RESOURCE REPORT EXPLORATION 2018

 
RESOURCE REPORT EXPLORATION 2018
RESOURCE REPORT
 EXPLORATION 2018

 R E S O U R C E R E P O R T E X P L O R AT I O N 2018
RESOURCE REPORT EXPLORATION 2018
CONTENTS

CHAPTER 1: INTRODUCTION AND SUMMARY			                                    5-12

CHAPTER 2: EXPLORATION ON THE NCS				                                     13-24

CHAPTER 3: UNDISCOVERED RESOURCES				25-32

CHAPTER 4: PROFITABILITY OF EXPLORATION			                                33-38

CHAPTER 5: PLAYER PICTURE IN THE EXPLORATION PHASE                        39-44

CHAPTER 6: NEW EXPLORATION TECHNOLOGY AND
		WORK PROCESSES					45-53

CHAPTER 7: EXPLORATION LOOK-BACK ANALYSES		                               55-65

CHAPTER 8: RESOURCES FOR THE FUTURE: SEABED
		         MINERALS AND GAS HYDRATES			                                   67-72

                 R E S O U R C E R E P O R T E X PLO R AT I O N 2018              3
RESOURCE REPORT EXPLORATION 2018
F O R E WO R D                                                                                                                                       CHAP TER 1
                                                                                                                                INTRO DUC TIO N AN D SUM MARY

P
       roduction of oil and gas from the Norwegian                  has been shown by the industry in the latest licensing
       continental shelf (NCS) is expected to rise                  rounds and, after a couple of years with lower explora-
       over the next few years. This increase reflects              tion drilling, activity has started rising again. This is
       contributions from discoveries under develop-                important for ensuring that the resource potential gets
ment as well as output growth from fields already                   proven and produced.
on stream. Production from these sources will begin                    Discoveries in recent years have been smaller than
to decline from the mid-2020s, and resources which                  before. In areas with existing infrastructure, even very
have still to be discovered will start making their                 small finds can be tied back to existing fields and con-
mark. Several years pass between a discovery and                    tribute to substantial value creation. The NPD’s analy-
bringing it on stream, so making new and large dis-                 ses show that exploration has been profitable in all
coveries quickly is necessary for maintaining pro-                  parts of the NCS. Continuing to explore actively in both
duction at the same level from the mid-2020s.                       known and less familiar areas will therefore be impor-
   The main job of the Norwegian Petroleum Directo-                 tant. A diverse range of players contributes to this.
rate (NPD) is to contribute to securing the greatest                   Finding oil and gas deposits is becoming increasingly
possible value for society from oil and gas operations              difficult. Technological advances have provided better
through efficient and prudent resource management,                  data and improved tools, contributing to new under-
which takes account of health, safety, the environment              standing and making it possible to identify new play
and other users of the sea. A good factual and knowl-               and prospect concepts. This trend will continue in com-
edge basis is a prerequisite for the government to play             ing years. Integration of broad and deep geoscientific
a decisive role in resource management.                             expertise and digital technology will probably be the
   In this report, the NPD presents an updated over-                key to identifying new resources in coming years.
view of the undiscovered petroleum resources on the                    This report collates information and presents a
NCS. It shows that roughly 55 per cent of expected oil              number of analyses which will form part of the knowl-
and gas resources remain to be produced after more                  edge base for both government and industry. These
than 50 years of activity, and that just under half of              analyses are intended to provide the basis for learning
these are still to be discovered.                                   and for good exploration decisions, which can help to
   The NPD’s updated estimate for undiscovered re-                  maintain exploration and the level of production in the
sources is 4 000 million standard cubic metres of oil               future.
equivalent (scm oe). That represents an increase of                    Deposits of minerals with rare earth elements are
almost 40 per cent from the previous figure in 2016.                found on the seabed in many parts of the world, and
The big growth results from the NPD’s mapping of                    interest in the commercial exploitation of such re-
resources northwards in the Barents Sea close to the                sources is dawning. On the NCS, seabed minerals are
boundary with the Russian sector. Estimated undiscov-               known to exist in the deep parts of the Norwegian Sea.
ered resources in the open part of the Barents Sea,                 The NPD is due to launch its own investigations in the
the North Sea and the Norwegian Sea are more or                     summer of 2018. This might become a new chapter in
less unchanged. Almost two-thirds of the undiscovered               the history of Norway’s marine resources.
resources lie in the Barents Sea, with the rest shared
between the Norwegian and North Seas. The upside
potential is greatest in the Barents Sea, where large
areas remain to be explored.                                                                   Stavanger, June 2018
   These figures reveal that opportunities on the NCS
are still substantial and can provide the basis for oil
and gas production over many decades. The govern-
ment provides a steady supply of exploration acreage
through regular licensing rounds, contributing to im-                                             Torgeir Stordal
portant predictability for the sector. Significant interest                                    Director exploration

  4                                      R E S O U R C E R E P O R T E X PLO R AT I O N 2018                                                                      5
RESOURCE REPORT EXPLORATION 2018
CHAP TER 1
 I N T R O D U C T I O N A N D S U M M A RY

                                                                                                                                                                                                                                                                                                                                                                                                  120                                                       0.6
Substantial remaining resources on the Norwegian continental                                                                                                                                                                                                                                      300      Undiscovered resources                                                                 100                                                       0.5

shelf (NCS) continue to offer big opportunities in both mature and                                                                                                                                                                                                                                         Contingent resources in discoveries

                                                                                                                                                                                                                                                                                                                                                                                 Million scm oe
                                                                                                                                                                                                                                                                                                                                                                                                  80                                                        0.4

                                                                                                                                                                                                                                                                                                                                                                                                                                                                  Success rate
                                                                                                                                                                                                                                                                                                  250      Contingent resources in fields

less-explored areas. Increased knowledge, better data coverage,                                                                                                                                                                                                                                            Reserves                                                                               60                                                        0.3

                                                                                                                                                                                                                                                                                 Million scm oe
                                                                                                                                                                                                                                                                                                  200      Sold and delivered

new working methods and innovative technology open new
                                                                                                                                                                                                                                                                                                                                                                                                  40                                                        0.2
                                                                                                                                                                                                                                                                                                  150
                                                                                                                                                                                                                                                                                                                                                                                                  20                                                        0.1
exploration opportunities and can yield a number of commercial                                                                                                                                                                                                                                    100
                                                                                                                                                                                                                                                                                                                                                                                                   0                                                        0
                                                                                                                                                                                                                                                                                                                                                                                                        1966-1980 1981-1990 1991-2000 2001-2010 2011-2017
discoveries. The companies must explore and discover more in                                                                                                                                                                                                                                       50
                                                                                                                                                                                                                                                                                                                                                                                                            Average discovery size (excl. RC6)

order to maintain activity and production over time.                                                                                                                                                                                                                                                0                                                                                                       Technical success rate
                                                                                                                                                                                                                                                                                                    1970         1980          1990         2000   2010      2020       2030                                Commercial discovery rate

                                                                                                                                                                                                                                                                                   Figure 1.4 Historical and expected future production from                                     Figure 1.5 Development of average discovery size and ave-
                                                                                                                                                                                                                                                                                   the NCS to 2030.                                                                              rage technical and commercial success rates.1 Discovery size
                                                                                                                                                                                                                                                                                                                                                                                 is based on today’s estimate, not that reported at the time of

N
                                                                                                                                                                                                                                                                                                                                                                                 discovery.
          ext year will be the 50th anniversary of the                     to adopt purposeful measures aimed at stimulating
          Ekofisk discovery in the southern part of the                    activity while increasing diversity and competition on
          NCS. This event generated great interest in                      the NCS. Combined with rising oil prices, these me-
          exploring off Norway, and a number of sub-                       asures led to a sharp increase in exploration wells.                                                                                                                                                                                                                                                  decline. From around 2025, a steadily larger propor-
                                                                                                                                                                                                                                                                                  SOFT LANDING
stantial discoveries were made over the next 20 years.                     New companies entered and a number of commercial                                                                                                                                                                                                                                                      tion of production must come from as yet undiscovered
                                                                                                                                                                                                                                                                                  After a sharp growth in wells and spending during
About 70 per cent of proven resources were found in                        discoveries were made, with 16/2-6 Johan Sverdrup as
                                                                                                                                                                                                                                                                                  2005-14, the level of costs and the oil price slump                                            resources (figure 1.4). If production and the level of
the period up to 1990 (figure 1.1).                                        the largest.
                                                                                                                                                                                                                                                                                  in the late autumn of 2014 led to cuts in exploration                                          activity are to be maintained at current levels, there-
   Since the first commercial oil discoveries were
                                                                                                                                                                                                                                                                                  budgets, postponed investment and fewer exploration                                            fore, more exploration is needed and new resources
made, Norway has established itself as an important                                                                                                          About 1075 wildcat wells
                                                                                                                                                                                                                                                                                  wells. Their number declined from 57 in 2014 to 36 in                                          must be proven.
player in international oil and gas markets.                                                                   12000
                                                                                                                                                                                                                                                                                  2016. Measures were also adopted by the industry to
                                                                    Accumulated resources (million scm oe)

                                                                                                                                                                                         Johan Sverdrup                                                                                                                                                                          DEVELOPMENT FEATURES
                                                                                                                                                                                                                                                                                  enhance productivity and efficiency while cutting costs.
SUBSTANTIAL VALUE                                                                                              10000
                                                                                                                                                            Ormen Lange                                                                                                           The decline flattened out in 2017, and exploration in                                          Discoveries are smaller. On average, discoveries
Oil and gas from the NCS have generated massive
                                                                                                                                                                                                                                                                                  2018 is expected to be higher than in the two preced-                                          in recent years have been smaller than before (figure
revenues to help make Norway a very wealthy country                                                            8000
                                                                                                                                                                Snøhvit                                                                                                           ing years. Activity remains relatively high in a histori-                                      1.5) – a natural development in a mature petroleum
today. The petroleum sector is the country’s largest
                                                                                                                                                              Troll Øst                                                                                                           cal perspective.                                                                               province. Mature areas are characterised by known
industry measured by value creation, government re-                                                            6000
                                                                                                                                                                                                                                                                                                                                                                                 geology, normally fewer and smaller technical challen-
venues, investment and export value.
                                                                                                                                                                                                                                                                                  SUBSTANTIAL RESOURCE POTENTIAL                                                                 ges, and well-developed or planned infrastructure. The
   Petroleum operations accounted in 2017 for about                                                            4000
                                                                                                                                                                                                                                                                                  Despite more than 50 years of exploration, the NPD’s                                           bulk of the acreage opened for petroleum operations
14 per cent of Norway’s gross domestic product (figure
                                                                                                                                                                                                                                                                                  assessment is that big opportunities still exist on the                                        is now mature. Big undiscovered resources remain in
1.2). They were responsible for 19 per cent of total                                                           2000                Statfjord
                                                                                                                                                                                                                                                                                  NCS. The resource accounts indicate that about half of                                         mature areas, which could provide the basis for new
investment and 17 per cent of government revenues.                                                                              Ekofisk
                                                                                                                                                                                                                                                                                  Norway’s total petroleum resources are left to produ-                                          finds. These resources could represent substantial
Sales of oil and natural gas provided some 40 per cent                                                              0
                                                                                                                                                                                                                                                                                  ce. Roughly 53 per cent of the expected remaining re-                                          value.
                                                                                                                        1966

