Norway Gas and Oil Needs new Development.

Norway's production of oil and gas is thought to run into trouble by the mid 2020's if currently off-limit areas are not developed. These include Nordland VI and VII and Troms II, which oil companies are currently banned from exploring since there are important fishing grounds and areas of natural beauty there. Since it can take 18 years from the granting of a license to actual onstream production, time is of the essence, especially as it is thought that the more mature Norwegian oil fields will begin to decline in 2012-2013 when Norwegian gas production will outstrip that of oil.

Norwegian North Sea oil production peaked at 3 million barrels a day in 2000 (the same output as the British peak in 1999), and is now 2.1 million barrels a day (British production has fallen to around 1 million barrels a day). Apparently under the Lisbon Agreement the EU may be able to grab oil from the UK, which is Europe's main oil and gas producer, while Norway's production remains sensibly out of EU jurisdiction. It is thought that by 2030 Norwegian oil output will be 1.6 million mpd or around 60% of current levels.

Altogether it is estimated that the areas offshore from the Vesteraalen and Lofoten archipelagos may hold 3.4 billion barrels of oil. While this is less than 6 weeks worth of oil to run the entire world on, it is a significant contribution to Norway's reserve. To do a simple R/P ratio sum, if Norway has "9 years worth of oil left" as has been said recently, then a daily output of 2.1 mbd x 365 x 9 = 6.9 billion barrels in current mature fields, so accessing these northern regions would add another half. In reality there will of course be a steady decline in production, and if production is still at 1.6 mbd by 2030, around 13.5 billion barrels of oil will have been produced by then, suggesting the reserve is far greater. On the other hand the latter prediction may prove highly optimistic.

Now the world's fifth major oil producer, Norway will continue to be a main player in the provision of oil to Europe over the next decades. It is second only to Russia in its provision of natural gas to Europe and its reserves of gas are believed to be very large.

There is the expected difference of opinion among Norwegians as to whether the fields in the north should be opened-up or not: 40.7% say yes and 35.5% no, with 23.9% undecided. The World Wildlife Fund and Bellona stand firmly on the "no" side, on the grounds that indigenous fish and birds in would be harmed by drilling in the region. For sure it would be a shame to kill-off the fish since Lofoten is a major spawning ground for cod, producing 400,000 tonnes of them per year, while other areas around the world , e.g. Cape Cod have lost much of their cod.

There are economic issues too. Those who want the exploration to go ahead are looking toward investment and the Norwegian economy and yet it is the current global recession in part that has put on-hold many such projects in Norway and elsewhere, and even if the go-ahead were to be given, is there the financial incentive for companies to start new drilling projects? It depends on the price of oil: this is now back up to $50 from $30 a barrel from a few months ago, and it will almost certainly rise again to previous levels. At $100 a barrel the incentive is probably restored, but it all takes time, especially against the relentless backdrop of world oil depletion.

We have to face the truth that we can't rely on the current level of world oil production for much longer, and then what? All these schemes are part of a general denial to that fact.

Related Reading.
"Norway Oil Industry Seen At Risk If New Areas Not Opened," by Elizabeth Adams. http://www.rigzone.com/news/article_pf.asp?a_id=75180