Perspectives on the future of the Norwegian Continental Shelf

”check against delivery”.

ONS: Hovedtale 26.august

• Distinguished guests, dear friends of the energy industry,
• It is a great pleasure for me to be here in Stavanger and at the ONS.
• I appreciate the opportunity to share my perspectives on the future of the Norwegian Continental Shelf – the NCS - with such prominent representatives of the global oil and gas industry.
• The theme of this year´s conference is “Changes”.
• One of the things that haven’t changed is the status of the Norwegian Continental Shelf. This is still the place to be!
• Today, I will elaborate on why Norway is, and will remain attractive for oil and gas companies and suppliers for decades to come.

 

• The discovery of Ekofisk in 1969 changed Norway, and marked the beginning of a fantastic adventure.
• Since becoming Minister of Petroleum and Energy, I have had the pleasure of meeting some of the pioneers who contributed substantially to this adventure.
• I am talking about the ones who built the platforms, worked the floors and got their hands dirty – in the pioneering years of the Norwegian oil and gas adventure.
• I am happy to see that many of these pioneers are invited to the 40th anniversary of the ONS, as special guests, to receive well-deserved recognition.
• They most certainly have a lot to be proud of! A successful  and profitable industry, attractive employment opportunities all over our country - lifting the welfare of Norwegians.
• Norwegian petroleum activities have been our dominant industry for decades, and have contributed to enormous value creation, jobs and ripple effects all over the country.
• I share the ambition for this adventure to continue for many decades to come - and will act accordingly. We need a long-term perspective, predictable and stable conditions, based on broad political support.
• Current realities do not allow us to ease our efforts. In order to generate the greatest possible values from our oil and gas resources - we must continue to improve, actively address future challenges and build on the strengths already in place.
• Let me present some characteristics about the NCS, why it is a good place to be - a place where further efforts will pay off.
• As recent reports indicate, the NCS is an attractive place to invest.

The NCS – a good place to be

• First, - there are considerable resources, both in existing fields and discoveries, as well as large undiscovered resources.
• 56 percent of our expected recoverable resources are still in the ground after more than 40 years of production!   
• This represents significant value, and is why we want to stimulate additional activity - both in mature and frontier areas on the NCS. New investments are needed continuously.
• The exploration activity has been stable and successful over the past decade. Many discoveries have been made. The potential is great for creative, engaged and hungry companies to develop these resources efficiently and timely.
• Our existing fields also represent great potential. The field owners have an obligation to ensure that the full economic potential of their assets is realized.

Supply and service industry

• Second, we have a world class, innovative and globally competitive supply and service industry.
• With more than forty years of experience on the NCS, it is renowned worldwide for its state of the art technology, and ability to deal with complex challenges.
• Currently, about 40 percent of the industry’s revenue is in international markets – the biggest ones being South Korea, Great Britain and Brazil.
• The presence of this high tech industry in Norway will continue to be an indispensible factor in the development of future offshore projects on the NCS.
• We also have a tradition of openness and cooperation in Norway – not only between the government and the industry, but also within the industry – between operators and suppliers.
• In order to come up with better solutions that offer cost reductions and efficiency gains, we need continuous technological development – from all parties involved.
• Research and development activities are closely integrated in our oil and gas sector. The government does its share of this. OG Twenty One, our national body for R&D in the petroleum sector, has cost- reducing technologies as its top priority.
• The cooperation between authorities, research communities, the supply industry and the oil companies makes us well suited to provide breakthrough solutions - also in the future.

Regulatory framework

• The third and final element that I wish to address is our regulatory framework.
• The main regulatory framework for the petroleum industry in Norway has been stable and predictable for decades.
• This contributes to sound resource management. It facilitates exploration, improved recovery from existing fields and development of new discoveries.
• My government is committed to keeping stability and predictability a trademark of Norwegian oil and gas policy.
• We will continue to pursue a broad political consensus that will benefit both country and industry. The same broad alliance that supported the 2011 white paper on the oil and gas policy.
  
  
• To sum up so far; we have the resources, we have world class suppliers and we have a predictable and stable framework.
• After more than 40 years of petroleum production, the NCS is still attractive - with a promising future.
• Taking full benefit of the huge economic potential in our remaining resources, requires active work and continuous investments from the operators on the NCS. 
• Producing the easy oil only, is not in accordance with good resource management and the license to operate.
• Cost-cutting and capital discipline are important tools in order to produce more resources. However, it should not lead to leaving economic resources in the ground.
• Fewer projects might reduce immediate ripple effects through the supply chain. This may result in a loss of capacity and competence which again will be needed in the future. 

