have the significant duty to ensure that companies operate according to the national petroleum regulations, meaning that we have extensive contact with all those working on the Norwegian continental shelf.

“We have a responsibility on a national scale for data from the NCS,” she adds. “This data, overview and analyses constitute a crucial factual basis on which activities are founded.”

This is just one of what Sølvberg identifies as three fundamental areas comprising the NPD’s overall remit. “We have mapped the entire NCS,” she details, “and have identified huge potential when it comes to safe storage sites for CO₂, for example, an area which is rapidly gaining interest and traction as thoughts turn keenly to the energy transition. We then have a dual duty to not only promote the NCS as a safe storage site, but also to contribute to ensuring that Norway has the appropriate effective regulations in place to fulfil such an undertaking.”

The NPD initiated the effort to define potential storage locations for CO₂ on the Norwegian shelf more than a decade ago, resulting in an ‘atlas’ which revealed the possibility of storing more than 80 billion tonnes on the shelf. In April, she reveals, three companies were offered exploration licences to store CO₂ in two areas on the NCS, one in the North Sea and one in the Barents Sea, the second time that acreage is has been awarded.

“These awards show that CO₂ storage is relevant for traditional energy companies as well as new players in an offshore activity that requires different business models than oil and gas projects,” Sølvberg summarises of the significant interest surrounding these developments. “The access to large volumes of data from 50 years of petroleum activities is a crucial factor for succeeding in this new industry.”

An emerging shelf industry represents the third of the NPD’s trifecta of specialisms, Sølvberg continues. “The NCS is currently not open for the extraction of seabed minerals, but much work is imminent and we as a governmental body have been out offshore taking samples of rock found in very deep waters. Currently we are analysing its mineral content and the potential for large-scale extraction in the future.” Gathering information and mapping the potential is vital in making a foundation for decision on whether to open or not the NCS to commercial extraction of seabed minerals.

The analysis that the NPD has conducted so far reveal high contents of copper, zinc and cobalt, and in addition rare earth elements have been found in samples from manganese crusts. “On the NCS we have sulphides and manganese crusts, containing metals and minerals that are crucial for the technology that surrounds us today, such as batteries, wind turbines, PCs and mobile phones – they are important metals in the effort to further electrify society,” Sølvberg explains.

“They are in high demand in industry, and the content of some of these metals is high compared with deposits from other places around the world.”

CO-EXISTENCE AT SEA

With CO₂ injection acreage gathering interest and seabed mineral extraction well on the way to becoming an established industry on the Norwegian shelf, new players and enterprises are emerging all the time. The technology pilot Hywind Tampen, for example, is the world’s first project to supply power to petroleum installations from floating offshore wind, with the plan calling for the turbines to be installed in the North Sea this year.

Common across all of these new technologies is the requirement of space on the NCS, and successfully coordinating this is an area on which the NPD has placed real significance. “The co-existence of oil and gas with these new, alternative forms as well as other users of the sea and shelf is a crucial consideration for us, and we have a key role in facilitating it,” says Sølvberg.

The combination of high production, significant demand and high commodity prices has resulted in record highs for revenues from the Norwegian shelf, and the NPD expects stable, high production to continue over the next few years. Sølvberg explains. “In Norway, the majority of the value created by the petroleum industry has been paid back into the state – either to the government or to the people of the country,” she relays, adding that the developments and expansions witnessed in recent times is certain to continue and amplify.

“The Norwegian government is, at present, looking carefully at expansion and diversification into the use of more renewable energy sources offshore,” Sølvberg delineates of what will shape the NPD’s future. “While we will of course continue to produce oil and gas from the NCS for many decades to come, especially as international demand increases, it is all about finding new ways to produce energy as a scarce resource. Norway has an abundance of natural resources that we can feed into the energy mix.”

Like the rest of the world, NPD is firmly set on successfully managing the energy transition, with a huge amount of know-how to draw on in the expansion into new systems and value chains. “We can use the knowledge, experience and confidence that we have gained from our long history in the petroleum industry with all of these emerging industries,” Sølvberg asserts, “both in terms of the regulatory side and specific technical expertise.”

“We are stepping up our efforts in achieving more efficiency gains from digitalisation and new ways of working. We have a huge national library containing reams of data and information on the shelf, both the infrastructure but also the seabed and subsurface geology side, as much as possible of which we have made available to the public. This allows the companies, engineers and geologists themselves can find and put together our information and, potentially, use it to discover even more oil and gas, and to explore the possibilities for value creation also from CO₂ storage and seabed minerals.

“We are now working hard to manage this data in any even better and more efficient way, so that it generates even more value for the future.”