Natural Gas in Norway

TPG 4140 NTNU
Natural Gas in Norway
Professor Jon Steinar Gudmundsson
Department of Petroleum Engineering and Applied Geophysics
Norwegian University of Science and Technology
Trondheim
September 3, 2013

Oil Equivalent
1000 Sm 3 gas = 1 Sm 3 o.e.
• The total petroleum production for the
first seven months in 2013 was about
127.1 million standard cubic meters oil
equivalents. (MSm 3 o.e.), broken down
as follows: about 49.5 MSm 3 o.e. of oil,
about 13.0 MSm 3 o.e. of NGL and
condensate and about 64.6 MSm 3 o.e.
of gas for sale.

Outline
• Actors in oil and gas industry
• Blocks and fields offshore Norway
• Receiving and processing terminals
• Licence, partner and operator
• Resources and reserves
• Field development
• Gas production and forecast
• Gas transport system
• Petoro, Gassled and Gassco
• Tax and “Pension Fund”

FACTS 2013
• Norwegian petroleum history
• Framework and organization
• The petroleum sector – Norway’s largest industry
• Petroleum resources
• Exploration activity
• Development and operations
• Gas export from the Norwegian shelf
• Research in the oil and gas activities
• Environmental considerations in the Norwegian petroleum
Sector
• Fields in production
• Fields under development
• Future developments
• Fields where production has ceased
• Pipelines and onshore facilities

Oil and Gas Exporters 2011

State organization of petroleum activities

Oil and gas names
• Ministry of Petroleum and Energy (MPE)
• Norwegian Petroleum Directorate (NPD)
• Petroleum Safety Authority (PTIL)
• Norwegian Climate and Pollution Agency (KLIF)
• Petoro AS, Statoil ASA, Gassco AS, Gasled JV
• PDO = Plan for Development and Operation
• PUD = Plan for utbygging og drift
• SDFI = State’s Direct Financial Interest
• SDØE = Statens direkte økonomiske engasjement
• NCS = Norwegian Continental Shelf

Internet addresses
• (MPE) Olje- og energidepartementet www.oed.no
• (NPD) Oljedirektoratet www.npd.no
• (PSA) Petroleumstilsynet www.ptil.no
• Petoro www.petoro.no
• Statoil www.statoil.com
• Gassco www.gassco.no

State’s oil and gas
• MPE state’s highest authority
• NPD state’s resources authority
• PTIL health and safety authority
• Petoro (100% state owned) largest
percentage in licenses on NCS
• Statoil owned 67% by state

Infrastructure Offhore and on Land
• Production platforms (fixed and floating)
and subsea systems (to platforms and
subsea-to-beach)
• Pipelines (flowlines from wells to
platforms, transport to land and to the
Continent and UK)
• Receiving and processing terminals
(Kårstø, Kollsnes, Sture,
Tjeldbergodden, Nyhamna, Melkøya)

Receiving and Processing Terminals
• Kårstø, larges terminal, receives gas and condensate,
processes and compresses for transport to Europe. Combined
cycle gas fired power plant.
• Kollsnes, receives gas from Troll, processes and compresses
for transport to Europe. Compressors driven by hydroelectricity.
• Mongstad, refinery, shuttle tankers arrive with crude oil, also by
pipeline. Combined gas as fired power plant.
• Sture, receives oil and condensate from offshore fields.
• Nyhamna, receives gas from Ormen Lange field, processes and
compresses for transport to United Kingdom (mainly). Facility
uses hydroelectricity, but has gas fired back-up.
• Tjeldbergodden, receives gas from Heidrun field (and some
from others), produces liquid methanol. Facility uses
hydroelectricity, but has gas fired back-up.
• Melkøya, recives gas from Snøhvit field, produces LNG for
export by ship. Facility receives electricity for compressors and
process from own gas fired power plants.

Kårstø and Kollsnes
www.statoil.com (2012)

www.statoil.com (2012)
Mongstad and Sture

Nyhamna and Tjeldbergodden
www.statoil.com (2012) & www.shell.com (2012)

Snøhvit, Melkøya and Hammerfest
www.statoil.com (2012)

Subsurface resources
• Oil and gas resources on NCS owned
by the state (the people)
• The State offers blocks to companies
• Companies nominate (apply for) blocks
• MPE issues percentages in blocks
(licenses) and operatorship
• Companies pay 78% (28+50) in tax

Operator:
Statoil ASA
Kristin License
An Example
Partners (rettighetshavere):
Statoil ASA
Petoro AS
ExxonMobil production
Eni Norge AS
Total E&P Norge AS
55.2991 per cent
19.5770 per cent
10.8761 per cent
8.2478 per cent
6.0000 per cent

Resources and Reserves
Plan for Development and Operation (PDO) describes the development of a
petroleum (oil and gas) deposit.
Plan for Installation and Operation (PIO) applies to installation and operation of
facilities for transport and exploitation of petroleum.

