Record number of Awards in Predefined Areas 2018

- I am delighted to offer 83 new production licenses in this year's APA round. This is the largest licensing award on the Norwegian continental shelf. 53 years after the first licensing round, this new record confirms the industry's belief in continued value creation and activity in Norway, says Minister of Petroleum and Energy, Mr. Kjell-Børge Freiberg (FrP).

The 83 production licenses are distributed over the North Sea (37), the Norwegian Sea (32) and the Barents Sea (14). 33 different oil companies, ranging from the large international majors down to smaller domestic exploration companies, are awarded ownership interests in one or more production licenses. 21 of these companies will be offered operatorship. The licenses are awarded with work-programme commitments or as additional area to such licenses.

- Awarding prospective acreage is a central element in the Government's policy. It enables different oil and gas companies to make the discoveries we need. Today, I have awarded several licenses to medium-sized companies and to new companies on the NCS. The increased diversity of companies is important to ensure employment and Government revenues, continues Minister Kjell-Børge Freiberg (Frp).

The APA licensing rounds cover the most explored areas on the Norwegian shelf. One of the primary challenges in mature areas is the expected decline in discovery size. Minor discoveries will not be able to carry standalone developments, but may have good profitability when they can exploit existing and planned infrastructure, or be seen in context with other discoveries or planned developments. Timely discovery and exploitation of such resources is therefore important.

Background

The first licensing round on the NCS took place in 1965. The activity started in the North Sea, and exploration in the Norwegian Sea and the Barents Sea started around 15 years later. Thus, Norway will soon have more than 40 years of experience in all sea-areas on the NCS.

 

Approximately 170 000 people are today directly or indirectly engaged in the petroleum sector. The competence and the competitiveness in the industry also produces positive ripple effects into other industries. Since the first oil-discovery was made, the sector has contributed with over 14 000 bn. NOK in value creation, and has given the Norwegian state a net cash-flow of over  5 000 bn. NOK over the last 15 years. The states net cash-flow in 2019 from the petroleum sector is estimated to be approx. 286 bn. NOK, that equals to  approx. 215 000 NOK for a family of four.

 

The award of new exploration acreage takes place in two equal licensing rounds. The numbered rounds takes place in the least known exploration areas, which for all practical purposes now means the deep-water areas in the Norwegian Sea and significant parts of the Barents Sea Acreage in the best know exploration areas are awarded in the annual APA-rounds. As a consequence of the fact that exploration has been going on for decades, the majority of the North Sea, large parts of the Norwegian Sea and an ever-increasing area in the Barents Sea is today included in the APA-rounds.

 

The only difference in the process for the two rounds is in how the authorities stipulates the applicable area. In the numbered rounds, this happens after proposals (nominations) from the companies. This gives the authorities the best possible basis for announcing the areas that will give the most information about the regional geology and thus, effective exploration. This approach is not needed in the APA-rounds, where the key challenge is to identify resources in a timely manner in order to best utilise existing and planned infrastructure in the area.

  

The petroleum activity on the NCS is conducted with  great empasis on health, safety and the environmental standards. Exploration, development and production takes place with low emissions to air. Greenhouse gas-emissions is a part of the EU Emissions Trading System (ETS). In addition, a high CO₂ –tax is paid.  This policy gives the companies financial incentives to reduce their own emissions. In a system like the ETS, the only way to reduce total emissions is to reduce the number of quotas available.

 

The level of safety on the NCS is high, and normal exploration-activities, development and production has no proven negative effects on the natural environment. As with all other industrial activity, petroleum acitivities leads to the risk of accidents with consequences for employees lives and health, loss of established infrastructure and the natural habitat. Great emphasis has therefore been made to avoid large-scale accidents.  

 

Potential damage to the natural environment is limited to large accidental oil spills. The probability of an oil-well blow-out is estimated to be one in every 7043 exploration wells drilled. On the NCS, approximately 50 wells are drilled each year. There has been very few larger oil spills on the NCS. There are requirements in place for emergency preparedness in order to reduce the consequences in the event of an accidental oil spill. Restrictions have in addition been placed on exploration drilling in oil-bearing layers for parts of the year. During 50 years of petroleum activities, no accidental oil spills have reached Norwegian shores, and no damage to the marine environment has been proven.

 1.MAP 

2. Awards with work-programme

Offer of licenses to 33 licensees

(Number of shares/operatorships)

 

Aker BP (21/11)

AS Norske Shell (4/2)

Capricorn (1/0)

Chrysaor (2/0)

Concedo (3/0)

ConocoPhillips (3/3)

DEA (9/3)

DNO (18/5)

Dyas (1/0)

Edison (4/2)

Equinor (29/13)

Faroe (8/4)

Idemitsu (1/0)

INEOS (6/2)

Inpex (3/0)

Lime (1/0) 

Lundin (15/9)

M Vest (4/0)

MOL (1/0)

Neptune (9/4)

OKEA (4/3) 

OMV (11/6)

Pandion (2/0)

Petrolia NOCO (5/1)

PGNiG (3/2)

Repsol (4/2)

Source (2/0)

Spirit (9/2)

Suncor (4/2)

Total (2/1)

Vår Energi (13/4)

Wellesley (6/0)

Wintershall (6/2)