Gas will surpass oil next year

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Norway is poised to reach a historical turning point as an oil- and gas-producing nation. As state oil company Statoil deals with restrictions on its oil exploration in the Gulf of Mexico, production at home will soon be only half of what it was 10 years ago. Gas production, though, is doubling.

Norway is facing a new era, with gas production exceeding oil production. Here, one of the early Norwegian installations in the North Sea, Ekofisk. PHOTO: Statoil/Leif Berge

Newspaper Aftenposten reports that gas production in Norwegian territory will surpass oil production in 2011. Even though new oil discoveries in the North Sea have hit a record high (28 last year), the amount of oil each contains is relatively small. It also takes up to 12 years from the time of a discovery until production is underway.

By 2014, according to industry estimates, oil production will be half what it was in the record production year of 2000. As Bente Nyland of the state oil directorate put it, “the lowest-hanging fruit has already been picked,” although she wants the oil companies to go after more oil in existing fields.

Norwegian gas production, meanwhile, is expected to hit 112.2 billion standard cubic meters by the end of 2014, compared to 47.4 billion standard cubic meters in 2000. During the same 14-year period, oil production will likely have fallen to 91.6 million standard cubic meters, from 181.2 billion standard cubic meters in 2000, according to the state oil directorate.

Some suggest this means that Norway’s era as an “oil nation” will soon be over, with gas taking over. Statoil and other oil companies are urging expanded oil exploration rights to keep the industry going, not least since gas prices have been falling, but it’s long been diversifying overseas for new business.

Among the areas where Statoil has invested heavily is the Gulf of Mexico, currently the site of what’s been called the worst oil spill ever. The explosion at a deep BP well not only was fatal, but set off the spill that BP has spent weeks trying to control. 

That in turn has led to new restrictions on deep-water drilling in an area where Statoil has invested around NOK 50 billion and now ranks as one of the biggest players in deep-water operations. 

With more than 400 exploration licenses, newspaper Dagens Næringsliv (DN) reports that Statoil is among the hardest hit by the new restrictions. It had two rigs looking for oil in deep water (more than 300 meters below the surface of the water) when BP’s accident occurred.

“We view this as a temporary halt,” Kjersti Morstøl of Statoil told DN. It’s expected to last, though, at least six months.

Views and News from Norway/Nina Berglund
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