Exploration activity on the Norwegian shelf is profitable in all areas and minor discoveries account for a significant share of value creation.
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There are still vast remaining resources in all areas.
These are among the main conclusions in the Norwegian Petroleum Directorate's new resource report for exploration.
Exploration activity has been high in recent years.
“A diverse range of players, good access to acreage and a higher volume of better-quality data have contributed to many discoveries.
"In areas with available and cost-effective infrastructure, even small discoveries can create substantial values.
"Low unit costs also mean that future exploration can be profitable”, says Torgeir Stordal, Director for Exploration in the Norwegian Petroleum Directorate (NPD).
There are still substantial remaining resources in all areas.
Exploration needs to continue at a high pace across the entire shelf, particularly in areas where the infrastructure has a limited lifetime.
The decline in demand for oil and lower prices have led oil companies to reduce their exploration budgets for the year and postpone a number of exploration wells.
The Norwegian Petroleum Directorate (NPD) projects that about 30 exploration wells will be drilled in 2020, which is about half the level from the previous year.
“Without new discoveries, oil and gas production could decline rapidly after 2030.
"New exploration technology and big data analyses can contribute to more discoveries on a mature shelf”, Stordal says.
The profitability of exploration is defined as revenues calculated from discoveries during the period minus all costs, including exploration costs and cessation costs.
Exploration costs comprise both exploration that resulted in discoveries and exploration resulting in dry wells.
The estimate for undiscovered resources on the Norwegian shelf is at about the same level as in the previous update two years ago.
About 25 per cent of the overall resources on the shelf have not yet been proven. ■
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