Resources and Reserves

Norway Petroleum Resources 31.12.2012

Norwegian Petroleum Reserves and Resources

Lifetime of Oil and Gas Developments
Nye funn
…på sikker og miljømessig forsvarlig måte
K. Pedersen, Petoro AS, November 2008, Bodø

PDO Prognosis and Actual Production
Examples

Oil and Gas Capex and Opex in Norway

Produced Fluids NCS

Gas Sales

Natural Gas Export Norway 2012

Petroleum Production in Norway

Production and Forecast

Natural Gas Production and Forecast

Sales Gas Norwegian Fields

Norway supplies natural gas to continent of
Europe and United Kingdom

Petoro
The Norwegian government has large
holdings in oil and gas licences on
Norway’s continental shelf (NCS) through
the State’s Direct Financial Interest (SDFI).
These are managed by Petoro AS. The
company’s most important job is to help
ensure the highest possible value creation
from the SDFI – value which benefits the
whole of Norway.

Gassled
Gassled is a joint venture for the owners of the gas transport system on
the Norwegian continental shelf. The gas transport system consists of
pipelines, platforms and onshore process facilities and gas terminals
abroad. The system is used by all parties needing to transport
Norwegian gas. The receiving terminals for Norwegian gas in
Germany, Belgium, France and the UK are wholly or partially owned
by Gassled. Gassled’s activities are regulated by the Petroleum
Regulations and tariffs for the individual services stipulated by the
Ministry of Petroleum and Energy. At the end of 2012, the owners of
Gassled were Petoro AS, Solveig Gas Norway AS, Njord Gas
Infrastructure AS, Silex Gas Norway AS, Infragas Norge AS, Statoil
Petroleum AS, Norsea Gas AS, ConocoPhillips Skandinavia AS,
DONG E&P Norge AS, GDF SUEZ E&P Norge AS and RWE Dea
Norge AS.

Gassled
Norway, western Europe’s largest gas exporter, will delay proposed cuts to tariffs on natural gas
transported through the Gassled pipeline network, responding to a huge reaction from interested
parties, according to news reports.
A scheduled 90 percent cut in gas transport tariffs, due to come into effect from May 1, 2013 will
be delayed as the Oil and Energy Ministry considers responses to news of the plan.
“We can confirm that we are aiming for changes in the tariff regulation to come into force July 1,”
according to ministry spokesman. “The ministry has received extensive submissions and will need
more time.”
Petroleum & Energy Minister recently announced the proposed tariff cut that is intended to boost
the economic viability of exploiting marginal finds in mature areas to lift recovery rates.
Norway, which is planning to cut tariffs in the network to make more gas discoveries profitable
while boosting exploration and recovery rates, has received criticism from investors in the pipeline
and their lenders. Investors argue the cut would reduce returns to 4 percent, well below their
projected minimum of 7 percent.

Gassled’s Owners 2012
Petoro AS 45.793%
Solveig Gas Norway AS 24.756%
Njord Gas Infrastructure AS 8.036%
Silex Gas Norway AS 6.102%
Infragas Norway AS 5.006%
Statoil Petroleum AS 5.000%
Norsea Gas AS 2.261%
ConocoPhillips Scandinavia AS 1.678%
DONG E&P Norway AS 0.983%
GDF SUEZ E&P Norway AS 0.304%
RWE Dea Norway AS 0.081%

Gassco
Gassco’s role as a neutral and independent operator of the gas transport
system is important in order to ensure that all users are treated equally,
both as regards utilisation of the transport system and considerations
for increasing capacity. This is necessary to ensure efficient utilisation
of the resources on the continental shelf. Efficient utilisation of the
existing gas transport system can also contribute to reducing or
postponing the need for new investments. Gassco has the operatorship
and coordinates and manages the gas streams flowing through the
pipeline network to the markets (system operation). In addition,
Gassco is responsible for administration of the gas transport capacity
(capacity administration) and development of infrastructure.

Tax on Oil and Gas in Norway

Market Value Norwegian Pension Fund

Carbon Dioxide Storage

Summary
• Resources and reserves is not the same
• MPE issues licenses (%) and operatorship
• In year 2010 oil and gas production equal,
measured in o.e
• State owns Petoro (100%), Statoil (67%) and
Gassco (100%)
• Extensive infrastructure offshore and on land
makes Norway 7th larges exporter of oil and
3rd larges in export of gas (not production)

Yes, there is progress…

Conversions Used in Norway