Development and operations

The picture:
Lista converter station. The Valhall field receives 100 per cent of its electricity from shore via a 295-km power cable from Lista.
(Photo: BP)


In 2012, the authorities approved the plans for development and operation (PDOs) for Skuld, Jette, Åsgard subsea compression, Martin Linge, Edvard Grieg, Bøyla and Svalin. The PDOs for Gina Krog, Ivar Aasen and Aasta Hansteen are awaiting approval by the authorities. In 2013, development plans are expected for Zidane, Flyndre and Oseberg Delta 2. 


Efficient production of petroleum resources

Given society’s large vested interests in the development and operation of oil and gas fields, the authorities have established a framework for these activities. The authorities have created a model that is characterised by both competition and cooperation between the players. The purpose of this is to create a climate for good decisions that serve the companies as well as society as a whole. Chapter 2 contains more information about organisation and framework.

Development of discovered petroleum resources is the basis for production and value creation from the petroleum industry today. It is becoming increasingly important to improve utilisation of the resources in familiar areas. This constitutes a significant potential that can generate substantial value for society, if it is utilised efficiently. The Norwegian Petroleum Directorate has assessed this potential, and arrived at a goal for reserve growth on the Norwegian continental shelf of 800 million Sm3 of oil in the decade leading up to 2015. This corresponds to about twice the original oil resource estimate for the entire Gullfaks field. This is a stretch goal for the industry and for the authorities. At the end of 2012, the reserve growth has been 608 million Sm3 of oil. In 2012 alone, the reserves increased by 155 million Sm3. The average increase of 80 million Sm3 per year that is needed to achieve the goal has not yet been reached.

Figure 6.1 shows the annual growth in oil reserves during the period 1993–2012. The 2012 accounts show a growth of 155 million Sm3 of oil, recorded as new reserves. The largest increase in oil reserves comes from the Ekofisk, Troll and Gullfaks Sør fields and from the fact that development decisions have been made for the Edward Grieg, Svalin, Martin Linge, Gina Krog and Ivar Aasen resources, thus maturing these into reserves.


Figure 6.1 - Download pdf

Figure 6.1 Gross reserve growth, oil 1993–2012
(Source: Norwegian Petroleum Directorate)


Improved recovery in mature areas

There is still a considerable potential for value creation in improving the recovery rate in producing fields, making operations more efficient and exploring for resources close to developed infrastructure. Figure 6.2 shows an overview of oil resources in the 25 largest producing fields. The resources can be divided into three groups:

  • Produced volumes
  • Remaining reserves
  • Resources that will remain in the ground after the planned shutdown

The figure shows that, under the current plans, vast resources will remain after the planned shutdown of these fields alone. Several measures are necessary if more resources are to be produced on the Norwegian shelf. The measures can be divided into two main groups; measures for improved recovery, and improving the efficiency of operations.



Figure 6.2 - Download pdf

Figure 6.2 Distribution of oil resources and oil reserves in fields
(Source: Norwegian Petroleum Directorate)


Improved recovery

First and foremost, the licensees must invest in projects that can improve recovery. Examples include drilling more wells, measures for extracting more from existing wells, injection in reservoirs to recover more petroleum and adaptations in process facilities. Such measures contribute to improve the average recovery rate. In 1995, the expected average oil recovery rate for producing fields was about 40 per cent – today it is about 46 per cent. Development and use of new technology has been and continues to be very important in order to improve recovery.

Figure 6.3 shows the production development for the Ekofisk, Varg, Oseberg and Ula fields. The actual production from these fields has been very different from what was assumed in the original development plans.


Figure 6.3 - Download pdf

Figure 6.3 Production development for Ekofisk, Varg, Oseberg and Ula
(Source: Norwegian Petroleum Directorate)


Figure 6.3 also shows that improved recovery means a longer field lifetime. A longer lifetime is positive. It makes implementation of additional recovery measures possible, and entails that the infrastructure will remain in place for a longer period. This also increases the chances of other discoveries being connected to this infrastructure. Figure 6.4 also shows that field lifetimes will be longer than previously assumed.


Figure 6.4 - Download pdf 

Figure 6.4 Lifetime for selected fields
(Source: Norwegian Petroleum Directorate)



Figure 6.5 - Download pdf

Figure 6.5 Deliveries of Norwegian crude oil
distributed by receiving country, 2012
(Source: Statistics Norway)


Efficient operations

The most important factor for extending the useful life of a field is profitable production. Efficient operations contribute to the reduction of production costs. Furthermore, efficient operations enable profitable production over the long term. This enables to production of resources that are currently unprofitable. Many fields are facing a situation where the cost level must be reduced for operations to be profitable at a lower production level. Efficient operations are also crucial for reducing emissions to air and discharges to sea from the activities on the Norwegian continental shelf.


