Foils (in pdf format)

Your Majesty, Ladies and Gentlemen
It is a pleasure for me to be invited to address you here at the 65th EAGE Conference as my predecessors did in 1983 and 1993.

Both in my capacity as a physicist and as a politician, I am reminded almost daily about the importance of experts being able to communicate with the general public and the importance of seeing your own field of expertise in a broader perspective. It is therefore very encouraging to see that EAGE is taking this challenge seriously and have chosen to focus on Geosciences and its role in Society at this Conference.

I am really impressed by the important role geoscientists have played in the development of the Norwegian Continental Shelf, but I am often reminded about a letter that was send from the Geological Survey of Norway to the Foreign Ministry 25th of February 1958. The letter basically stated that there did not exist any petroleum resources on the Norwegian Continental Shelf. In the name of fairness it has to be said that the Geologists got a very short deadline to give their opinion about the Shelf and they also stated in their letter that it was some uncertainty connected to their answer.

Fortunately history has shown that the evaluation of the Geological Surveys of Norway was slightly off target, and today we are the third largest oil exporter in the world.

As the graph behind me illustrates there has been a steep rise in the production on the NCS since the beginning in 1971. For 2003 we estimate that the production will total 262 millions Scm oil equivalents. The production will stay at this high level the coming years before we estimate that a steady decline will set in. With a production like this, the oil and gas business has grown to become Norway’s largest industry in terms of value creation.

One of the key success-factors in the development of the Norwegian oil and gas resources has always been – and will continue to be - a close cooperation between the authorities, private companies, research institutions and universities. Both in my job as a minister, and in my professional life as a physicist, bringing together these groups have been, and still is, very important. In achieving this, my experience has shown me that organisations like the EAGE, with members from both private companies, research institutions and universities, plays an important role as meeting places for these groups.

The estimates for the future production illustrated on the graph are based on what my Government have called the long-term scenario for petroleum activity on the NCS. In this scenario we will have oil-production for another 50 years and gas-production for another 100 years. This potential makes us believe that the NCS is among the most promising and interesting petroleum provinces in the world.

The estimates of remaining recoverable resources on the Shelf amounts to just over 10,2 billions scm o.e. Out of this close to 40 % (3,9 billion scm) are undiscovered resources. As the illustration behind me shows the ratio between discovered and undiscovered resources varies in the different parts of the shelf. This diverse degree of maturity on the Shelf should give you as geoscientists different challenges to work with.

In the south we have the North Sea where petroleum activity has been going on for close to 40 years. The biggest discoveries - so far - have been made in this part of the Shelf and it was here production started in 1971 when Ekofisk came on stream. The area where Ekofisk was found had to a large extent been given up by the oil-industry after 30 wells in the North Sea without any commercial discoveries. Also Phillips tried to get out of their obligation to drill the last well in their production license but was “forced” into it and discovered Ekofisk. This was along time ago and things have changed since 1969, but discoveries like EnCana’s Buzzard-field on UKCS still give us hope that the time for surprises is not over yet. Many times we have seen that areas abandoned by some companies have been picked up with great success by others. We do however realise that the possibility of new giant fields are declining in the North Sea, but there are still a considerable potential for discovering new resources, including resources that can be developed as tie-ins to exiting infrastructure.

Further to the north we have the Norwegian Sea which is probably the most interesting province on the NCS today. It consists of both mature areas, around Haltenbanken, and more frontier deepwater areas to the west. In the Norwegian Sea the first production license was awarded in 1980 and in the following year Midgard was found. In the Norwegian Sea several high profile frontier wells, like Havsule, Solsikke and the President, have rendered disappointing results the last years. From listening to geologists I understand that the main uncertainties are linked to the presence and distribution of reservoir rocks and that there are several theories about where the reservoir sand could come from, and where it has been deposited. Some of this uncertainty is due to the fact that only eight wells have been drilled in deep water in the Norwegian Sea. As only a small number of wells have been drilled in this large province, large parts of the Norwegian Sea are still regarded as unknown and need to be further explored to understand the geological models and hopefully new discoveries will be made in the years to come.

The northernmost part of the Norwegian Continental Shelf is the Barents Sea. Here it has been petroleum activity since 1980 but most of it is still a rather immature part of the Shelf. 39 production licenses have been awarded since 1980 and 61 wells have been drilled and they have yielded a series of minor and medium sized discoveries. In most of the wells in the Barents Sea traces of hydrocarbon have been found, but the large accumulation of petroleum that once were present seems to have migrated out of the trap, either to the surface or into other traps that remain to be explored.

The Barents Sea is however a very environmentally sensitive area. When we came into office my Government initiated an Impact assessment study to see whether petroleum production in this sensitive area could take place within acceptable risk limits. The impact assessment study will be sent out on public hearing shortly. Based on the results from this study the Government will decide upon the issue of possible future petroleum activity in this part of the Shelf. If the study shows that we can accept petroleum activity in this area it will be under strict environmental conditions in order to ensure that the activity is undertaken within the framework of sustainable development.

As a Government our main contribution to ensure the realisation of the long term scenario is to put in place the right framework conditions for the industry. With regard to exploration this Government has a strong focus on access to acreage.