                                                                                                                                       1980

                                                                                                                                                                   1990

                                                                                                                                                                                            2000

                                                                                                                                                                                                                      2010

                                                                                                                                                                                                                                                      2017

of total Norwegian export value in 2017.
                                                                                                                                                                                                                                                                                  sources lie in fields and discoveries, while 47 per cent                                          The trend for the technical success rate shows
                                                                        Figure 1.1 Resource growth on the NCS 1966-2017.                                                                                                                                                                                                                                                         that increased knowledge, more and better data, and
                                                                                                                                                                                                                                                                                  remain to be found.
PURPOSEFUL MEASURES
                                                                                                                                                                                                                                                                                     The NPD’s updated mapping has led it to raise its                                           technological progress have helped to make explora-
Exploration activity measured by annual exploration
                                                                                                                                                                                                                                                                                  estimate of undiscovered resources from around 2 900                                           tion more efficient since the first well in 1966. Despite
wells has fluctuated partly in line with oil price trends
                                                                                                                                                                                                                                                                                  standard cubic metres of oil equivalent (scm oe) to                                            some decline for the average success rate in recent
                                                                       Number of exploration wells (spudded)

                                                                                                               70               Exploration wells                                                                                                120
(figure 1.3). It declined from the 1990s to bottom out
                                                                                                                                Oil price (nominal)                                                                                                                               4 000 million. Considerable uncertainty attaches to                                            years, it has remained at a high level from the 1990s.
in 2005 at 12 wells. That prompted the government                                                              60
                                                                                                                                                                                                                                                       USD/bbl (previous year)

                                                                                                                                                                                                                                                 100
                                                                                                                                                                                                                                                                                  this estimate, particularly for the little-explored areas                                      The commercial success rate has remained more or
                                                                                                               50
                                                                                                                                                                                                                                                 80                               in the Barents Sea and around Jan Mayen.                                                       less unchanged since petroleum operations began,
                                                                                                               40                                                                                                                                                                    Total remaining resources provide the basis for                                             even though the average discovery size has been de-
                                                                                                                                                                                                                                                 60
      14%            17%             19%                                                                                                                                                                                                                                                                                                                                         clining. Exploration on the NCS remains profitable.
                                                                                                               30                                                                                                                                                                 petroleum production over many decades to come.
                                                          40%                                                                                                                                                                                    40
                                                                                                                                                                                                                                                                                  Today’s forecast for future oil and gas output shows
                                                                                                               20
                                                                                                               10                                                                                                                                20                               an increase until the mid-2020s, followed by a gradual
                                                                                                                                                                                                                                                                                                                                                                                 1 Discoveries not very likely to be recovered – resource class 6 (RC6) – are not
  Share of        Share of       Share of         Share of                                                      0                                                                                                                                0
                                                                                                                 1966
                                                                                                                         1969
                                                                                                                                1972
                                                                                                                                       1975
                                                                                                                                              1978
                                                                                                                                                     1981
                                                                                                                                                            1984
                                                                                                                                                                    1987
                                                                                                                                                                           1990
                                                                                                                                                                                  1993
                                                                                                                                                                                         1996
                                                                                                                                                                                                1999
                                                                                                                                                                                                       2002
                                                                                                                                                                                                              2005
                                                                                                                                                                                                                     2008
                                                                                                                                                                                                                            2011
                                                                                                                                                                                                                                   2014
                                                                                                                                                                                                                                          2017

    GDP         government         total        total exports                                                                                                                                                                                                                                                                                                                    included when calculating average discovery size. All discoveries are included in
                 revenues      investments                                                                                                                                                                                                                                                                                                                                       calculating the technical discovery rate. The commercial discovery rate excludes
                                                                                                                                                                                                                                                                                                                                                                                 discoveries in RC6. An estimated assessment has also been made for new disco-
Figure 1.2 Macroeconomic indicators for the petroleum                      Figure 1.3 Developments in exploration wells spudded.                                                                                                                                                                                                                                                 veries in resource class 7 (RC7) – in other words, those which have not been
sector 2017.                                                                                                                                                                                                                                                                                                                                                                     evaluated. See figure 1.10 for the NPD’s resource classification system.

  6                                      R E S O U R C E R E P O R T E X PLO R AT I O N 2018                                                                                                                                                                                                                                                          R E S O U R C E R E P O R T E X PLO R AT I O N 2018                                                    7
RESOURCE REPORT EXPLORATION 2018
CHAP TER 1
                 I N T R O D U C T I O N A N D S U M M A RY
                      60                                                               120                                                                                                                    tures which could contain large quantities of oil and                   declined substantially in recent years in line with cost
                                                                                                                         6000                                                                                 gas (figure 1.8).                                                       cuts and downsizing by the companies.
                      50                                                               100
Number of companies

                      40                                                               80                                5000                                                                                 Resources are harder to find – calls for techno-                        Gas calls for collaboration and a joint effort. Gas
                                                                                                                                                                                                              logy and expertise. Finding new petroleum resources                     accounts for roughly half the undiscovered resources.

                                                                                             USD/bbl
                      30                                                               60                                                                                                    4000             is becoming increasingly difficult in areas with a long                 Since the average discovery size is declining, many
                                                                                                                         4000

                                                                                                        Million scm oe
                                                                                                                                                                                                              exploration history. Exploration takes place to a great                 small gas finds are likely in the opened areas. The
                      20                                                               40
                                                                                                                         3000                                                                                 extent in areas which have been open to oil and gas                     infrastructure in the North and Norwegian Seas is well
                                                                                                                                                                            2535
                                                                                                                                                                                                              activities for many years, so additional data must be                   developed (figure 1.9). As more spare capacity beco-
                      10                                                               20
                                                                                                                         2000                                                                                 acquired or existing information reanalysed to obtain                   mes available, interest among the companies in also
                       0                                                               0                                                                                                                      new understanding. Seismic surveys and data from                        exploring for small gas deposits could increase.
                           2007
                           2008
                           2009
                           2010
                           2011
                           2012
                           2013
                           2014
                           2015
                           2016
                           2017
                           2000
                           2001
                           2002
                           2003
                           2004
                           2005
                           2006

                                                                                                                         1000                                                                                 exploration wells are the geologists’ most important                       Almost two-thirds of the undiscovered gas is ex-
                                                                                                                                        725                740
                           European gas/power companies   Majors                                                                                                                                              basis for establishing new plays. Technological advan-                  pected to lie in the Barents Sea. That emphasises the
                           Small companies                Large Norwegian companies                                         0                                                                                 ces have provided new and better tools which con-                       significance of this area for long-term output. Cur-
                           Medium-sized companies         Oil price (nominal)                                                           North Sea        Norwegian Sea      Barents Sea         Total         tribute to steady improvements in understanding the                     rent gas transport capacity from the Barents Sea is
 Figure 1.6 Players on the NCS by size, 2000-17.                                                        Figure 1.7 Estimated undiscovered resources by area.                                                  sub-surface.                                                            limited to the liquefaction plant at Melkøya. Under
                                                                                                                                                                                                                 Collating and integrating all available data are also                existing plans, capacity there will be fully utilised until
                                                                                                                                                                                                              very important for making new discoveries. Expertise                    the early 2040s. Lack of infrastructure and spare gas
     Even very small discoveries can become commercial                                                  ries are greatest in little-explored areas. New discove-
                                                                                                                                                                                                              and experience are crucial here. In a long-term per-                    transport capacity affects exploration. Where the
   when they are phased in to existing fields or devel-                                                 ries in the Barents Sea will be increasingly important
                                                                                                                                                                                                              spective, therefore, it is a matter of concern that ap-                 companies are concerned, finding gas which does not
   oped in coordination with other finds. Coordinated                                                   as production further south on the NCS begins to decli-
                                                                                                                                                                                                              plications to study traditional petroleum subjects have
   development of several discoveries normally reduces                                                  ne from around 2025.
   unit costs and lowers the threshold for exploration and                                                 Half the undiscovered resources in the Barents Sea                                                                          10°                                                   0°                          10°                            20°

   development. Achieving commercial production from                                                    lie in unopened areas of the far north. The NPD’s map-
                                                                                                                                                                                                                                                                                                                                                 BARENTS SEA
   smaller finds located far from existing infrastructure is                                            ping of parts of these areas has identified big struc-                                                                                                                                                                                                          75°
   more demanding.
                                                                                                                                                                                                                                                                 NORWEGIAN SEA
   Diversity creates competition. A broad variety of                                                                                                              20˚                                   40˚
                                                                                                                                80°N                                                                          60°          Faroe Islands
   companies, both large and small, creates competition
                                                                                                                           3000 2400 1800 1200 600 milliseconds
   which encourages efficiency and a diversity of ideas in
                                                                                                                                   Km                                                 Kvitøya
   the exploration phase.2 The number of players on the                                                                     0           75
   NCS has increased from the mid-2000s, partly as a re-
   sult of measures to create greater diversity. Although                                                                                       Svalbard

   the total has declined somewhat since 2013, variety                                                                                                                  Kong Karls Land
   remains high (figure 1.6).
                                                                                                                                                                                Kong Karl Platform                       NORTH SEA                                                                                                                                      70°
      A trend in recent years has been that the majors are
   exploring less actively and cutting back on or with-                                                                                                                               Storbanken High
   drawing from the NCS. This can be viewed in relation
   to such factors as the fall in oil prices and a decline in                                                                                                                                                                                                   Norway
   expected discovery size. When the large companies                                                      76˚                                                                                                                                                                                       Sweden                                                     Russia
   reduce their exploration activity, the medium-sized and                                                                                                                                                                                                                                                                      Finland
   small players become increasingly important. Maintain-                                                                                                                                 Olga Basin

   ing a positive combination of active and experienced                                                                         75°N

   large and medium-sized companies, more focused                                                                                                                             Sentralbanken High                                                                                                                         Undiscovered resources
                                                                                                       74˚30                                                                                                                                                                                        1800
                                                                                                                                                              Gardarbanken High                                                                                                                                          Contingent resources in discoveries
   exploration companies and new company creations for                                                                                        Bjørnøya                                                        55°
                                                                                                                                                                                                                                                                                                    1600                 Contingent resources in fields                 65°
   both exploration and production is important for con-                                                                                                                                                                                                                                                                 Reserves

                                                                                                                                                                                                                                                                                   Million scm oe
                                                                                                                                                                                                                                                                                                    1400
   tinued efficient exploration of the NCS.
                                                                                                                                                                                                                                    Denmark                                                         1200

   Most and biggest in the far north. Most of the un-                                                                                                                                                                                                                                               1000

   discovered resources are expected to lie in the Barents                                              Figure 1.8 Large structures and the extent of the mapped
                                                                                                                                                                                                                                       10°                                        20°               800                          30°

   Sea (figure 1.7). Opportunities for making big discove-                                              area in Barents Sea North (time contour map for the top of                                                                                                                                  600
                                                                                                                                                                                                              Figure 1.9 Existing gas infrastructure and expected
                                                                                                        the Permian).3
                                                                                                                                                                                                              remaining gas resources.                                                              400
                                                                                                                                                                                                                                                                                                    200
                                                                                                                                                                                                                                                                                                       0
 2 See the resource report for 2017 at www.npd.no for analyses of the player                            3 The NPD’s report on Geological assessment of petroleum resources in eas-                                                                                                                           North Sea    Norwegian Sea                   Barents Sea
 picture in the development and operation phases.                                                       tern parts of Barents Sea North 2017.

