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Norwegian authorities fear steep crude decline

This is a direct quotation by Norwegian Oil Director Mr. Gunnar Berge from the Foreword to Facts - The Norwegian Petroleum Sector - 2007 (220-page PDF) published by the Norwegian Ministry of Petroleum and Energy on Friday, April w0:

Forecasts show that gas production is rising while oil production is declining. The number of exploration wells increased significantly in 2006 compared with the previous year, but only six new discoveries were made. These were made in four wellbores. This is figures for reflection [stet]. If we are to achieve the development that we want, with only a slow and gradual decline, serious efforts must be made in several areas.
(page 8)

What is the Norwegian Oil Director actually predicting here?

He is establishing "a slow and gradual decline" as a best case scenario for Norway, concluding that "serious efforts must be made in several areas" to achieve it. The alternative scenario? Steep decline.

Contrary to natural gas, Norwegian crude production has actually been in decline since 2001, but far from acknowledging Hubbert's Peak, the tune from the authorities has up till now been something like "maybe we will be on the increase again next year, due to our investments and many nice enhanced oil recovery (EOR) techniques." Now Hubbert's Peak is finally official in Norway - and the decline will at best be slow and gradual.

While the crude production forecast for 2007 is about 130 million standard cubic metres, the Norwegian crude reserves now officially stands at about 1 billion, reduced by nearly 15 percent only last year. Very little new oil will be coming on stream during the next few years due to minor discoveries. Under such circumstances, with an R/P* of 7-8 years, who can really believe in "a slow and gradual decline" ?

-Jan Herdal

* Reserves/Production (R/P) ratio - If the reserves remaining at the end of any year are divided by the production in that year, the result is the length of time that those remaining reserves would last if production were to continue at that level. (from BP)

Other quotes from the Foreward by Mr. Berge:
The Norwegian Petroleum Directorate’s estimates show that we have produced and sold about one-third of our petroleum resources so far, while about one-fourth has yet to be discovered. Now it is important that we explore more to find deposits which, even though they may be smaller than the largest discoveries, are still large enough to warrant development.

One of the greatest challenges the industry faces in the years to come will be to attract clever brains. We work in a greying industry.

Over the next five to ten years, decisions will be made that may have significant consequences for oil production from the Norwegian continental shelf. These decisions deal with the issue of whether the gas resources in the respective fields shall be used as a drive mechanism to increase oil recovery, or whether it is more profitable to sell the gas.

When oil production declines, these fields will face important choices: When should we stop gas injection and turn to full gas export? When the gas is produced without being reinjected, the pressure in the reservoir drops and it becomes more difficult to extract the remaining oil. Therefore, if we sell too much gas too early, significant volumes of oil will be lost.

Editorial Notes: Jan Herdal is a freelance Norwegian information consultant, and publisher and editor of the Norwegian peak oil site oljekrisa.no . Also by Jan Herdal at EB: Don't forget the "Twin Peaks" of oil production. UPDATE Apr 24: A related story in the Norway Post: Smaller oil fields become important looks like a press release and misses the main point that Jan Herdal made in his article. -BA

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