According to forecasts by the Norwegian Offshore Directorate, which extend to 2050, the difference between high and low oil and gas production could account for almost the entire state pension fund.
Norway still has extensive oil and gas reserves on the Norwegian Continental Shelf (NCS). According to the new resource report, this can provide a basis for high levels of production, exports and added value for society as a whole for many years to come. However, this potential future will not materialise on its own. The Norwegian Offshore Directorate expects total production on the NCS to decline after 2025.
“For this reason, we need to increase our exploration and investment in fields, discoveries and infrastructure in the future to slow the decline in production. Lack of investment will lead to a rapid collapse of the oil industry,” says Kjersti Dahle, Director of Technology, Analysis and Coexistence.
Oil and gas until 2050
The Directorate has developed three possible scenarios for total oil and gas production up to 2050. All scenarios point to a decline in production. How quickly this will occur will depend on a number of factors, such as the pace of exploration activity and technological development.
“The scenarios reveal large differences in future value creation and future government revenues from oil activities. The Norwegian Offshore Directorate’s calculations show a difference in net cash flow of about 15 billion Norwegian kroner between the high and low scenarios,” says Dahle.
The decline in production evident in all three scenarios is consistent with the successful implementation of the Paris Agreement.
To maintain activity and production levels in the long term, we need to look for more/additional resources, both close to infrastructure and in frontier areas. More knowledge, better data coverage, new working methods and new technologies open up new exploration opportunities and could lead to more profitable discoveries in the coming years.
Exploration is profitable
The Norwegian Offshore Directorate has conducted an analysis of exploration activities over the past 20 years, which shows that oil and gas exploration in mainland Norway has created enormous added value for society, representing a net present value of more than USD 190 billion. The total value added by the discoveries is more than three times the costs spent on exploration during this period.
“Norway and the NCS are still in an excellent position to remain a competitive oil and gas producer for many years to come, as we have significant remaining resources, low emissions, well-developed infrastructure, low operating costs and a stable framework,” says Dahle.