                      8                                               R E S O U R C E R E P O R T E X PLO R AT I O N 2018                                                                                                                               R E S O U R C E R E P O R T E X PLO R AT I O N 2018                                                             9
RESOURCE REPORT EXPLORATION 2018
CHAP TER 1
 I N T R O D U C T I O N A N D S U M M A RY

justify an independent export solution is of little value.          CHAPTER 3: UNDISCOVERED RESOURCES                             The industry has long worked purposefully to avoid                for metals and rare-earth elements (REEs).
Gas discoveries in the Barents Sea therefore depend to              Total undiscovered resources are estimated to lie bet-     biases in the decision basis, but a number of analyses                  On the NCS, seabed minerals are known to exist
a greater extent on unitisation and coordinated devel-              ween 2 330 (P95) and 6 200 (P05) million scm oe. The       show that an improvement potential still exists. That                in the deep parts of the Norwegian Sea. Mapping has
opment. At the same time, it will be more difficult to              expected value is 4 000 million scm oe, up by 37 per       finding is underlined by the NPD analyses presented in               identified both manganese crusts and sulphides.
discover sufficient gas resources which can support                 cent from 2 920 million scm oe in 2015. This increa-       this chapter.                                                           Gas hydrates could become a future energy source.
new infrastructure unless the companies explore for                 se primarily reflects a new estimate for Barents Sea                                                                            These are found in large quantities immediately be-
them.                                                               North in 2017. The NPD’s mapping there has identified      CHAPTER 8: RESOURCES FOR THE FUTURE:                                 neath the seabed in some parts of the Norwegian and
                                                                    large structures which could yield substantial oil and     SEABED MINERALS AND GAS HYDRATES                                     Barents Seas. No solution currently exists for profit-
HARD WORK AND INTELLIGENT CHOICES                                   gas discoveries. The updated estimate for undiscover-      The greater attention being paid to producing energy                 able production of such deposits, but research on
Substantial opportunities remain on the NCS. More                   ed resources shows that the total amount remaining         with a low carbon footprint is expected to mean an                   recovery methods is under way internationally.
than half the expected resources are still in the gro-              could provide the basis for oil and gas production over    increased need for natural gas and a growing demand
und, and half of these are yet to be discovered. Inn-               many decades to come.
ovative technology and better-quality data open new                                                                            RESOURCE CLASSIFICATION AND RESOURCE ACCOUNTS AT 31 DECEMBER 2017
opportunities, including in mature areas. Spare capa-               CHAPTER 4: PROFITABILITY OF EXPLORATION
city in existing infrastructure as well as cuts in explo-           Exploration in the past decade has contributed sub-        THE NPD’S RESOURCE CLASSIFICATION                                       Reserves and contingent resources represent total
ration and development costs have lowered the thres-                stantial value to society. The net present value of this   SYSTEM                                                               discovered recoverable resources. They are broken
hold with regard to exploring for and producing small               activity over these 10 years, at discount rates of four    Petroleum resources are divided into classes which re-               down in turn into sub-classes which reflect their sta-
discoveries.                                                        and seven per cent, was about NOK 930 billion and          flect the level of knowledge about the quantities invol-             tus before and after important decision gates in the
   Bigger finds are also needed if production is to be              NOK 560 billion respectively. Exploration has been         ved and the maturity of development projects. These                  process of maturing projects up to development and
sustained. Relatively large discoveries are still possible          profitable in all areas.                                   classes correspond to a great extent with those used                 recovery (production).
in known and mature areas. However, the potential                                                                              in internationally recognised classification systems.                   Undiscovered resources are broken down into esti-
for making large finds which can support new infra-                 CHAPTER 5: PLAYER PICTURE IN THE                                                                                                mated but unproven petroleum resources in mapped
structure and contribute to a high level of production              EXPLORATION PHASE                                          The   resource classes are:                                          prospects and estimated but unproven recoverable
is greatest in little-explored areas – and particularly             A broad variety of companies creates competition,            •   reserves                                                       petroleum resources related to plays (fact box 3.2).
areas which have still to be opened.                                which promotes efficiency and value creation in the          •   contingent resources
   But resource opportunities will not just happen.                 exploration phase. That contributes to greater diver-        •   undiscovered resources.
Hard work and intelligent choices are needed to ensure              sity of ideas and interest in different plays, technolo-
that resources in both mature and less-explored areas               gies, and play and prospect concepts. The number of
contribute to maintaining production and creating                   players on the NCS has increased from the mid-2000s,       Undiscovered                              8
value.                                                              partly as a result of measures to create greater diver-    resources                                                              Leads and unmapped
                                                                                                                                                                      Prospects
                                                                                                                                                                                                            resources
                                                                    sity. Although their total has declined somewhat since
SUMMARY                                                             2013, variety remains high.
CHAPTER 2: EXPLORATION ON THE NCS
Trends for exploration on the NCS and in its various                CHAPTER 6: NEW EXPLORATION TECHNOLOGY                      Contingent                                7F
sea areas are presented. After a number of years with               AND WORK PROCESSES                                         resources                           New discoveries
                                                                                                                                                                    that have not
a high level of activity, exploration declined from 56              In order to understand better how progress with te-                                            been evaluated
wells in 2015 to 36 in 2016 and 2017. However, 40-50                chnology and geological methods has contributed to                                                                    Reserves                                              Historical
exploration wells are expected in 2018.                             efficient exploration, the NPD carried out a study in                                                                                                                       production
   Substantial interest has been shown in new explora-              collaboration with consultant Westwood Global Energy              6                 5F               4F                        3F                    2F            1             0
                                                                                                                                 Recovery            Recovery          In the                                        Approved                      Sold and
tion acreage during the latest licensing rounds. This               Group. This identified a number of areas within a wider                            likely,
                                                                                                                                                                                                 Decided
                                                                                                                                                                                                                      plan for         In
                                                                                                                                 not very                             planning                    by the                                          delivered
probably partly reflects new understanding based on                 exploration technology concept, such as data acqui-            likely             but not          phase                    licensees          development     production     petroleum
                                                                                                                                                     clarified                                                     and operation
better seismic data and well results which have led to              sition, geosciences and working methods, which have
                                                                                                                                                        5A               4A                        3A                    2A
new play and prospect concepts. Cost cuts and access                either been or are expected to become important for
to infrastructure capacity are other important factors.             exploration on the NCS.
   On average, discoveries in recent years are smaller                                                                                                                   7A
                                                                                                                                                                   Possible future
than before. Smaller finds and fewer wells will make                CHAPTER 7: EXPLORATION LOOK-BACK                                                             measures to improve
it demanding to maintain production over time. The                  ANALYSES                                                                                          recovery
number of wells drilled and the size of discoveries                 Earlier NPD analyses have shown that the compani-
                                                                                                                               Figure 1.10 The NPD’s resource classification system (www.npd.no).
made must be above the average for the past decade if               es exaggerate resource expectations and understate
production is to be sustained at a high level. Opportu-             the probability of success in drilling. This means their
nities for making larger finds are probably greatest in             exploration portfolios systematically deliver below
less-explored areas.                                                expectations.

 10                                      R E S O U R C E R E P O R T E X PLO R AT I O N 2018                                                                             R E S O U R C E R E P O R T E X PLO R AT I O N 2018                             11
RESOURCE REPORT EXPLORATION 2018
CHAP TER 1                                                                                                                                                                                                   CHAP TER 2
            I N T R O D U C T I O N A N D S U M M A RY                                                                                                                                                 E XPLO R ATIO N O N TH E NCS

 RESOURCE ACCOUNTS AT 31 DECEMBER 2017                                                                     The amount remaining to be produced is estimated
 The NPD’s estimate for total proven and unproven pe-                                                   at 8.5 billion scm oe. Proven resources account for 4.5                                      The companies must explore and make
 troleum resources on the NCS is about 15.6 billion scm                                                 billion of this. Estimated unproven resources come to
 oe. Of this, 7.1 billion or 45 per cent have been sold                                                 four billion scm oe, or about 47 per cent of remaining                                       larger discoveries in order to maintain
 and delivered (table 1.1).                                                                             resources.
                                                                                                                                                                                                     production on the Norwegian continental
                            Total petroleum resources on the Norwegian continental shelf at 31 December 2017                                                                                         shelf at a high level.
                                                                                 Oil                Gas                        NGL                      Condensate                  Total
                                                                               mill scm            bn scm                  mill tonnes                   mill scm                mill scm oe

                            Produced                                            4 261.4              2 341.1                  200.3                           117.3                7 100.3

                            Reserves*                                           1 131.1              1 729.1                     109.5                         20.7                3 088.9

                            Contingent resources in fields                       338.2                241.3                       20.8                          2.4                  621.5

                            Contingent resources in discoveries                  275.0                293.4                       15.2                          1.9                  599.2

                            Production not evaluated (RC7A)                      130.0                 70.0                                                                         200.0

                            Undiscovered resources                             1 995.0               1 870.0                                                 135.0                 4 000.0

                            Total                                              8 130.7             6 544.9                   345.8                           277.4                15 610.0
                            * Includes resource classes 1, 2 and 3

   Table 1.1 Total petroleum resources on the NCS at 31 December 2017.4

                 12
                                                   10.9                                                        Total resources:
                 10                                                                                            15.6 billion scm oe

                                       8.5
                 8                                                                                                                                            26%

                      6.7
                 6
                                                                              5.4                       5.7                                                                                    45%
                                                                                                                                                        4%
Billion scm oe

                 4                                                    4.2                      4.3
                                                        3.4                      3.2                                                                      5%

                 2
                                                                                                                                                                       20%
                                                                                                                                  Liquid
                                                                                                                   Total
                                                                                                                           Gas

                 0
                                                                     2.3                                                                   Undiscovered resources
                                                                                                                                           Contingent resources in discoveries
                 -2                                                                          4.8                                           Contingent resources in fields
                                                                                                                                           Reserves
                                    7.1
                 -4                                                                                                                        Sold and delivered

                 -6

                 -8
 Figure 1.11 Petroleum resources and uncertainty in the estimates at 31 December 2017.

 4 Oil and condensate are specified in million scm, natural gas liquids (NGL) in million tonnes, and gas in billion scm. The conversion factor from tonnes to scm
 for NGL is 1.9. Total oil equivalent is specified in million scm oe.

