During a live presentation yesterday, NPD’s Director of Exploration Torgeir Stordal presented its new resource report for exploration. The main conclusions are that exploration activity on the Norwegian shelf is profitable in all areas and minor discoveries account for a significant share of value creation. In addition, there are still vast remaining resources in all areas.
Vast remaining resources
The estimate for undiscovered resources is about 3,900 million standard cubic meters of oil equivalents (Sm³ o.e.), which translates to 22,644 billion boe. The estimate is uncertain and has a uncertainty range of between 2200 and 6200 million Sm³ o.e. About 40 percent of the undiscovered the resources are located in areas that have not yet been opened for petroleum activities.
Exploration activity still high despite decline in activity
“A diverse range of players, good access to acreage and a higher volume of better-quality data have contributed to many recent discoveries. In areas with available and cost-effective infrastructure, even small discoveries can create substantial values. Low unit costs also mean that future exploration can be profitable”, said Torgeir Stordal.
However, the decline in demand for oil and lower prices have led oil companies to reduce their exploration budgets for the year and postpone a number of exploration wells. The Norwegian Petroleum Directorate (NPD) projects that about 30 exploration wells will be drilled in 2020, which is about half the level from the previous year. Yet, this is still much higher than in other North Sea countries where for instance in the UK only three exploration wells were spudded so far this year.
The Norwegian shelf is well-positioned for the energy transition
Both the Intergovernmental Panel on Climate Change and the International Energy Agency’s (IEA’s) scenarios estimate that there will be a need for carbon capture and storage to reach the objectives of the Paris Agreement.
In that light, the NPD has mapped areas suitable for long-term, safe storage, and one of these will be used in connection with the Government’s recently proposed Longship project.
The development within renewable energy sources and battery technology requires access to considerable amounts of rare earth minerals. On the Norwegian continental shelf, it is known that such rare earth minerals are found in massive sulphide deposits and in manganese crusts on the seabed in the deep parts of the Norwegian Sea.
The Government decided this year to initiate an opening process for mineral activities on the Norwegian continental shelf. The NPD will contribute in the impact assessment and resource assessments in this overall effort.
The NPD has been working for several years to map mineral deposits and is now working on data analyses, geological evaluation and is also planning new mapping expeditions.
In summary, with vast low carbon footprint oil and gas resources, good storage capacity for CO2 and opportunities for mineral resources on the seabed, the Norwegian shelf is well-positioned for the future energy transition.