Norwegian gas production has long been expected to offset declines in oil production, but a new research report indicates it will decline sooner and by a larger degree than expected. That will result in less money flowing into the state treasury.
Researchers at the University of Uppsala in Sweden have presented research results warning that Norway had better not rely too heavily on gas to secure the country’s economic base, reports newspaper Aftenposten. The researchers specializing in physics and global energy systems think Norway’s Oil Directorate has overestimated the number of so-far undiscovered gas fields in the Norwegian offshore sector.
Professor Kjell Areklett in Uppsala told Aftenposten that Norway hasn’t found any “meaningful” gas fields since Ormen Lange in 1997, and that there’s “little reason to believe” any new, giant discoveries will be made in the future.
The North Sea has been extensively drilled, Areklett argues, and with the exception of the Snøhvit (Snow White) field in the far north, exploration in the Barents Sea has been “a fiasco,” Areklett said.
He said it’s possible that Norway’s Oil Directorate is calculating with large gas discoveries off of Lofoten, but that’s an environmentally sensitive area and Areklett cautions that it’s unclear the oil industry will win its battle for drilling rights off either Lofoten or Vesterålen.
State officials are traditionally reserved about publicizing their outlook for long-term gas production, for market reasons, but recent reports have suggested Norway’s gas production will surpass oil production by the end of next year. Norwegian authorities’ last prognosis was released two years ago and extended only until 2020, and it indicated steady growth that would eventually flatten out.
Jan Bygdevoll, leader of analysis and prognosis at the Oil Directorate, conceded that the Swedish researchers may be right and said OD has lowered its own gas expectations. “It’s correct that we have been a bit too optimistic,” Bygdevoll told Aftenposten. “This especially applies to gas production in the Norwegian Sea.”
He doesn’t expect any steep fall in gas production, though, from 2020. “Some of the future production will just take longer time (to develop)” than the authorities thought, he said. “We agree gas production will start to fall after 2020, but we don’t know how quickly.”