            12                                                              R E S O U R C E R E P O R T E X PLO R AT I O N 2018                                                                                                           13
RESOURCE REPORT EXPLORATION 2018
CHAP TER 2
                               E X P LO R AT I O N O N T H E N C S

       The government provides a steady supply of
       exploration acreage through regular licensing
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 FACT BOX 2.1: Exploration wells

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 •     Exploration well. Drilled to prove a possible
       rounds. Great interest has been shown by                                                                                                                                                                                                                                                                                                                           Well type                Purpose                            Area                                             petroleum deposit or to secure information for
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       delineating a possible deposit. A collective term
       the industry in the most recent of these. After
                                                                                                                                                                                                                                                                                                                                                                                                                     North Sea    Norwegian Sea   Barents Sea

                                                                                                                                                                                                                                                                                                                                                              Exploration wells 1 654
                                                                                                                                                                                                                                                                                                                                                                                              Appraisal   1 092            733           242             117                           for wildcats and appraisal wells.
                                                                                                                                                                                                                                                                                                                                                                                              Wildcats      562            453            81              28

       a couple of years with reduced activity, the                                                                                                                                                                                                                                                                                                                       Total                           1 654           1 186         323             145                      •     Wildcat. Drilled to investigate whether a possi-
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       ble deposit contains petroleum.
       number of exploration wells is rising again. It                                                                                                                                                                                                                                                                                              Table 2.1 Number of exploration wells spudded by category
                                                                                                                                                                                                                                                                                                                                                    and area (at 31 December 2017).
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 •     Appraisal well. Drilled to determine the size
       is important that the industry maintains a high                                                                                                                                                                                                                                                                                                                                                                                                                                 and extent of a petroleum deposit already pro-
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       ven by a wildcat.
       level of exploration.                                                                                                                                                                                                                                                                                                                      the first time (figure 2.2) with a record 17 wells drilled
                                                                                                                                                                                                                                                                                                                                                  there. While a decline has been forecast in the Barents
                                                                                                                                                                                                                                                                                                                                                  Sea for 2018, drilling in the North and Norwegian Seas

E
                                                                                                                                                                                                                                                                                                                                                  is expected to rise.
               xploration is influenced by such factors as                                                                                                                    DEVELOPMENTS IN EXPLORATION                                                                                                                                                                                                                                                       over time in line with new knowledge about the reser-
               expected prospectivity, available acreage, the                                                                                                                 ACTIVITY FROM 1965 TO 2017                                                                                                                                          DISCOVERIES ARE SMALLER                                                                                       voir.
               regulatory framework, costs and the level of                                                                                                                  The first exploration well on the NCS was drilled in                                                                                                                 A high level of exploration in recent years has resulted                                                         The decline in average discovery size reflects the
               oil and gas prices. A long-running increase                                                                                                                   1966 (see fact box 2.1). A total of 1 654 such wells had                                                                                                             in many discoveries (figure 2.3). On average, these are                                                       fact that the NCS has become more mature (figure
       in activity which began in 2006 ended in 2016 after                                                                                                                   been spudded by 31 December 2017 (table 2.1).                                                                                                                        smaller than before.                                                                                          2.5). However, even very small finds can show good
       a substantial drop in oil prices. While 56 exploration                                                                                                                   Exploration has varied substantially over this 50-                                                                                                                   International experience shows that the biggest                                                            profitability if existing infrastructure is used effectively
       wells were drilled in 2015, the annual figure for 2016                                                                                                                year period (figure 2.1). The first peak was reached in                                                                                                              finds are made early in the exploration phase of a new                                                        (see more in chapter 4). Maintaining a high level of
       and 2017 was 36. However, 40-50 are expected in                                                                                                                       the mid-1980s, with up to 50 wells per year. From the                                                                                                                petroleum province, and that discovery size declines as                                                       exploration is important for identifying and developing
       2018.                                                                                                                                                                 end of the 1990s, activity declined to a low point of 12                                                                                                             the latter matures. This also applies to the NCS (figure                                                      small discoveries while the big installations are still on
          Substantial interest has been shown in new explora-                                                                                                                wells in 2005. It then began to recover, and 65 wells                                                                                                                2.4). With the exception of Ormen Lange in 1997 and                                                           stream.
       tion acreage during the most recent licensing rounds.                                                                                                                 were spudded in 2009. The post-2006 increase reflect-                                                                                                                Johan Sverdrup in 2010, the largest finds were made in
       This partly reflects new understanding based on better                                                                                                                ed changes to exploration policy combined with rising                                                                                                                the first 20 years and discovery size has declined from                                                       RESOURCE GROWTH AND PRODUCTION
       seismic data and well results, which have led to new                                                                                                                  prices. Activity remained by and large high until 2015,                                                                                                              the mid-1980s. The average discovery size (excluding                                                          The reduction in average discovery size has also meant
       play and prospect concepts. Cost cuts and access to                                                                                                                   but the steep slump in oil prices led to a substantial                                                                                                               resource class 6 (RC6) – see chapter 1 for a definition)                                                      a decline in resource growth over time. It has been
       infrastructure capacity are other important factors.                                                                                                                  fall over the past two years. Nevertheless, the level is                                                                                                             over the past seven years has been about seven mil-                                                           substantially smaller from discoveries over the past
          Discoveries above the average size for the past dec-                                                                                                               still high compared with 1998-2005.                                                                                                                                  lion standard cubic metres of oil equivalent (scm oe).                                                        30 years than in the first two decades of Norwegian
       ade must be made if production is to be sustained at                                                                                                                     Historically, the largest annual number of explora-                                                                                                               Discovery size in figures 2.4 and 2.5 is based on the                                                         oil history. Figure 2.4, showing resource growth from
       a high level. Opportunities for making larger finds are                                                                                                               tion wells has been drilled in the North Sea. In 2017,                                                                                                               current estimate, not that reported when the discovery                                                        discoveries by size, illustrates the trend. Resource
       greatest in little-explored areas.                                                                                                                                    however, the level was highest in the Barents Sea for                                                                                                                was made. The original estimate can differ from the                                                           growth in the various sea areas is presented in fact
                                                                                                                                                                                                                                                                                                                                                  current figure. Discovery size can increase or decrease                                                       box 2.5.

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 5000                                                  < 5 mill. scm oe
Number of exploration wells (spudded)

                                                                                                                                                                           Number of exploration wells (spudded)

                                        70            Appraisals                                                                                                                                                   70         Barents Sea                                                                                                                                                                                                                                                     16
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               7                                       5 - 10 mill. scm oe
                                                      Wildcats                                                                                                                                                                Norwegian Sea                                                                                                                                                                                                                                      4500         15
                                                                                                                                                                                                                                                                                                                                                                          140         Number of discoveries (excl. RC6)                                                                                                                10 - 50 mill. scm oe
                                        60                                                                                                                                                                         60         North Sea                                                                                                                                               Number of discoveries in RC6                                                               4000          4
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          44                           50 - 100 mill. scm oe
                                                                                                                                                                                                                                                                                                                                                                          120                                                                                                                             11
                                        50                                                                                                                                                                         50                                                                                                                                                                                                                                                            3500                                                  > 100 mill. scm oe
                                                                                                                                                                                                                                                                                                                                                  Number of discoveries

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          25

                                                                                                                                                                                                                                                                                                                                                                                                                                                                Million scm oe
                                                                                                                                                                                                                                                                                                                                                                          100                                                                                                    3000                      9
                                        40                                                                                                                                                                         40
                                                                                                                                                                                                                                                                                                                                                                           80                                                                                                    2500
                                        30                                                                                                                                                                         30
                                                                                                                                                                                                                                                                                                                                                                           60                                                                                                    2000         11

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      61
                                        20                                                                                                                                                                         20                                                                                                                                                                                                                                                             1500                                15
                                                                                                                                                                                                                                                                                                                                                                           40                                                                                                                              8
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      21
                                        10                                                                                                                                                                                                                                                                                                                                                                                                                                       1000                                             95
                                                                                                                                                                                                                   10                                                                                                                                                                                                                                                                                                  2          14
                                                                                                                                                                                                                                                                                                                                                                           20                                                                                                                                                     20                84
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     500                               4                            17
                                         0                                                                                                                                                                          0                                                                                                                                                                                                                                                                                                              1                16
                                                                                                                                                                                                                                                                                                                                                                             0                                                                                                         0
                                             1966
                                                    1969
                                                           1972
                                                                  1975
                                                                         1978
                                                                                1981
                                                                                       1984
                                                                                              1987
                                                                                                     1990
                                                                                                            1993
                                                                                                                   1996
                                                                                                                          1999
                                                                                                                                 2002
                                                                                                                                        2005
                                                                                                                                               2008
                                                                                                                                                      2011
                                                                                                                                                             2014
                                                                                                                                                                    2017

                                                                                                                                                                                                                    1966
                                                                                                                                                                                                                           1969
                                                                                                                                                                                                                                  1972
                                                                                                                                                                                                                                         1975
                                                                                                                                                                                                                                                1978
                                                                                                                                                                                                                                                       1981
                                                                                                                                                                                                                                                              1984
                                                                                                                                                                                                                                                                     1987
                                                                                                                                                                                                                                                                            1990
                                                                                                                                                                                                                                                                                   1993
                                                                                                                                                                                                                                                                                          1996
                                                                                                                                                                                                                                                                                                 1999
                                                                                                                                                                                                                                                                                                        2002
                                                                                                                                                                                                                                                                                                               2005
                                                                                                                                                                                                                                                                                                                      2008
                                                                                                                                                                                                                                                                                                                             2011
                                                                                                                                                                                                                                                                                                                                    2014
                                                                                                                                                                                                                                                                                                                                           2017

                                                                                                                                                                                                                                                                                                                                                                                  1967-1980       1981-1990       1991-2000       2001-2010       2011-2017                                1967-1980   1981-1990   1991-2000   2001-2010        2011-2017
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      Incl. RC6

          Figure 2.1 Exploration wells spudded.                                                                                                                             Figure 2.2 Exploration wells spudded by area.                                                                                                                         Figure 2.3 Discoveries.                                                                                       Figure 2.4 Resource growth by discovery size. The number
                                                                                                                                                                                                                                                                                                                                                                                                                                                                of discoveries is shown in the bars.

                                  14                                                                                             R E S O U R C E R E P O R T E X PLO R AT I O N 2018                                                                                                                                                                                                                                                R E S O U R C E R E P O R T E X PLO R AT I O N 2018                                                               15
RESOURCE REPORT EXPLORATION 2018
CHAP TER 2
         E X P LO R AT I O N O N T H E N C S

                                                                                                                                          1800
                                                                                                                                                                                                      2000         16th round
                 100                                                                 1967-1980                                            1600      Resource growth                                   2001         NSA2000                                                                     No awards in 2005
                                                                                                                                                                                                      2002         17th round NSA2001
                  90                                                                 1981-1990                                            1400           Production                                   2003         NSA2002       APA2003
                                                                                     1991-2000                                                                                                        2004         18th round         APA2004
                  80                                                                                                                      1200

                                                                                                     Million scm oe
                                                                                     2001-2010                                                                                                        2006         19th round      APA2005
                  70                                                                                                                                                                                  2007         APA2006
                                                                                     2011-2017
Million scm oe

                                                                                                                                          1000                                                        2008         APA2007
                  60                                                                                                                                                                                  2009         20th round              APA2008
                                                                                                                                          800                                                         2010         APA2009
                  50
                                                                                                                                                                                                      2011         21st round                 APA2010
                  40                                                                                                                      600                                                         2012         APA2011
                  30                                                                                                                                                                                  2013         22nd round                 APA2012
                                                                                                                                          400                                                         2014         APA2013
                  20                                                                                                                      200                                                         2015         APA2014
                                                                                                                                                                                                      2016         23rd round APA2015
                  10                                                                                                                                                                                  2017         APA2016
                                                                                                                                             0
                   0                                                                                                                                                                                  2018         APA2017

                                                                                                                                                1967
                                                                                                                                                1969
                                                                                                                                                1971
                                                                                                                                                1973
                                                                                                                                                1975
                                                                                                                                                1977
                                                                                                                                                1979
                                                                                                                                                1981
                                                                                                                                                1983
                                                                                                                                                1985
                                                                                                                                                1987
                                                                                                                                                1989
                                                                                                                                                1991
                                                                                                                                                1993
                                                                                                                                                1995
                                                                                                                                                1997
                                                                                                                                                1999
                                                                                                                                                2001
                                                                                                                                                2003
                                                                                                                                                2005
                                                                                                                                                2007
                                                                                                                                                2009
                                                                                                                                                2011
                                                                                                                                                2013
                                                                                                                                                2015
                                                                                                                                                2017
                           North Sea                    Norwegian Sea          Barents Sea                                                                                                                        0           10        20        30     40      50      60                    70            80
                                                                                        Incl. RC6                                                                 Excl. RC6                                                                  Licences awarded since 2000
Figure 2.5 Average discovery size by area.                                                              Figure 2.6 Annual resource growth and production.                                             Figure 2.9 Annual licence awards since 2000.

