Norway receives large number of applications for oil exploration on the Norwegian Continental Shelf

Oil platform - Odin Drill - Aker H3 plattformPhoto: Erik Thorberg / NTB Scanpix
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The Norwegian Ministry of Petroleum and Energy has received a large number of applications from 33 oil companies in the licensing round Awards in Predefined Areas (APA) 2020.

“In a challenging year for the petroleum industry, I am very pleased with the interest shown by the companies for new licenses on the Norwegian Continental Shelf (NCS). 

We have received a large number of applications, and this is important in order to make discoveries that will contribute to long-term value creation, employment, and state revenues,” Norwegian Minister of Petroleum and Energy Tina Bru noted.

Awards in Predefined Areas (APA) is an annual licensing round for the Norwegian Continental Shelf’s best-known areas. 

It now includes the larger part of all available exploration acreage.

Applications from 33 companies

By the application deadline of September 22, the Ministry received applications from a total of 33 companies. 

The applicants constitute a wide variety of companies, ranging from large international companies to mid-sized companies and smaller exploration companies. 

The total number of applications is high, and at around the level of the last few years’ large licensing rounds.

“Predictable and stable framework conditions and an active licensing policy are two of the main pillars in the government’s petroleum policy. 

The high interest expressed by the companies in new exploration acreage shows that our long term petroleum policy has the desired effect, also during challenging times,” Bru added.

Considerable interest

The APA-area is expanded as knowledge about the geology in areas on the NCS increases. 

The predefined area was expanded in the Norwegian Sea during the preparation for this year’s licensing round. 

The Ministry has received interest both in the newly included areas and in the previously announced APA-areas.

APA 2020 was announced on June 19, 2020. 

The Ministry’s objective is to award new production licenses in the announced areas at the beginning of 2021. 

Background

The first licensing round on the 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 now has more than 40 years of experience in all Norwegian sea-areas.

Since the first oil discovery was made, the sector has contributed to over NOK 15,400 billion in value creation and has given the Norwegian state a net cash-flow of over NOK 6,500 billion this millennium, the Ministry of Petroleum and Energy noted in its press release. 

The state net cash-flow in 2019 from the petroleum sector was NOK 257 billion. 

In 2019, the use of petroleum revenue in the National Budget equaled more than 180,000 NOK for a family of four.

Licensing rounds

The award of new exploration acreage takes place in two equal licensing rounds. 

The numbered rounds take place in the least known exploration areas, which for all practical purposes now means the deep-water areas in the Norwegian Sea and significant parts of the Barents Sea. 

Acreage in the best know exploration areas is awarded in the annual APA-rounds. 

As a consequence of the fact that exploration has been going on for decades, most of the North Sea, large parts of the Norwegian Sea, and an ever-increasing area in the Barents Sea are today included in the APA-rounds.

The only difference in the process for the two rounds applies to how the authorities stipulate the applicable area. 

In the numbered rounds, the stipulation is made based on proposals (nominations) from the companies. 

That gives the authorities the best possible basis for announcing the areas that will provide 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 utilize existing and planned infrastructure in the area. 

Safety requirements

The petroleum activity on the NCS is conducted within the highest consideration for health, safety, and the environment. 

Exploration, development, and production take place with low emissions to air. Greenhouse gas emissions are a part of the EU Emissions Trading System (ETS). 

Additionally, a high CO2 –tax is paid. This policy gives the companies financial incentives to reduce their own emissions.

The level of safety on the NCS is high, and normal exploration-activities, development, and production have no proven adverse effects on the natural environment. 

As in all other industrial activities, there is a risk of accidents that may have consequences for life, loss of infrastructure, or damage to the environment. 

A strong focus has, therefore, been aimed at reducing the risk of large, unwanted incidents.

Potential damage to the natural environment is limited to large accidental oil spills. 

There have been very few larger oil spills on the NCS, and there are strict requirements for emergency preparedness to reduce the consequences in the event of an accidental oil spill. 

During 50 years of petroleum activities, no accidental oil spills have reached Norwegian shores, and no damage to the marine environment has been proven.

The companies that have applied are Aker BP ASA, A/S Norske Shell, Chrysaor Norge AS, Concedo ASA, ConocoPhillips Skandinavia AS, DNO Norge AS, Edison Norge AS, Equinor Energy AS, Horisont Energi AS, Idemitsu Petroleum Norge AS, Ineos E&P Norge AS, INPEX Norge AS, KUFPEC Norway AS, Lime Petroleum AS, Lotos Exploration & Production Norge AS, Lundin Energy Norway AS, MOL Norge AS, M Vest Energy AS, Neptune Energy Norge AS, OKEA AS, OMV (Norge) AS, ONE Dyas Norge AS, Pandion Energy AS, Petrolia NOCO AS, PGNiG Upstream Norway AS, RN Nordic Oil AS, Source Energy AS, Spirit Energy Norge AS, Sval Energi AS, Total E&P Norge AS, Vår Energi AS, Wellesley Petroleum AS, and Wintershall DEA Norge AS.

Source: Ministry of Petroleum and Energy / Norway Today

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