The NCS and climate change policies

• A recurring theme during the ONS has been the relationship between energy and climate.
• Let me state some indisputable facts. The world needs more energy. Access to energy is a precondition for economic development and social welfare. At the same time we must combat climate change.
• Solving this dual challenge demands action from all parties involved – governments and industry alike. We need policies that work in a global context.
• Our upstream oil and gas activities are part of the solution to these challenges.
• First, we need more use of natural gas, and less use of coal.
• Substituting coal with gas is the easiest and the most cost-effective way to reduce carbon emissions significantly in the short term. Norway contributes to this through our gas exports to Europe.
• Second, in order to mitigate climate change, efficient use of energy and increased deployment of new and innovative technologies will be necessary. Particularly carbon capture and storage– CCS - has the potential to make a significant contribution.
• Two of the biggest CCS - projects in the world are located at the NCS. Namely the Sleipner and Snøhvit gas fields.
• These projects are part of our broader commitment to making the commercialization of carbon capture and storage a key technology in the combat against climate change.
• Third, as the prime minister mentioned yesterday, we have a system where the polluters pay for their emissions. This delivers both efficient use of energy and promotes cleaner energy sources.
• For more than 20 years, a very high CO2-tax has been in place on the NCS. Since 2008, this tax has been combined with inclusion of the sector in the EU Emissions Trading System – The ETS.
• Companies operating on the Norwegian Continental Shelf have to pay more than 70 US dollars for every ton of CO2-emissions. This high cost makes the activity on the NCS well prepared for even more ambitious global climate policies.
• The evidence, dear audience, is clear – the emissions per produced unit of oil and gas at the NCS are low in a global context.
• These are all good reasons to maintain production on the NCS – even in a climate perspective.
• We should not forget one more basic reality. Even if oil production is important for Norway, we currently produce just about two percent of the global production. Just maintaining the level of production is a huge task due to the natural decline in producing fields.
• Stopping or reducing this production, will not make any big difference for the climate. This view was last week supported by the Executive Director of the United Nations Environmental Program, Mr. Achim Steiner.
• Furthermore, I see no evidence that a gradual reduction in the oil production from the NCS will reduce global oil demand. The demand would be covered by oil from other oil producing countries – just as it has happened in the past.
• As a matter of fact, oil production on the NCS has been reduced over the last decade. In the same period world demand and supply has increased significantly.
• With our efficient upstream sector and low upstream emissions, reducing Norwegian production might even increase global emissions from energy production.

 

Moving north

• Currently there is a debate about petroleum activities in the north.
• Oil and gas activity in the North is actually nothing new. Snøhvit, the northernmost LNG-field in the world, was discovered back in 1984, with the first well being drilled 35 years ago. Other countries have experiences way back - from areas even further north, and in harsher weather conditions.
• Most of the challenges we face in our northern areas are similar to those we face in other parts of the NCS.
• Therefore, I strongly disagree with claims that it is not safe to explore and produce oil and gas in the Barents Sea.
• Our approach will be the same as on the rest of the NCS. I am confident that the industry will be able to handle new or different operational challenges in these areas.
• We do have a tradition for close and fruitful collaboration between companies, industry and research institutions to overcome operational challenges. I am happy to see this tradition continues as the industry is heading north.
• There are without a doubt a lot of oil and gas resources in the Barents Sea. This certainly gives reason for optimism.
• We have fields under development, and in the late planning phase. Exciting discoveries have been made, and new interesting exploration wells will be drilled.

 

• The work with the 23. licensing round is well underway. For the first time in more than 20 years, new exploration acreage is available.
• I am excited about the opportunities the petroleum activities bring to our northernmost counties. People are experiencing positive ripple effects, more job opportunities and generally increased optimism. 
• The petroleum activity is a cornerstone of my Government´s High North policy.

Concluding remarks

•  Dear friends, it is time to summarize. The Norwegian Continental Shelf is a well established and sucessful petroleum province with a huge remaining potential.
• It will continue to deliver investment opportunities and production for decades to come.
• We have the resources, we have world class suppliers and we have a predictable and stable framework. The latter will not change, and will continue to be a trademark of the NCS.
• Exploration – both in new and well established areas – is the key to continued success in the petroleum sector. Therefore, our areas in the north will be vital.
• The future is created right here – right now. It is crucial that we keep the investment level high. If not, we run the risk of not utilizing the full potential of the NCS.
• Dear Friends, I hope you all enjoy the ONS and your stay here in Stavanger. Spend your time well and get inspired.

 

• Thank you for your attention!