   During the first decade after Ekofisk was found in                                                   further development of new and known plays based on                                           LICENSING ROUNDS                                                                                                  Introduced in 2003, the APA scheme is intended to
1969, the big Statfjord, Sleipner Vest, Gullfaks and                                                    additional seismic surveys and continuous exploration                                         Two types of licensing rounds with equal status are                                                            ensure efficient exploration of mature areas and to
Oseberg fields were discovered and are still on stream.                                                 drilling, combined with improved interpretation tools                                         conducted on the NCS – numbered, and awards in                                                                 prove time-critical resources close to planned and ex-
Most of the other largest fields followed in 1979-84                                                    and methods (see chapter 6). Infrastructure expan-                                            predefined areas (APA).5 APA rounds have taken place                                                           isting infrastructure (fact box 2.3). It is important that
(figure 2.6). Almost 65 per cent of all proven resources                                                sion, further progress with new development concepts                                          annually since 1999, while the numbered rounds in                                                              acreage awarded gets explored quickly and efficiently
were found in this period. The figure shows that, with                                                  and innovative drilling technology have also made it fi-                                      less-explored exploration areas are generally staged                                                           so that existing infrastructure can be utilised in the
the exception of Ormen Lange and Johan Sverdrup,                                                        nancially interesting to explore ever-smaller prospects.                                      every other year. These regular rounds contribute to                                                           best possible way and small discoveries are phased
resource growth from exploration has been low for                                                                                                                                                     important predictability for the industry. The scope of                                                        in swiftly if spare capacity is available. As new areas
the past 30 years. By and large, the annual figure has                                                  ACCESS TO ACREAGE                                                                             awards is presented in figures 2.9 and 2.10.                                                                   become mature, the APA coverage has been expanded
been smaller than production over the past two dec-                                                     The government gives great emphasis to making acre-                                              The first licensing round in 1965 was clearly the                                                           on the basis of established criteria. See report no 28
ades. Output has largely come from fields discovered                                                    age regularly available, which is important for maintai-                                      most extensive in terms of acreage on offer. While the                                                         (2010-2011) to the Storting on the petroleum sector as
in production licences awarded from 1965 to the early                                                   ning interest in exploration and ensuring the develop-                                        first four rounds were confined to the North Sea, parts                                                        an industry for the future. One of the following criteria
1990s.                                                                                                  ment of commercial discoveries. Companies primarily                                           of the Norwegian and Barents Sea were opened for                                                               must be met: the area is close to infrastructure, has
   Figure 2.7 presents resource growth by decade of                                                     gain access to acreage through licensing rounds, but                                          exploration from the fifth round held in 1980-82.                                                              an exploration history, or borders on existing prede-
licence award. Almost half the total resource growth                                                    can also buy or swop licence interests.
from exploration (by decade of licence award) has                                                          In line with the growth in the number of companies                                                    160            Licensed
                                                                                                                                                                                                                                Awarded                                                                                                                    APA 2003
come from discoveries in licences awarded in the first                                                  and licences, and with oil price trends, the secondary
                                                                                                                                                                                                                 140            Relinquished
to fifth licensing rounds (before 1980). Many of the                                                    market (acquisition, swop and sale) for interests has
exploration wells drilled over the past decade were                                                     expanded substantially since 2007. It peaked in 2013
                                                                                                                                                                                                                 120
located in pre-1980 acreage. That partly reflects the                                                   (figure 2.8).
                                                                                                                                                                                                                 100

                 12000
                                                                                                                                                                                                                 80
                 10000

                                                                                                                                                                                                      1000 km
                                                                                                                                                                                                                 60
Million scm oe

                 8000
                                                                                                     Number of farm-ins and asset swops

                                                                                                                                          160                     120                                            40
                 6000
                                                                                                                                                                        Oil price (nominal) USD/bbl

                                                                                                                                          140
                                                                                                                                                                  100
                 4000                                                                                                                     120                                                                    20
                                                                                                                                                                  80
                 2000                                                                                                                     100
                                                                                                                                                                                                                   0
                                                                                                                                           80                     60
                       0
                                                                                                                                           60                                                                    -20
                       1967
                       1969
                       1971
                       1973
                       1975
                       1977
                       1979
                       1981
                       1983
                       1985
                       1987
                       1989
                       1991
                       1993
                       1995
                       1997
                       1999
                       2001
                       2003
                       2005
                       2007
                       2009
                       2011
                       2013
                       2015
                       2017

                                                                                                                                                                  40
                                                                                                                                           40
                           Awards NSA/APA                           Awards 1980s                                                                                  20                                             -40
                                                                                                                                           20
                                                                                                                                                                                                                       1965

                                                                                                                                                                                                                              1967

                                                                                                                                                                                                                                     1969

                                                                                                                                                                                                                                             1971

                                                                                                                                                                                                                                                    1973

                                                                                                                                                                                                                                                           1975

                                                                                                                                                                                                                                                                  1977

                                                                                                                                                                                                                                                                         1979

                                                                                                                                                                                                                                                                                1981

                                                                                                                                                                                                                                                                                       1983

                                                                                                                                                                                                                                                                                              1985

                                                                                                                                                                                                                                                                                                      1987

                                                                                                                                                                                                                                                                                                              1989

                                                                                                                                                                                                                                                                                                                     1991

                                                                                                                                                                                                                                                                                                                            1993

                                                                                                                                                                                                                                                                                                                                                                                           2011

                                                                                                                                                                                                                                                                                                                                                                                                  2013
                                                                                                                                                                                                                                                                                                                                   1995

                                                                                                                                                                                                                                                                                                                                          1997

                                                                                                                                                                                                                                                                                                                                                 1999

                                                                                                                                                                                                                                                                                                                                                        2001

                                                                                                                                                                                                                                                                                                                                                               2003

                                                                                                                                                                                                                                                                                                                                                                      2005

                                                                                                                                                                                                                                                                                                                                                                             2007

                                                                                                                                                                                                                                                                                                                                                                                    2009

                                                                                                                                                                                                                                                                                                                                                                                                         2015

                                                                                                                                                                                                                                                                                                                                                                                                                2017
                           Awards from 2000 (numbered rounds)       Awards 1970s
                                                                                                                                            0                     0
                           Awards 1990s                             Awards 1960s
                                                                                                                                                 2000
                                                                                                                                                 2001
                                                                                                                                                 2002
                                                                                                                                                 2003
                                                                                                                                                 2004
                                                                                                                                                 2005
                                                                                                                                                 2006
                                                                                                                                                 2007
                                                                                                                                                 2008
                                                                                                                                                 2009
                                                                                                                                                 2010
                                                                                                                                                 2011
                                                                                                                                                 2012
                                                                                                                                                 2013
                                                                                                                                                 2014
                                                                                                                                                 2015
                                                                                                                                                 2016
                                                                                                                                                 2017

                                                                                         Incl. RC6                                                                                                    Figure 2.10 Acreage awarded, licensed and relinquished.
 Figure 2.7 Resource growth by decade of licence award.                                                 Figure 2.8 Farm-ins and swops of licence interests.
                                                                                                                                                                                                      5 They were called North Sea awards (NSA) from 1999 to 2002.

           16                                                           R E S O U R C E R E P O R T E X PLO R AT I O N 2018                                                                                                                                                      R E S O U R C E R E P O R T E X PLO R AT I O N 2018                                                                       17
RESOURCE REPORT EXPLORATION 2018
CHAP TER 2
 E X P LO R AT I O N O N T H E N C S
                                                                                                                                                          0°        2°             4°                  6°                8°             10°                             16°         18°         20°    22°          24°         26°    28°   30°     32°         34°     36°   38°

      FACT BOX 2.2: Work programme                                                                                                                  68°
                                                                                                                                                                                                                                                          68°                                                                                                                        74°
      The government attaches obligations (a work                         ned. If not, it lapses. Should a commercial disco-
      programme) to production licences. Changes have                     very be made, the licensees must decide whether
                                                                                                                                                                                                                                                                 74°
      occurred with these programmes as the NCS has                       a plan for development and operation (PDO) is to
      matured. In the early rounds, when the NCS ran-                     be submitted. This process, with average figures
      ked as a frontier area and information was lacking,                 from 2000, is illustrated in figure 2.11.
      requirements often involved acquiring seismic data                     Licences which require a fixed number of wells
      and drilling a specific number of firm wells. In the                to be drilled are still awarded in APA rounds, but
                                                                                                                                                                                                                                                                                                                                                                                     72°
      APA rounds covering mature areas, a licence is                      on a smaller scale than before. This is because the                       66°
      often required to acquire seismic data, through eit-                largest and best-defined structures have already                                                                                                                                66°    72°
      her purchases or surveys. A “drill or drop” obliga-                 been drilled. Mapping remaining prospects is
      tion is also imposed. This means that the licensees                 harder, and more extensive geoscientific analyses
      have one-three years to decide whether to spud a                    are often needed before a drilling decision can be
      wildcat. If they decided to drill, the licence is retai-            taken.
                                                                                                                                                                                                                                                                                                             Hammerfest                                                              70°
                                                                                                                                                                                                                                                                                                                                                     Vadsø
                                                                                                                                                                                                                                                                 70°
                                                                                                                                                                                                                                                                              18°          20°          22°               24°         26°     28°          30°          32°
                                                                                                                                                    64°
                                                                      Discovery                          Commercial                                                                                                                                       64°          Discoveries and fields
                          Drill exploration well?                     in the licence?                    discovery                       Develop-                                                                                                                         Oil                 APA area
                                                                                                                                         ment                                                                                                                             Gas                 Licensed acreage
                                                                                                                                                                                                                                              Stjørdal                    Oil w/gas           Announced blocks
                                                                                                                      NO: 2%   YES: 5%                                                                                          Trondheim                                 Gas/condensate
                                                                                               YES: 7%
                                                                              NO: 18%                                                                                                                               Kristiansund
                                                      YES: 25%
                                                                                                                                                                                                                 Molde
                                      NO: 75%
                                                                                                    Figure 2.11 From award to development.                                                            Ålesund

