Norway, western Europe’s largest oil producer, expects crude output to increase 0.7 percent this year, ending 13 straight years of declines as new fields offset dwindling production from aging North Sea deposits.
Total petroleum production will rise to 215 million cubic meters from 213.7 million cubic meters last year, the Norwegian Petroleum Directorate said today. Oil output will rise to 85.5 million cubic meters from 84.9 million cubic meters, and gas production will drop to 107 billion cubic meters from 108.7 billion cubic meters, the Stavanger-based authority said.
Still, the NPD cut its crude output forecasts for the next four years by 3 percent to 5 percent compared with the estimates the authority gave last year.
“A lot of the fields are old,” Director General Bente Nyland said in an interview in Stavanger. “Production is a lot more variable than we’d wish.”
After falling by more than half since a 2000 peak, Norway’s crude production will rise to 86.5 million cubic meters in 2015 and 87 million cubic meters in 2017 thanks to new projects including Knarr, Martin Linge, Edvard Grieg and Ivar Aasen in the North Sea and Goliat in the Barents Sea, the first Arctic oil project. Gas production is expected to rise to 113.3 billion cubic meters in 2017 and 115.8 billion cubic meters the following year, the NPD said.
Discoveries including Johan Sverdrup and Johan Castberg since 2010 have helped revive exploration optimism in Norway, where 59 wells were drilled last year, second only to the 65 wells sunk in 2009. Though the number of exploration wells will fall to about 50 in 2014 as companies invest more heavily in field developments, the number of wildcat wells in the Arctic Barents Sea is expected to reach a record 10, the NPD said.
“The discoveries in recent years have created renewed interest in the Barents Sea, which could come to play an important role in maintaining long-term petroleum production,” Nyland said.
Capital investments by oil and gas companies will rise to a record 176 billion kroner ($28.8 billion) from about 173 billion kroner in 2013, the NPD forecast. Investments are then expected to increase to 180 billion kroner in 2015 before remaining steady at about 170 billion kroner up to 2018 as oil companies review the profitability of some projects to protect cash flow.
“We see a recent trend towards postponing more projects, which has led to a downward adjustment of the NPD’s investment forecast,” the authority said. “The high cost level, combined with uncertainty regarding oil and gas prices over the next few years, presents a considerable challenge for further development on the Norwegian shelf.”
The authority also raised its resource estimate for Norway, including already produced volumes, to 14.2 billion cubic meters of oil equivalent from 13.6 billion cubic meters a year ago. The estimate for undiscovered resources was raised by 14 percent to 2.9 billion cubic meters. The rise is mostly due to higher estimates for the Arctic Barents Sea, where an area formerly disputed by Russia was opened to exploration last year.