Applications 20% higher than previous record
While U.S. unconventional activity certainly dominates the news in recent years, other oil and gas activities have not stopped. The North Sea, which has seen activity for nearly 40 years, is still popular based on the results of Norway’s recent licensing round.
The Norwegian Ministry of Petroleum and Energy announced today record interest in its most recent licensing round. A total of 39 companies submitted applications for new acreage in the best known areas of the Norwegian Continental Shelf, the most ever in this lease sale. For reference, last year saw 33 companies apply for licenses.
The Awards in Predefined Areas (APA) sale awards licenses for mature areas, where geologic data is present. The government significantly enlarged the area available in this sale this year, with expansions in both the Norwegian Sea and the Barents Sea. According to Bloomberg, the Barents may hold 65% of Norway’s undiscovered oil and gas resources, meaning further exploration in the area could have major effects for Norway.
The Ministry of Petroleum reports that the number of individual applications received is more than 50% higher than in last year’s round, and about 20% higher than the previous record, set in 2014.
The 39 companies that submitted applications are as follows.
- A/S Norske Shell
- Aker BP ASA
- Bayerngas Norge AS
- Capricorn Norge AS
- Centrica Resources (Norge) AS
- Concedo ASA
- ConocoPhillips Skandinavia AS
- DEA Norge AS
- DNO Norge AS
- Dong E&P Norge AS
- ENGIE E&P Norge AS
- ENI Norge AS
- ExxonMobil Exploration and Production Norway AS
- Faroe Petroleum Norge AS
- Fortis Petroleum Norway AS
- Idemitsu Petroleum Norge AS
- INPEX Norge AS
- Kufpec Norway AS
- Lime Petroleum AS
- Lotos Exploration & Production Norge AS
- Lundin Norway AS
- Maersk Norge AS
- M Vest Energy AS
- MOL Norge AS
- OKEA AS
- OMV (Norge) AS
- Pandion Energy AS
- Petrolia NOCO AS
- PGNiG Upstream Norway AS
- Point Resources AS
- Repsol Norge AS
- Skagen 44 AS
- Statoil Petroleum AS
- Suncor Energy Norge AS
- Total E&P Norge AS
- Tyr Exploration AS
- VNG Norge AS
- Wellesley Petroleum AS
- Wintershall Norge AS
230 MBOEPD coming online this year
This record level of interest corresponds to growing production from the North Sea. According to Bloomberg, fourteen projects will start in the area this year, with a combined peak production of 230,000 BOEPD. This is the most since 2007, and is the result of multiple long-term projects reaching completion.
Source: Bloomberg
So far this year, eight projects have begun production, accounting for a combined 140,000 BOEPD of production. Chief among these is BP’s (ticker: BP) Quad 204 project, redeveloping the Schiehallion and Loyal fields in the North Sea. Located directly north of Scotland, the Quad 204 involves using an FPSO (floating production, storage and offloading vessel) to process production from up to 20 new wells. Production is expected to ramp up to a plateau of 130 MBOEPD and sustain this level for several years. BP estimates that the Schiehallion and Loyal fields have an additional 450 MMBOE of resource still available, and expects Quad 204 to produce through at least 2035. BP announced first oil from the project in May.
More recently, Total announced start-up of production from the Edradour & Glenlivet gas and condensate field in late August. Located west of Shetland, this project will bring additional production capacity of up to 56 MBOEPD.
Additional projects are expected in the next few years, such as BP’s Clair Ridge project, but the increase in production is likely to stall after 2018. The current set of projects was mostly approved before the oil price downturn, and few projects have been approved since then. Unless oil prices rise, North Sea production is likely to begin falling again after 2020 according to Mike Tholen of Oil & Gas UK.