                                                                                                                                                          2°             4°                     6°                  8°                   10°

fined areas but has not been applied for in numbered                        The 24th round was announced on 21 June 2017                            Figure 2.12 Blocks put on offer in the 24th round.
rounds. Predictability about the areas which can be ap-                  with a deadline of 30 November 2017 for applications.
plied for, with a steady addition of new acreage, is im-                 It included 102 full or partial blocks – nine in the Nor-
                                                                                                                                                               2°             4°           6°               8°                            2°        4°           6°           8°          10°                               18°        20°     22°         24°         26°     28°
portant for the effectiveness of the scheme. Since the                   wegian Sea and 93 in the Barents Sea (figure 2.12).
                                                                                                                                                                                                Ålesund
APA rounds were introduced, the number of licences                                                                                                                                                                            68°
and the amount of acreage awarded have increased                         APA 2017 AND 2018                                                          62°
                                                                                                                                                                                        Måløy
considerably (figures 2.9 and 2.10).                                     Mature areas of the NCS remain attractive. A new                                                               Florø
   More acreage has been relinquished over the past                      record for the number of applications was set by the
decade than before. Faster circulation of acreage was                    2017 APA round, with 39 companies applying. This big                                                                                                                                                                                                                 BARENTS SEA
precisely one of the goals of the APA scheme. Stricter                   interest partly reflected access to new and improved                                                             Bergen                                                                                                              72°
                                                                                                                                                                                                                              66°
work programmes (fact box 2.2) and an increased area                     seismic data. Large parts of the NCS, particularly the                     60°
fee mean that licensees must work faster to evaluate                     mature areas of the North and Norwegian Seas, are
prospectivity and relinquish holdings they find unin-                    now covered by broadband surveys. Combined with                                                                  Haugesund
                                                                                                                                                                                                                                     NORWEGIAN SEA
teresting. That means this acreage becomes avail-                        increased computing power and innovative interpreta-                                                                   Stavanger
                                                                                                                                                                                                Sandnes
able more quickly for other players with new eyes and                    tion and visualisation tools, that has made it possible                                                                                                                                                                 Namsos                                                          Hammerfest
                                                                                                                                                                    NORTH SEA
ideas.                                                                   to identify new exploration opportunities – including in                                                                        Kristiansand 64°
                                                                                                                                                                                                     Farsund
                                                                         previously explored acreage.                                               58°                                                                                                                                                                    APA2017 area
                                                                                                                                                                                                                                                                                                 Stjørdal                  APA2018 expansion
24TH LICENSING ROUND                                                        Figure 2.13 shows the extent of the expansion for                                                                                                                                                 Trondheim
                                                                                                                                                                                                                                                                                                                           Licensed acreage
Ahead of the announcement of a numbered licensing                        the 2018 APA round. Since the 2017 round, the prede-                                                                                                                                              Kristiansund

round, the companies are invited to nominate blocks                      fined areas have been expanded by 47 blocks in the                                                                                                                                           Molde
                                                                                                                                                                                                                                                                 Ålesund
they believe should be included. The NPD then prepa-                     Norwegian Sea and 56 in the Barents Sea. Applications                                                                                                62°
res a recommendation to the Ministry of Petroleum and                    can be submitted for all unallocated full or part blocks                                                                                                                        Måløy
                                                                                                                                                    56°
Energy (MPE) on the acreage which should be put on                       in these areas.                                                                                                                                                                 Florø

offer.
                                                                                                                                                    Figure 2.13 APA 2018 expansion.

 18                                           R E S O U R C E R E P O R T E X PLO R AT I O N 2018                                                                                                                               R E S O U R C E R E P O R T E X PLO R AT I O N 2018                                                                                            19
CHAP TER 2
                      E X P LO R AT I O N O N T H E N C S
                                                                                                                                                                                                                                                                                                                                                                  1800             Barents Sea
                                                                                                                                                                                                                                                                                                                                                                                   Norwegian Sea                                                                                                   FACT BOX 2.3: Changes to the regulatory fra-
                                                                                                                                                                                                                                                                                                                                                                  1600                                                                                                                             mework and licensing policy
                               50           North Sea                                                                                                                                              35            North Sea                                                                                                                                                         North Sea
                                                                                                                                                                                                                                                                                                                                                                  1400
Number of wildcats (spudded)

                               45           Norwegian Sea                                                                                                                                                        Norwegian Sea
                                            Barents Sea                                                                                                                                            30                                                                                                                                                             1200                                                                                                                             Licensing policy in mature areas was revised in

                                                                                                                                                                                                                                                                                                                                                 Million scm oe
                               40                                                                                                                                                                                Barents Sea

                                                                                                                                                                           Number of discoveries
                               35                                                                                                                                                                  25
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   1999 by establishing the annual NSA rounds, which
                                                                                                                                                                                                                                                                                                                                                                  1000
                               30                                                                                                                                                                                                                                                                                                                                                                                                                                                                  were further developed in 2003 into the APA. The
                                                                                                                                                                                                   20                                                                                                                                                             800
                               25                                                                                                                                                                                                                                                                                                                                                                                                                                                                  aim was to prove and recover commercial resources
                                                                                                                                                                                                   15                                                                                                                                                             600                                                                                                                              in mature areas before the infrastructure closed
                               20
                               15                                                                                                                                                                                                                                                                                                                                 400                                                                                                                              down. Another important objective was to contribu-
                                                                                                                                                                                                   10
                               10                                                                                                                                                                                                                                                                                                                                 200                                                                                                                              te to efficient exploration at the companies by provi-
                                5                                                                                                                                                                   5                                                                                                                                                                                                                                                                                              ding greater predictability for the industry through a
                                                                                                                                                                                                                                                                                                                                                                     0
                                0                                                                                                                                                                                                                                                                                                                                                                                                                                                                  regular supply of new acreage.

                                                                                                                                                                                                                                                                                                                                                                                                                      2007

                                                                                                                                                                                                                                                                                                                                                                                                                                    2009
                                                                                                                                                                                                                                                                                                                                                                                                                                           2010
                                                                                                                                                                                                                                                                                                                                                                                                                                                  2011
                                                                                                                                                                                                                                                                                                                                                                     2000
                                                                                                                                                                                                                                                                                                                                                                            2001
                                                                                                                                                                                                                                                                                                                                                                                   2002
                                                                                                                                                                                                                                                                                                                                                                                          2003
                                                                                                                                                                                                                                                                                                                                                                                                 2004
                                                                                                                                                                                                                                                                                                                                                                                                        2005
                                                                                                                                                                                                                                                                                                                                                                                                               2006

                                                                                                                                                                                                                                                                                                                                                                                                                             2008

                                                                                                                                                                                                                                                                                                                                                                                                                                                         2012
                                                                                                                                                                                                                                                                                                                                                                                                                                                                2013
                                                                                                                                                                                                                                                                                                                                                                                                                                                                       2014
                                                                                                                                                                                                                                                                                                                                                                                                                                                                              2015
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     2016
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            2017
                                                                                                                                                                                                    0
                                                                                     2007
                                                                                            2008
                                                                                                   2009
                                                                                                          2010
                                                                                                                 2011
                                                                                                                        2012
                                                                                                                               2013
                                                                                                                                      2014
                                                                                                                                             2015
                                                                                                                                                    2016
                                                                                                                                                           2017
                                    2000
                                           2001
                                                  2002
                                                         2003
                                                                2004
                                                                       2005
                                                                              2006

                                                                                                                                                                                                                                                                                     2011

                                                                                                                                                                                                                                                                                                                 2015
                                                                                                                                                                                                                                                                                                                        2016
                                                                                                                                                                                                                                                                                                                                2017
                                                                                                                                                                                                        2000
                                                                                                                                                                                                               2001
                                                                                                                                                                                                                      2002
                                                                                                                                                                                                                             2003
                                                                                                                                                                                                                                    2004
                                                                                                                                                                                                                                           2005
                                                                                                                                                                                                                                                  2006
                                                                                                                                                                                                                                                         2007
                                                                                                                                                                                                                                                                2008
                                                                                                                                                                                                                                                                       2009
                                                                                                                                                                                                                                                                              2010

                                                                                                                                                                                                                                                                                            2012
                                                                                                                                                                                                                                                                                                   2013
                                                                                                                                                                                                                                                                                                          2014
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      The government also made provision in 2000 for
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     Incl. RC6
                                                                                                                                                                                                                                                                                                                            Incl. RC6                                                                                                                                                              admitting new companies, and the offer to pre-
 Figure 2.14 Wildcats by area.                                                                                                                                               Figure 2.15 Discoveries by area.                                                                                                                                    Figure 2.18 Accumulated resource growth by area.                                                                                                  qualify as operators and licensees was established.
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   This scheme aimed to help improve predictability for
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   new companies seeking to become established on
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   the NCS, either through awards or by farming into
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   licences.
 EXPLORATION TRENDS ON THE NCS,                                                                                                                                              fluctuated between one and 12. Activity increased in                                                                                                                ACCUMULATED RESOURCE GROWTH BY AREA                                                                                                                  A reimbursement system for exploration costs
 2000-17                                                                                                                                                                     2017, and 17 wildcats were drilled.                                                                                                                                 Overall resource growth in the Norwegian and Barents                                                                                              introduced with effect from 1 January 2005 put
                                                                                                                                                                                                                                                                                                                                                 Seas during the past 18 years has been somewhat lo-                                                                                               companies without taxable earnings on an equal
 WILDCATS                                                                                                                                                                    DISCOVERIES                                                                                                                                                         wer than in the North Sea (figure 2.18). A total of 257                                                                                           footing with those which have such revenues in
 Developments in the number of wildcats by sea area in                                                                                                                       Developments in the number of discoveries after 2000                                                                                                                discoveries were made in 2000-17, of which 36 were                                                                                                terms of the tax treatment of exploration expenses.
 2000-17 are illustrated in figure 2.14.                                                                                                                                     by area are presented in figure 2.15. The high level                                                                                                                larger than 10 million scm oe. One really large find (Jo-                                                                                         The scheme gives companies with a tax-deductible
    Relatively few wildcats were drilled in the North Sea                                                                                                                    of exploration after 2006 resulted in a big increase                                                                                                                han Sverdrup) was made in this period, and accounted                                                                                              loss the right to have the tax value (78 per cent) of
 during 2000-05, but the number increased substan-                                                                                                                           in finds. Most were made in the North Sea with the                                                                                                                  for 24 per cent of total resource growth.6 The biggest                                                                                            their exploration costs reimbursed rather than car-
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   rying them forward with a supplement for interest.
 tially from 2007. Exploration remained high until 2016,                                                                                                                     exception of 2013, when the Norwegian Sea accounted                                                                                                                 contributions to resource growth in the Barents Sea
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   These alternatives have the same financial outcome
 with an average of 21 wildcats per year. Only eight                                                                                                                         for the majority, and 2014 and 2017, when the Barents                                                                                                               have come from 7324/8-1 (Wisting), 7220/7-1 (Havis)
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   for the government. The goal of the reimbursement
 wildcats were drilled in the North Sea during 2017.                                                                                                                         Sea topped the list.                                                                                                                                                and 7220/8-1 (Skrugard). Contributors in the Norwegi-
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   scheme was to reduce entry barriers by putting new
    Exploration in the Norwegian Sea has varied rather                                                                                                                                                                                                                                                                                           an Sea include 6507/5-3 (Ærfugl) and 6406/3-8 Maria.                                                                                              companies in the exploration phase on an equal
 more than in the North Sea. Activity there was also                                                                                                                         SUCCESS RATES                                                                                                                                                       Of the 257, 175 are below five million scm oe. Such                                                                                               footing with established players who had taxable
 high from 2008, but fell to three wildcats spudded in                                                                                                                       The average technical success rate (discoveries as a                                                                                                                smaller discoveries account for 14 per cent of resource                                                                                           earnings
 2016.                                                                                                                                                                       proportion of wildcats) has varied over time and bet-                                                                                                               growth. Fact box 2.5 presents resource growth in the
    In the Barents Sea, exploration has varied through-                                                                                                                      ween the different areas (figures 2.16 and 2.17). It has                                                                                                            various areas of the NCS.
 out the period. Since 2009, the number of wildcats has                                                                                                                      lain around 50 per cent in recent years (see chapter 6).
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   FACT BOX 2.4: Relicensing acreage

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   Much of the acreage being explored today has
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   been awarded and relinquished several times (figu-
                                                                                                                                                                                                                 Discovery
                               35            Average discovery size                                                                                 1.00                                                         Dry well                                                                                                                                                                                                                                                                          re 2.19). Improved seismic data, information from
                                             Success rate (last 5 years)
                                                                                                                                                    0.90                                           60            Success rate (last 5 years) North Sea                                                                  1.00                                                                                                                                                                       more wells, innovative technology, and new thinking
                               30            Success rate (yearly)                                                                                                                                               Success rate (last 5 years) Norwegian Sea                                                                                                                                                                                                                                         and ideas mean that petroleum resources are being
                                                                                                                                                    0.80                                                                                                                                                                0.90
                                                                                                                                                                                                   50            Success rate (last 5 years) Barents Sea                                                                                                                                                                                                                                           proven in areas which have been explored many ti-
                               25                                                                                                                                                                                                                                                                                       0.80
                                                                                                                                                    0.70                                                                                                                                                                                                                                                                                                                                           mes before. A number of areas covered by the APA
 Million scm oe

