The Ministry of Petroleum and Energy (MPE) of Norway has started the 24th licensing round, inviting oil companies to nominate blocks on the Norwegian Continental Shelf (NCS). The Ministry is also accepting nominations in the Norwegian Sea and the North Sea.
The strategy for licensing rounds in newly opened and frontier areas has mainly adhered to the principle of sequential exploration. This entails that results of wells in certain blocks in a given area should be available and evaluated before new blocks are announced in the same area. This approach ensures that large areas can be mapped with relatively few exploration wells. In this manner, available information is used for further exploration, while drilling of unnecessary, dry wells can be avoided. In May 2016, ten production licenses (consisting of 40 blocks in total) in the Barents Sea were awarded to 13 companies in the 23rd licensing round.
Meanwhile, Norwegian energy group Statoil has announced a 20% cut in the investment costs for the first development phase of the Johan Sverdrup field (down to NOK 99bn, i.e. €10.7bn), whose break-even is reduced to below US$25/bbl; the break-even for the full-field development of Johan Sverdrup also fell to below US$30/bbl. The estimate for the full-field investment has been improved from a range of NOK 170–220 bn (€18-24bn) in 2015 to NOK 140–170bn (€15-18bn, 2016 value). The improvements made for the Johan Sverdrup full-field development are mainly a result of optimisation and simplification of the development concept for future phases, in close cooperation with the supplier industry.
The Johan Sverdrup project will be developed in several phases, with the first phase estimated at 440,000 bbl/d of oil (total production capacity initially estimated between 315,000 and 380,000 bbl/d). Full production is estimated at 660,000 bbl/d (initial production target of 550,000-650,000 bbl/d). According to an updated plan the project pre-sanction will be made in the first half of 2017, and a final investment decision will be reached and PDO will be submitted in the second half of 2018. Full-field production start will be 2022, as originally planned.