– I am proud to offer 69 new production licenses in this year’s APA round. The companies show great interest in further access to new exploration acreage. This means that the industry believes in future value creation on the Norwegian continental shelf, says Minister of Petroleum and Energy, Sylvi Listhaug.
The 69 production licenses are located in the North Sea (33), the Norwegian Sea (23) and the Barents Sea (13). A total of 28 different oil companies, ranging from the large international majors to smaller domestic exploration companies, are offered ownership interests in one or more production licenses. Of these, 19 will be offered operatorships. The licenses are awarded with work-programme commitments or as additional areas to such licenses.
– Hopefully, the exploration in the awarded acreage will result in new discoveries. This is important to ensure employment, value-creation and future government revenue for Norway’s largest industry, says Listhaug.
The APA licensing rounds cover the most explored areas on the Norwegian shelf. One of the primary challenges in mature areas is the expected decline in discovery size.
Smaller discoveries may not be able to carry standalone developments, but can have good profitability when making use of existing and planned infrastructure. It can also be seen in context with other discoveries or planned developments. Timely discovery and exploitation of such resources is therefore important.
The first licensing round on the Norwegian continental shelf (NCS) took place in 1965. The activity started in the North Sea, and exploration in the Norwegian Sea and the Barents Sea started around 15 years later. Thus, Norway will soon have more than 40 years of experience in all sea-areas on the NCS.
Approximately 225 000 people are today directly or indirectly engaged in the Norwegian petroleum sector. The competence and the competitiveness in the industry also produces positive ripple effects into other industries. Since the first oil-discovery was made, the sector has contributed with over 14 900 billion NOK in value creation. It has also given the Norwegian state a net cash-flow of over 6 450 billion NOK since the start of the new millennium. The State’s net cash-flow in 2020 from the petroleum sector is estimated to be approximately 245 billion NOK. That equals approximately 185 000 NOK for a family of four.
The award of new exploration acreage takes place in two equal licensing rounds. The numbered rounds takes place in the least known exploration areas, which for all practical purposes now means remaining parts of the deep-water areas in the Norwegian Sea and parts of the Barents Sea. Acreage in the best-known exploration areas is awarded in the annual APA-rounds. As a consequence of the fact that exploration has been going on for decades, the majority of the North Sea, large parts of the Norwegian Sea and an increasing area in the Barents Sea is now included in the APA-rounds.
The only difference in the process for the two rounds is in how the authorities stipulates the applicable area. In the numbered rounds, this happens after proposals (nominations) from the companies. This gives the authorities the best possible basis for announcing the areas that will give the most information about the regional geology and thus, effective exploration. This approach is not needed in the APA-rounds, where the key challenge is to identify resources in a timely manner in order to best utilise existing and planned infrastructure in the area.
The petroleum activity on the NCS is conducted with great emphasis on health, safety and the environmental standards. Exploration, development and production takes place with low emissions to air. Greenhouse gas-emissions is a part of the EU Emissions Trading System (ETS). In addition, a high CO2 –tax is paid. This policy gives the companies financial incentives to reduce their own emissions, as recently demonstrated by the industry’s initiative to cut emissions from the activities on the NCS. In a system like the ETS, the only way to reduce total emissions is to reduce the number of quotas available.
The level of safety on the NCS is high, and normal exploration-activities, development and production has no proven negative effects on the natural environment. As with all other industrial activity, petroleum activities leads to the risk of accidents with consequences for employees lives and health, loss of established infrastructure and the natural habitat. Great emphasis has therefore been made to avoid large-scale accidents.
Potential damage to the natural environment is limited to large accidental oil spills. The probability of an oil-well blow-out is estimated to be one in more than every 7000 exploration wells drilled. On the NCS, approximately 50 wells are drilled each year. There has been very few larger oil spills on the NCS. There are requirements in place for emergency preparedness in order to reduce the consequences in the event of an accidental oil spill. Restrictions have in addition been placed on exploration drilling in oil-bearing layers for parts of the year. During 50 years of petroleum activities, no accidental oil spills have reached Norwegian shores, and no damage to the marine environment has been proven.
Offer of licenses to 28 licensees
(Number of licenses /operatorships)
Aker BP (15/9)
AS Norske Shell (5/2)
Vår Energi (17/7)
Wintershall Dea (9/3)