                                                                                                                                                                           Number of wildcats

                                                                                                                                                                                                                                                                                                                        0.70
                                                                                                                                                            Success rate

                               20
                                                                                                                                                    0.60                                           40                                                                                                                                                                                                                                                                                              scheme and around the big North and Norwegian
                                                                                                                                                                                                                                                                                                                                  Success rate

                                                                                                                                                                                                                                                                                                                        0.60
                                                                                                                                                    0.50                                                                                                                                                                                                                                                                                                                                           Sea fields have been awarded four or five times.
                               15                                                                                                                                                                  30                                                                                                                   0.50                                                                                                                                                                       Although acreage is awarded several times, sub-
                                                                                                                                                    0.40
                                                                                                                                                                                                                                                                                                                        0.40                                                                                                                                                                       stantial discoveries can still be made. 16/2-6 Johan
                               10                                                                                                                   0.30                                           20
                                                                                                                                                                                                                                                                                                                        0.30                                                                                                                                                                       Sverdrup, the Johan Castberg discoveries 7220/8-
                                                                                                                                                    0.20                                                                                                                                                                                                                                                                                                                                           1 (Skrugard) and 7220/7-1 (Havis), and 7220/11-1
                                5                                                                                                                                                                                                                                                                                       0.20
                                                                                                                                                                                                   10
                                                                                                                                                    0.10                                                                                                                                                                                                                                                                                                                                           (Alta) are good examples.
                                                                                                                                                                                                                                                                                                                        0.10
                                0                                                                                                                   0
                                                                                                                                                                                                    0                                                                                                                   0
                                    2017
                                    2008
                                    2009
                                    2010
                                    2011
                                    2012
                                    2013
                                    2014
                                    2015
                                    2016
                                    2000
                                    2001
                                    2002
                                    2003
                                    2004
                                    2005
                                    2006
                                    2007

                                                                                                                                                                                                        2011
                                                                                                                                                                                                        2012
                                                                                                                                                                                                        2013
                                                                                                                                                                                                        2014
                                                                                                                                                                                                        2015
                                                                                                                                                                                                        2016
                                                                                                                                                                                                        2017
                                                                                                                                                                                                        2000
                                                                                                                                                                                                        2001
                                                                                                                                                                                                        2002
                                                                                                                                                                                                        2003
                                                                                                                                                                                                        2004
                                                                                                                                                                                                        2005
                                                                                                                                                                                                        2006
                                                                                                                                                                                                        2007
                                                                                                                                                                                                        2008
                                                                                                                                                                                                        2009
                                                                                                                                                                                                        2010

                                                                                                                                                     Incl. RC6

    Figure 2.16 Technical success rate and average discovery                                                                                                                Figure 2.17 Technical success rate and wildcats by area.
    size.
                                                                                                                                                                                                                                                                                                                                                  6 The resource estimate for Johan Sverdrup is about 400 million scm oe,
                                                                                                                                                                                                                                                                                                                                                  including phase two of the development project. Source: Equinor

                       20                                                                                               R E S O U R C E R E P O R T E X PLO R AT I O N 2018                                                                                                                                                                                                                                                                              R E S O U R C E R E P O R T E X PLO R AT I O N 2018                                          21
CHAP TER 2
 E X P LO R AT I O N O N T H E N C S
                                 -10°                  0°              10°                20°         30°                    40°                     0°                                                                10°                             20°                 30°
                                                                                                                                               NORTH SEA                                   NORWEGIAN SEA                             75°     BARENTS SEA
                                                                                                                                                                                                                                                                                 7435/12-1 !
                                                                                                                                                                                                                                                                7325/4-1
                                                                                                                                                                                                                                                                   !
                                                                                                                                                                                                                                                                   <
                                                                                                                                                             35/8-6 A

                                                                                                                                                               !
                                                                                                                                                    34/10-55 S <   !  ! 36/7-4
                                                                                                                                                                      <                                                                              7220/6-2 R
                                                                                                                                                                   ! 35/11-20 B                                                                             !
                                                                                                                                                                                                                                                            <
                                                                                                                                                     34/11-6 S !        35/11-20 S                                                                     !7219/9-2-1
                                                                                                                                                                                                                                                       !
                                                                                                                                                                                                                                               7219/12 <
                                                                                                                                                                                                                                                       ! 7219/12-2 S         7130/4-1
                                                                                                                                                             < !30/9-28
                                                                                                                                                    30/4-3 S !            S                      6608/10-17 S <
                                                                                                                                                                                                              !                                                                   !
                                                                                                                                                                  ! 31/7-1
                                                                                                                                                                  <                                6507/3-12 !                                    7121/8-1!
                                                                                                                                         60°          30/11-13 !< 30/11-14 B
                                                                                                BARENTS SEA                                          30/11-11 S ! 30/11-14
                                                                                                                                                                ! 30/11-12 S                       6507/8-9 !
                                                                                                                                                            25/2-18 S                65°
70°                                                                                                                                                                                                                                                   20°                          30°
                                                                                                                                                                                                      6407/7-9 A                           Discovery wells completed in 2016-2017
                                                                                                                                                           ! 16/1-26 S
                                                                                                                                                           <                                               !
                                                                                                                                                                                                           <
                                                                                                                                                                                                      6407/7-9 S                           !  Oil
                                                                                                                                                                                                                                           !  Gas
                                                                                                                                                                                                                                           !
                                                                                                                                                                                                                                           <  Oil/gas
                                                                             SNØHVIT                                                                                                                                                       !
                                                                                                                                                                                                                                           <  Gas/condensate

                                                                                                                                               0°                                                                        10°
                                                                                                                                   70°
                                                                                                                                         Figure 2.20 Discoveries on the NCS in 2016-17.

                                                                                                                                         EXPLORATION RESULTS 2016-17                                               Sea during 2016 – three wildcats and one appraisal.
                                                                                                                                         Seventy-one exploration wells were completed on the                       Activity increased in 2017, when a new exploration
                                                                                                                                         NCS in 2016-17, of which 52 were wildcats. A total of                     record was set with 17 completed wells. Five were
                                                                                                                                         29 discoveries were made, giving a success rate of 62                     appraisals. A total of seven discoveries were made in
                          NORWEGIAN SEA                                                                                                  per cent in 2016 and 50 per cent in 2017. The biggest                     2016-17.
                                                                                                                                         finds in this period were 36/7-4 (Cara) and 31/7-1                           Expectations were high for Statoil’s 7435/12-1 (Korp-
                                  HEIDRUN                                                                                                (Brasse) in the North Sea, and 7219/12-1 (Filicudi) and                   fjell) wildcat, the very first to be spudded in Barents
                                 ÅSGARD                                                                                                  7435/12-1 (Korpfjell) in the Barents Sea. Figure 2.20                     Sea South-East after the area was opened for explora-
                                                                                                                                         shows all the finds made in the period, while fact box                    tion in 2013. It was drilled on the Haapet Dome, a large
                                                                                                                                         2.5 presents resource growth in the various sea areas.                    structure close to the boundary with the Russian sec-
                                                                                                                                            Thirty exploration wells were completed in the North                   tor. Many had hoped for a big oil discovery, but instead
                               ORMEN
                               LANGE                                                                                                     Sea during 2016 and 12 in 2017. Twelve were apprais-                      the well encountered small quantities of gas. Although
                                                                                                                                         als. Sixteen of the wildcats encountered hydrocarbons.                    the result was disappointing, it lay within the NPD’s
                                                                                                                                            While exploration activity in the Norwegian Sea was                    expected uncertainty range. Preliminary estimates put
                                                                                                                                         low during 2016, with only three wildcats, there was a                    the size of the discovery at eight to 11.5 million scm
      STATFJORD                                                                                                                          slight increase in 2017 to five wells (four of them wild-                 oe. Although the find is not commercial at present, the
       GULLFAKS                                                                                                                          cats). Five discoveries were made in 2016-17.                             well has contributed important new geological knowl-
60°
                       TROLL                                                                                                                Four exploration wells were drilled in the Barents                     edge about the area.
       OSEBERG

                                                                                                            Number of times        60°
                                                                                                            awarded
                                                                                                                1
          NORTH SEA                                                                                             2
                                                                                                                3
                                                                                                                4
                                                                                                                5
                                                                                                                6
                                                                                                                7
                                                                                                            Selected fields
             EKOFISK                                                                                            Oil
                                                                                                                Gas
                                                                                                                Oil w/gas
                                                                                                                Gas/condensate
                                           10°                                      20°

                                        Figure 2.19 Number of times acreage has been awarded.
 22                                                                                                                                                                                    R E S O U R C E R E P O R T E X PLO R AT I O N 2018                                                 23
CHAP TER 2                                                                                                                                                                                                              CHAPTER 3
E X P LO R AT I O N O N T H E N C S                                                                                                                                                                       UNDISCOVERED RESOURCES

                                                                                                                                                                                                          Updating the estimate for undiscovered
                                                                                                                                                       Fact box 2.5: Exploration curves
                                                                                                                                                                                                          resources shows that the amount remaining
                                                                                         1966-2017
                                           9000
                                                                                                        16/2-6 (JohanSverdrup)
                                                                                                                                                       The exploration curve for 1965-2017 shows
 Accumulated resources (million scm oe)

                                           8000

                                           7000
                                                                                                                                                       that the largest number of wells drilled and the
                                                                                                                                                       biggest resources found were in the North Sea.
                                                                                                                                                                                                          provides the basis for exploration and oil and
                                                                                                                                                                                                          gas production over several decades to come.
                                                                 31/6-1 (Troll Øst)
                                           6000                                                                                                        The Norwegian and Barents Sea were opened
                                                                                                                                                       for exploration in 1980. More wells were drilled
                                           5000
                                                                                                                                                       and resources found in the Norwegian Sea than
                                                                               31/2-1 (Troll Vest)
                                           4000                                                                                                        in the Barents Sea.
                                                                                                                      Barents Sea, cumulative
                                                                                                                      resource growth 1980-2018           In 2000-17, the largest number of wells
                                           3000
                                                                     33/12-1 (Statfjord)
                                                                                                                      Norwegian Sea, cumulative        drilled and the biggest resources were again
                                           2000                                                                       resource growth 1980-2018
                                                                                                                                                       found in the North Sea. Resource growth was
                                                                     6305/5-1 (Ormen Lange)                           North Sea, cumulative
                                           1000                                                                       resource growth 1966-2018        about the same in the Norwegian and Barents
                                                             6507/7-2 (Heidrun)
                                                                                                                                                       Seas, but with almost twice as many wells
                                                    0         7121/4-1 (Snøhvit)
                                                        0           100           200          300        400         500          600          700    drilled in the former area as in the latter.
                                                                                                                                                          The largest number of wells and the highest
                                                                                      Number of wildcat wells
                                                                                                                                                       resource growth in 2015-17 were in the North
                                                                                         2000-2017                                                     Sea. Resource growth in the Barents Sea was
                                          1000
                                                                                                                                                       roughly 60 per cent of the level in the North
 Accumulated resources (million scm oe)