One week ago I announced a licensing round in the so called pre-defined exploration acreage in mature parts of the Shelf. This is the first time we announce such a round and it will replace the former annual North Sea Awards. The biggest change from previous years licensing rounds in mature parts of the North Sea is that I have also included mature acreage in the Norwegian Sea (Haltenbanken) in this round. The changes made will also lead to a more predictable and simplified licensing system where the industry gets access to larger acreage than previously.

In the more frontier areas of the Shelf I have invited the oil-companies to nominate areas they think should be included in the upcoming 18th licensing round. In light of last years exploration results the 18th licensing round will be of great importance for the development of frontier areas of the NCS.

Exploration activity in the Norwegian Sea needs to be revitalised and the nominations from the companies are an important tool to achieve our target of including high quality acreage in the round.

We plan to announce the 18th licensing round before Christmas 2003, with awards of production licenses during the 2nd quarter of 2004.

In addition to the two licensing rounds I have mentioned, we awarded licenses in the North Sea Awards 2002 the 11th of April this year. All in all my Government will make 2003 a very interesting year when it comes to licensing rounds, which should give many of you interesting challenges in years to come.

The future of the petroleum activity on the Norwegian Shelf does however not rest on access to acreage alone.

Technology
The need for new technology to realize the values in the long term development scenario is significant as more complex reservoirs and smaller fields create intensified technical challenges in our future activities. Until today water and gas injection has been vital in our efforts to produce more oil over the lifetime of the producing fields. These measures together with among others advanced seismic technology and smart wells have been very important in increasing the recovery rate on the Norwegian Continental Shelf.

In the future, better reservoir management will be even more important than before. Application of geological and geophysical competence will be a cornerstone in the competence needed to achieve our future targets in enhanced recovery and value creation from our sector. Not all of this competence can be developed here. International collaboration, such as EAGE, is welcomed to help fostering the expertise and building the competence we need for the future.

Eventually, I would like to point to a particular challenge that we are experiencing here in Norway: The apparent lack of knowledge, interest and debate concerning oil and gas issues in society in general. This indifference contrasts strongly with the huge possibilities associated with this industry for a century to come. As I showed you earlier, the oil and gas industry is a cornerstone for the Norwegian society today, and still few seem to be interested in debating the future for this industry. As a consequence, young people seem to turn away from the petroleum sector.

A great concern to me is the lack of interest in science and mathematics amongst our young. This is also reflected in the low recruitment to petroleum-related education at a higher level. I find this disturbing because the young are the future. In order to attain the long-term scenario, we need all their creativity, brains and enthusiasm in the oil and gas sector. In other words – we need to convince the younger generation that it is worth investing in petroleum-related education and that there are vast opportunities in the oil and gas industry throughout and beyond their lifetimes. This is a task that both industry and government must take on board.

It should not be too difficult to make the petroleum sector attractive to young people. Let me point to some interesting characteristics of this industry.

First, the petroleum sector is the most intensive industry in Norway in terms of information and communication technology. It is getting increasingly knowledge-based and provides exciting opportunities for both old and new generations of "techno-freaks".

Second, the petroleum industry is also increasingly international in its nature. For those seeking challenges in an international sphere, there are ample opportunities for interesting jobs throughout the world.

Third, the petroleum industry is getting more and more diversified in terms of career opportunities. There is a need for different kinds of expertise – from engineers to social anthropologists. This diversification should constitute attractive and interesting possibilities for the young people of today.

Our clear aim should be to communicate these prospects to the next generation. And there is quite a bit of work going on:

KonKraft is an initiative that was established to address the new challenges of the Norwegian oil and gas industry following the fall in oil prices in 1998/99. They have launched a project to develop a strategy to build public awareness and communicate facts about the petroleum industry. The strategy is to be finalised this year.

OLF, the Norwegian Oil Industry Association, has embarked upon an extensive information campaign targeted towards young people to stimulate their knowledge about and interest for the petroleum industry. The overall aim is to ensure the recruitment of competent young people to the industry on a continuous basis.

I would also like to mention that the government is aiming at more coherent policies to enhance innovation in business in general. One very concrete objective is to build a stronger competence base in natural sciences founded on co-operation with the business community. This should be of great relevance to the entire petroleum sector as we are growing increasingly dependant on attracting the best expertise available. This is particularly true for areas such as geo-science and engineering.

With this in mind I am very pleased to see that this Conference holds a special students’ Forum tomorrow where students can present their thesis research work. I think this is a good initiative that can be of benefit to both the industry and to the students themselves. It does however not target potential future students and I hope that EAGE in the future can help us with the task of increasing young peoples interest in petroleum-related fields.

In concluding I would once again like to emphasis on the importance of cooperation amongst and between private companies, research institutions, University and the authorities for the long-term development of the Norwegian Shelf. In Norway we still have interesting petroleum provinces with resources both in the mature and frontier areas. The president of EAGE wrote in his welcome to this conference that “EAGE’s core mission is to foster cross-discipline integration to support responsible exploitation of the world’s subsurface resources”. For the Norwegian Continental Shelf I share this mission and I therefore hope that we also in the future can work together with you as individuals and as an organisation to achieve this goal.

With this I wish you all an interesting conference.