Tale -INTSOK’s International Oil and Gas Business Day

Ladies and gentlemen, good afternoon!

• It is a pleasure for me to address you all today at INTSOK’s 11th International Oil and Gas Business Day.
• Norway’s history as a host nation for oil and gas activities is considered a success story. Many would say that this is due to luck, since Mother Nature has been so kind to us, providing us with considerable natural resources: We have large oil and gas resources, ample supplies of water for production of hydropower, as well as the potential to develop other kinds of renewable energy.
• But our success as a petroleum nation has mainly come as a result of the way we have managed our petroleum resources.
• Norway was a developed, mature industrial nation when we first discovered oil on the day before Christmas Eve in 1969. There has been a high degree of political consensus over time to ensure sound management of our petroleum resources, and stable and predictable investment conditions.
• We decided early on to invite the international petroleum to participate. At the same time, we started to build our own knowledge and competence. A strong national oil industry has developed over the years.
• The petroleum sector has become the largest industry in Norway. It counts for half of Norwegian exports and a third of the state revenue.  More than 140 000 people are directly employed in the Norwegian petroleum sector.
• After 40 years activity, we have learnt an important lesson: International presence and national ambitions go hand in hand.
• Last summer, the government put forward an updated strategy for the petroleum sector in a white paper, which I called: “An industry for the future”. It received support from all political parties in the Parliament in December last year.
• The main message in this white paper is that a steady activity level must be maintained in order to achieve the goal of long-term management and value creation from the petroleum resources. The strategy we put forward is a parallel and active commitment to:

1. Further increase the recovery rate from fields in production
2. Develop profitable discoveries
3. Continue active and thorough exploration in areas open for petroleum activities on the Norwegian Continental Shelf
4. Open new areas for petroleum activities

• We are seeing a high level of activity on the Norwegian Continental shelf and we had fantastic exploration results last year.
• Our biggest discovery last year – Sverdrup – holds resources estimated at 1.7 billion barrels of oil equivalents. It was the largest offshore discovery globally last year. 
• In addition to this, the Skrugard discovery in the Barents Sea was the third biggest.
• Next to Skrugard we made a discovery of equal size called Havis in January 2012. The estimated resources of the two discoveries combined are 400 to 600 million barrels. This is a breakthrough in this area and opens up a new oil province.
• Last year the Ministry of Petroleum and Energy approved 10 plans for development.   Total investment in 2011 was more than 100 billion kroner.  The revitalization of Ekofisk is expected - alone – to amount to investments of 65 billion kroner.
• We expect to receive new plans for development in the next few months, like: Aasta Hansteen, Dagny and Draupne, and several smaller field development plans.

• During the past 40 years, we have extracted 40 percent of the estimated recoverable resources on the Norwegian Continental Shelf.
• We work to increase the recovery rate in existing fields.  Sixty percent of our resources remain in the subsurface.
• I often tell the Ekofisk story, and it is one worth mentioning once more. As the first producing field on the NCS, Ekofisk had produced for 40 years when a plan for further development was submitted last year. This is likely to set the stage for another 40 years of production.
• The recovery rate on the field has increased from 17 per cent in the original plan to over 50 percent under the current plans. 
• This is positive, but I believe we must always aim to do even better. The higher oil price environment we now live in will help make more of the resources commercial as well.

• While the North Sea still dominates when it comes to production, the areas further north have a huge potential for future activities. 
• It is estimated that about a quarter of the world’s remaining hydrocarbons may be located in the Arctic.
• Opening processes are therefore ongoing around Jan Mayen and the new areas in the southern part of the Barents Sea – this is the Norwegian part of the formerly disputed area with Russia. 
• If nothing unexpected happens, the industry can look forward to additional new acreage for exploration in the not too distant future. 

• The twenty-second licensing round was announced in June this year. Out of the 86 blocks announced, 81 are located north of the Arctic Circle, and 72 of those are located in the Barents Sea.
• I look forward to receiving high quality applications from experienced companies.

Technology development on the NCS

• We have 40 years of experience solving challenges on the Norwegian continental shelf.  Exploration and exploitation have been demanding.
• Fields have often been in deep waters, or located in remote areas with no infrastructure in place. Technological development has been necessary to make fields economically viable, or possible to develop at all.
• Thanks to this work, Norwegian industry has developed cutting edge technology: Subsea production systems, subsea compression, and multiphase flow over long distances and in deep waters are some examples.
• Fairly recent technological advances made the development of Snøhvit and Ormen Lange possible.
• Another technology step forward is the Åsgard subsea compression project.
• The closer the compression is to the well, the higher the efficiency and production rates. Other fields on the Norwegian continental shelf are planning technology tests and qualifications similar to those utilised on Åsgard.
• The engagement and interaction between oil companies, industry and research institutions have been fundamental in finding solutions to technological challenges. I am truly proud of the way these players have collaborated and are bringing world class technology and technological solutions to the market.
• This is also reflected in the international success of Norwegian companies.  The Norwegian service and supply industry currently leads the world  within seismic, subsea equipment and services, drilling equipment, offshore service, floating production and transport.
• We see that the Norwegian industry is expanding on the global market, and we find examples in countries such as Australia, Angola and Brazil. 
• Next to oil and gas, this has become the most important industry in Norway. This is a success story, which should be told more often. Practical challenges encountered on the Norwegian Continental Shelf have given birth to a number of important innovations adopted by other industries.

Challenges ahead

• There is no doubt; we are seeing a lot of positive developments. However, the petroleum industry faces some challenges which need to be addressed.
• The main challenges are related to the rising cost levels and the increasing difficulty of recruiting enough personnel with the right skills.
• The costs on the Norwegian Continental Shelf have increased significantly since the turn of the century and are higher than in other, comparable petroleum provinces.
• Norway is a high-cost society. We compete on quality and efficiency. If we manage to justify a high level of cost with quality and efficiency, this is viable in the future. This is a continuous quest.
• I want to stress the importance of thorough planning, in order to implement projects in a cost-effective manner. It is important to seriously consider the complexity of the projects, and involve suppliers with the right qualifications.
• The cost level is a very real challenge to reaching the full potential of our resource base. It is the responsibility of all stakeholders involved in our industry to work actively to keep costs at an acceptable level.
• Another important challenge is recruitment. How do we get enough young people to pursue the right education and to start work in the energy sector?
• We have an enormous need for more people in the energy sector, be it oil and gas, hydropower, wind power, grid development or new technology such as carbon capture and storage.
• I think we need to tell today’s youth that within these industries, you do not only get very interesting jobs and save salaries. I think we also must tell the youth that it is within these industries that tomorrow’s most important challenges will be solved and solutions will be shaped.
• In short, we all have a job to do in informing students about the many opportunities in the energy sector. This is a priority for me, and I also want to challenge you to work actively with this.

• The Norwegian Continental Shelf has been a breeding ground for innovation and technological development.  40 years of challenges on the shelf has laid the foundation for a competent and internationally competitive oil and gas industry.  
• Today, hundreds of companies are contributing to the continuous development of technology to improve resource management - and to ensure sustainable exploitation of the petroleum resources. It is my job to make sure that this continues.
• Last summer, the government put forward a white paper with an updated strategy for the petroleum sector.  The main message in this white paper is that a steady activity level must be maintained in order to secure long-term management and value creation from the resources.
• We are seeing a high level of activity on the Norwegian Continental shelf and new and interesting acreage will soon be available for oil companies.
• My goal is that Norway shall continue to be the land of opportunities for the petroleum industry.  
• Thank you for your attention!