                                                                                                                                   36/7-4 (Cara)
                                          900                                                            30/11-9 S (Askja Vest)                        Sea, but fewer wildcats were drilled
                                          800                                                  35/9-7 (Skarfjell)
                                                                                                                                                       there. The Norwegian Sea accounted
                                                                       16/2-6 (Johan Sverdrup)
                                          700                                                                                                          for the smallest resource growth,
                                          600                                                                                                          even though a few more wells
                                          500                                                                                                          were drilled there than in the
                                                                                                                                                       Barents Sea.
                                          400                     7219/12-1 (Filicudi)
                                                                                                          6406/12-3 S (Pil)                               The horizontal axes show
                                          300             7324/8-1 (Wisting)                             (Maria)
                                                                                                       6705/10-1 (Asterix)                             the number of wildcats in
                                          200           7220/7-1 (Havis)
                                                                                   (Ivar Aaasen)                                       Barent Sea      the order they were drilled.
                                                                                                                                       Norwegian Sea
                                           100                          35/2-1 (Peon)                                                                  When a new discovery is
                                                                    25/4-7 (Alvheim)                                                   North Sea
                                                0                                                                                                      made, the resources in-
                                                    0       20    40      60      80 100 120 140 160 180 200 220 240 260                               volved are represented as
                                                                                      Number of wildcat wells                                          accumulated values along
                                                                                         2015-2017                                                     the vertical axis. A steep
                                           70                                                                                                          curve shows that a lot of
 Accumulated resources (million scm oe)

                                                                                                                                                       resources were found with
                                          60                                                                                             30/4-3 S
                                                                                                                                                       relatively few wells, while
                                          50                                                                                           36/7-4 (Cara)   a shallow curve indicates
                                                                                                                                                       that proven discoveries were
                                          40                                7435/12-1 (Korpfjell)                                                      small.
                                          30
                                                                                                                      31/7-1 (Brasse)
                                                                   7219/12-1 (Filicudi)
                                          20                                              6608/10-17 S (CapeVulture)

                                                                                                                                       Barent Sea
                                                                       6406/12-4 S (Boomerang)
                                           10                                                                                          Norwegian Sea
                                                                                                                                       North Sea
                                                                        6706/12-2 (Snefrid Nord)
                                           0
                                                0                      10                   20                30                  40
                                                                                      Number of wildcat wells

 Figure 2.21 Accumulated resource growth in the
 North, Norwegian and Barents Seas for 1966-2017,
 2000-17 and 2015-17.

24                                                                                                              R E S O U R C E R E P O R T E X PLO R AT I O N 2018                                                                                 25
CHAP TER 3
  U N D I S COV E R E D R E S O U R C E S
                                                                                                                                                                                                        Fact box 3.1: Expected value                                                                           4500                                Barents Sea           Barents Sea North
                                                                                                                                                                                                                                                                                                                                                   Norwegian Sea         Barents Sea South
The NPD’s updated estimate for undiscovered                                                                                                                                                             The estimate for undiscovered resources is un-
                                                                                                                                                                                                        certain. Great uncertainty prevails about the
                                                                                                                                                                                                                                                                                                               4000                                North Sea

                                                                                                                                                                                                                                                                                                               3500
resources is 4 000 million standard cubic metres                                                                                                                                                        mapped prospects, and even more over the num-                                                                                 980
                                                                                                                                                                                                                                                                                                                           1000 986                                                  1370
                                                                                                                                                                                                        ber and size of those which have yet to be iden-                                                       3000 800
                                                                                                                                                                                                                                                                                                                                            990 1030 910
of oil equivalent (scm oe), up by almost 40 per cent

                                                                                                                                                                                                                                                                                              Million scm oe
                                                                                                                                                                                                        tified. The method used by the NPD to estimate
                                                                                                                                                                                                                                                                                                               2500
                                                                                                                                                                                                        undiscovered resources (fact box 3.2) quantifies                                                                                                           1260 1275
                                                                                                                                                                                                                                                                                                                                                                             1400

from the previous figure. This big growth reflects
                                                                                                                                                                                                                                                                                                               2000 1300 1500 1594 1750                      945                     1165
                                                                                                                                                                                                        the uncertainty. Estimates are expressed as pro-
                                                                                                                                                                                                                                                                                                                                            1220 1195 1195
                                                                                                                                                                                                        bability distributions, not single figures. When                                                       1500

the NPD’s mapping of resources in the northern                                                                                                                                                          this report cites the estimate as a single figure,                                                                                                   780   870   850
                                                                                                                                                                                                                                                                                                               1000                                                            775    740
                                                                                                                                                                                                        the expected value of the probability distribution

part of Barents Sea East. The new estimate shows                                                                                                                                                        is used. The example shows that the probability                                                             1400 1200 1170 1200 1190 1175 1175
                                                                                                                                                                                                                                                                                                                500                                    845         850   815   745    725
                                                                                                                                                                                                        of finding more than 2 330 million scm oe is 95
                                                                                                                                                                                                                                                                                                                  0
that remaining resources can provide the basis for                                                                                                                                                      per cent, and of finding more than 6 200 million
                                                                                                                                                                                                        scm oe is five per cent (figure 3.1).
                                                                                                                                                                                                                                                                                                                      1996 1998 2000 2002 2003 2006 2009 2010 2012 2013 2015 2017

oil and gas production over many decades.
                                                                                                                                                                                                                                                                                               Figure 3.5 Development in estimates for undiscovered
                                                                                                                                                                                                                                                                                               resources over time. The 2017 estimate includes the eastern
                                                                                                                                                                                                                                                                                               part of the Norwegian sector in Barents Sea North.

T
         he NPD regularly updates its estimate for                                                 DISTRIBUTION BY AREA                                                                              Liquids are expected to account for just over half                                          expectations for gas. The main reason in the Norwe-
         undiscovered resources on the Norwegian                                                   Estimates for undiscovered resources in the North                                              the undiscovered resources. As figures 3.3 and 3.4                                             gian Sea was further disappointing exploration results
         continental shelf (NCS) (see the section on                                               and Norwegian Seas and in Barents Sea South at 31                                              show, the distribution between liquid and gas varies                                           with large structures in the deepwater areas. Changed
         resource classification and resource accounts                                             December 2017 (figure 3.2) are virtually the same as                                           from one sea area to another.                                                                  expectations of the potential off Lofoten, Vesterålen
at 31 December 2017 in chapter 1). Its previous as-                                                in 2015.                                                                                                                                                                                      and Senja, based on seismic data acquisition and map-
sessment was made in 2015 (see the NPD’s resource                                                     Uncertainty in these estimates is greatest in areas                                         HISTORICAL CHANGES                                                                             ping by the NPD, also affected the results. See the
report for 2016). The calculation method has re-                                                   with little information and a short exploration history,                                       The estimate for total undiscovered resources has                                              NPD’s 2010 reports on Petroleum resources in the sea
mained unchanged since the mid-1990s, which pro-                                                   such as much of the Barents Sea. That applies particu-                                         varied over time (figure 3.5). New knowledge from                                              areas off Lofoten, Vesterålen and Senja and Geofaglig
vides a good basis for comparing estimates over time.                                              larly to Barents Sea South-East and North. Uncertainty                                         mapping and exploration wells may lead to substantial                                          vurdering av petroleumsressursene i havområdene
                                                                                                   is considerably smaller in the North Sea and the well-                                         revisions of the figures, both positive and negative.                                          utenfor Lofoten, Vesterålen og Senja (in Norwegian
UPDATED ESTIMATES FOR UNDISCOVERED                                                                 explored part of the Norwegian Sea.                                                            Over time, however, estimates will reduce naturally as                                         only).
RESOURCES                                                                                             The estimate for undiscovered resources shows                                               prospects are drilled.                                                                            The background for the 2012 increase in the Barents
Total undiscovered resources are estimated to lie bet-                                             that the amount remaining could provide the basis for                                             After rising from 1996 to 2002, the estimates de-                                           Sea was the NPD’s mapping and inclusion of Barents
ween 2 330 (P95) and 6 200 (P05) million scm oe (fact                                              exploration and oil and gas production over several                                            clined up to 2017. The discovery of Ormen Lange in                                             Sea South-East. This area was incorporated in the
box 3.1 and figure 3.1). The expected value is 4 000                                               decades to come.                                                                               1997 raised great expectations for a number of large                                           Norwegian sector after the boundary treaty with Rus-
million scm oe, up by 37 per cent from 2 920 million                                                  More than 60 per cent of undiscovered resources are                                         structures in the deepwater areas of the Norwegian                                             sia came into force in 2011. In the same year, the sea
in 2015. This big increase primarily reflects the new                                              expected to lie in the Barents Sea, with the remainder                                         Sea. However, disappointing wildcats prompted a                                                areas around Jan Mayen were included in the estimate
estimate for Barents Sea North in 2017.                                                            divided more or less equally between the North and                                             downgrading of the estimates in 2003. That related                                             for the Norwegian Sea. That increased the total esti-
                                                                                                   Norwegian Seas (figure 3.3).                                                                   particularly to the gas potential in the deepwater                                             mate for undiscovered resources.
                                                                                                                                                                                                  areas.                                                                                            Before 2017, the resource estimate for the Bar-
                                                          7000
                                                                                                                                                                                                     While the estimate for the Barents Sea increased in                                         ents Sea primarily covered undiscovered resources
                                                                 Total recoverable undiscovered

                                                          6000                                                                                                                                    2010, those for the North and Norwegian Seas were                                              in Barents Sea South – including those in plays which
                                                                   resources (million scm oe)

                                                                                                                                   3000
                                                          5000                                                                                                                                    reduced. These reductions primarily reflected lower                                            extend into Barents Sea North. The NPD’s mapping of
                                                                                                  Total recoverable undiscovered

                                                                                                                                   2500                                                                                                                                                          the latter area in 2016-17 led to the eastern part being
                                                                                                    resources (million scm oe)

                                        4000              4000
P95              2330                                                                                                                                                                                                                                                                            separated out with its own estimate. See the NPD re-
                                                          3000                                                                     2000                                                                                                                                                          port on Geological assessment of petroleum resources
                                                          2000                                                                                                                                                Gas                          Liquid                         Total                  in eastern parts of Barents Sea North 2017. This area
       Expected value   4000                                                                                                       1500
                                                                                                                                                                                    1370                                                                                                         accounts for about 35 per cent of the undiscovered re-
                                                          1000                                                                                                        1165                                        North Sea
                                                                                                                                                                                                                   13%                           North Sea                     North Sea
                                                                                                                                   1000                                                             Barents Sea                                                                 18%
P05                            6200                                                                                                                                                                                                               22%           Barents Sea
                                                          0                                                                                725           740                                          North                       Barents Sea
                                                                                                                                                                                                      29%             Norwegian     North                         North
                                                                                                                                                                                                                                                                                  Norwegian
                                      P95

                                                        P05

                                                                                                                                    500                                                                                  Sea        39%             Norwegian     34%
                                                                                                                                                                                                                        21%                                                          Sea
                                                                                                                                                                                                                                                       Sea                          19%
                                                                                                                                                                                                                                                      16%
                                                                                                                                      0                                                                Barents Sea South                  Barents Sea               Barents Sea South
                                                                                                                                          North Sea   Norwegian Sea   Barents Sea   Barents Sea             37%                             South                        29%
                                                                                                                                                                        South         North                                                 23%

Figure 3.1 Estimated undiscovered resources – expected                                             Figure 3.2 Undiscovered resources by area within the                                           Figure 3.3 Distribution of undiscovered resources in each
value and uncertainty range.                                                                       spread from P95 to P05. The numbers shown are the                                              area: gas, liquids and total.
                                                                                                   expected values.

 26                                            R E S O U R C E R E P O R T E X PLO R AT I O N 2018                                                                                                                                                              R E S O U R C E R E P O R T E X PLO R AT I O N 2018                                                                  27
You can also read