New discoveries – efficient utilisation of infrastructure

In 2012, approximately NOK 146 billion* (* Exploration costs excluded.) was invested on the Norwegian continental shelf. In total, about NOK 2400 billion* (* Exploration costs excluded.) has been invested on the shelf, measured in current value. A lot of infrastructure has been established through these investments. This infrastructure makes it possible to produce and market petroleum, and also lays the foundation for the development of additional resources in a cost-effective manner.

Declining production from a field releases infrastructure capacity. Such capacity can provide efficient exploitation of resources that can be tied into this infrastructure. In some cases, the use of existing infrastructure is a precondition for the development of production from new deposits that are too small for profitable standalone development. Exploration for and development of resources in the vicinity of existing infrastructure can provide significant value for the Norwegian society. Read more about exploration in mature areas in Chapter 5.

In 2005, in an effort to contribute to efficient use of existing infrastructure, including existing platforms and pipelines, the Ministry of Petroleum and Energy prepared separate regulations, the Regulations relating to the use of facilities by others, with effect from 1. January 2006. The objective of these Regulations is to ensure efficient use of infrastructure and thus provide licensees with good incentives to carry out exploration and production activities. The purpose will be fulfilled through the provision of a framework for the negotiation process, and the design of tariffs and general terms in agreements regarding the use of facilities by others. The Regulations entail no changes in the principle that it is the commercial players who must negotiate good solutions for both parties.

To ensure that the potential in and around producing fields is exploited, it is important that the ownership interests rest with the companies that want to make the most of this. A wider range of players is encouraged; cf. the discussion of the player scenario in Chapter 5. The Norwegian authorities believe that a diversity of players that make different assessments and priorities is positive for realising the resource potential on the Norwegian continental shelf.

Improved recovery, longer useful life and the phasing in of resources near producing fields lay the foundation for realising significant added value for society. Existing infrastructure must be utilised in order to further develop the resources in and around existing fields. Thus, the companies have less freedom here than in new developments, and are not free to choose any technical solution due to limitations in existing equipment, weight limits etc.


Clean-up after production ends

The petroleum activities merely borrow the ocean, and all phases of the oil and gas activities must consider the environment and other users of the ocean. The rule of thumb is that all equipment must be cleaned and/or removed when petroleum activities end.

So far, the Ministry of Petroleum and Energy has processed more than ten decomissioning plans. In most cases, it has been decided that abandoned facilities must be removed and transported to shore, as was done with facilities such as Odin, Nordøst Frigg, Øst Frigg, Lille Frigg, Frøy and TOGI. During processing of the decomissioning plans for Ekofisk I and Frigg, permission was given to leave in place the concrete substructure and protective wall on the Ekofisk tank and the TCP2 concrete substructure on the Frigg field.

When the authorities make decisions regarding how a facility on the Norwegian continental shelf must be disposed of, both national and international regulations are applied. The Petroleum Act of 1996 governs disposal or decommissioning of facilities. In addition to the Petroleum Act, the OSPAR convention (Oslo-Paris Convention for the Protection of the Marine Environment of the North-East Atlantic) governs disposal of facilities. OSPAR Decision 98/3 on the Disposal of Disused Offshore Installations entered into force in 1999, and lays down guidelines for what is acceptable for various types of offshore facilities.

The decision does not include pipelines, parts of facilities that are below the seabed, or concrete anchor foundations that do not obstruct fishing. The decision means that it is prohibited to dump or to abandon all or parts of scrapped facilities at sea. Exceptions can be made for some facilities, or parts of facilities if a comprehensive assessment shows that there are strong reasons for disposal at sea.

As regards pipelines and cables, the guidelines in Storting White Paper No. 47 (1999–2000) Disposal of scrapped pipelines and cables, shall apply. As a general rule, pipelines and cables can be abandoned when they are not an inconvenience or constitute a risk for demersal fishing, based on an assessment of the costs associated with trenching, covering or removal.

As a main rule, the Petroleum Act requires licensees to present a decomissioning plan to the Ministry two to five years before the licence expires or is relinquished, or the use of a facility ends.

The decomissioning plan must have two main sections; one impact assessment and one disposal section. The impact assessment provides an overview of consequences, e.g. for the environment. The disposal section must include a proposal for a final disposal solution.

A disposal decision will be made on the basis of the impact assessment, the consultation opinions, the disposal section and evaluations of this section. The licensees at the time of the disposal decision are responsible for carrying out the disposal. In 2009, the Petroleum Act was amended so that the party that sells part of a production licence has an alternative liability for removal costs related to the sold share.

When a decision is made regarding abandonment, the regulations stipulate that the licensees are still liable for wilful or negligent damage, harm or inconvenience in connection with the abandoned facility. The licensees and the State can agree that future maintenance and responsibilities will be transferred to the State for an agreed financial compensation. 


Figure 6.6 - Download pdf

Figure 6.6 Illustration of the Ekofisk tank before and
after removal of the topside
(Source: ConocoPhillips)



Figure 6.7 - Download pdf

Figure 6.7 The Balder heavy lift vessel prepares removal
of the Edda topside frame

(Photo: Kjetil Alsvik/ConocoPhillips)