Oil and gas activities, investments, Q4 2011

The estimate for 2011 is NOK 19.6 billion higher than the corresponding estimate for 2010, given in the 4th quarter of 2010. The current estimate for 2012 is NOK 33.8 billion higher than the corresponding estimate for 2011, given in the 4th quarter of 2010. These estimates indicate that the decrease in investments seen in 2010 will turn to a strong upswing in 2011 and 2012.

Record high estimate

The estimate for 2012 is the highest estimate since Statistics Norway started collecting estimates in 1985 (measured in current prices). The increase for 2012 compared to the corresponding estimate for 2011 is due to higher investments in fields on stream, field development and exploration, with the estimate also indicating a decrease in onshore activity and pipeline transportation.

The combination of persistent high crude oil prices and many mature fields on the Norwegian Shelf forms the backdrop for the expected high investment level in 2012. Many field developments are taking place. The oil companies have extensive drilling plans, both within production and exploration. Production in many fields is falling, and many platforms are old. These facts necessitate upgrading on a large scale. Worn and obsolete infrastructure will be replaced and new physical capital and technology will be implemented mainly to increase oil recovery in fields.

In recent years, many discoveries have been made near to producing fields. Many of these supplementary resources are now being developed at an accelerated pace in order to exploit both high crude oil prices and available production capacity in fields with falling production.

The investments for exploration activity in 2012 are now estimated at NOK 32.4 billion. The estimate is on the same level as given in the previous quarter and NOK 0.9 higher than the corresponding estimate for 2011. The celebrated discoveries earlier this year contribute to a greater will to invest in exploration. A shortage of rigs and a strong demand to use the same rigs for production drilling restrict the exploration plans.

Extensive field investments

Investments in field development and fields on stream in 2012 are estimated at NOK 147.4 billion; NOK 11.8 billion higher than the figure quoted in the previous quarter. The increase is partly due to higher than previously expected investments in existing fields. In addition, two new development projects and a couple of new projects connected to fields on stream are included in the current survey.

The estimate is NOK 33.7 billion higher than the corresponding estimate given for 2011. Large development fields, such as Goliat, Gudrun and Ekofisk South, will reach their investment peak next year according to plan. In addition, extensive development investments are planned on Eldfisk II, Skarv and Valemon. Within fields on stream, extensive upgrading and production drilling will occur, especially in the producing fields Troll, Ekofisk, Gullfaks and Oseberg.

Onshore activities and pipeline transportation are estimated at NOK 4.4 and 0.4 billion respectively.

Upward adjusted estimate for 2011

Total investments in oil and gas activities for 2011, including pipeline transportation, are estimated at NOK 152.6 billion. The estimate is NOK 0.9 billion higher than the estimate given in the previous quarter. The estimate for 2011 is NOK 19.6 billion higher than the corresponding estimate for 2010, given in the 4th quarter of 2010.

Investments in the exploration activity in 2011 are estimated at NOK 29.2 billion, which is NOK 0.6 billion higher than the estimate given in the previous quarter. The estimate is also NOK 1.9 billion higher than the corresponding estimate for 2010, presented in the 4th quarter of 2010.

Investments for field development and fields on stream are now estimated at NOK 116.9 billion; an increase of NOK 0.9 billion compared with the estimate in the previous quarter and NOK 18.7 billion higher than the corresponding estimate for 2010.

Onshore activities and pipeline transportation are estimated at NOK 6.1 and NOK 0.4 billion respectively.

High investment activity in 3rd quarter

While the accrued investments in the 1st and the 2nd quarter came to NOK 32 and 34.6 billion respectively, the investments in the 3rd quarter increased to NOK 38.9. This amounts to NOK 105.5 billion for the first three quarters of 2011. Realisation of the current estimate for 2011 assumes an investment of NOK 47.1 billion in the 4th quarter of 2011.

Tables:

• Table 1 Accrued and estimated investment costs. Extraction of crude petroleum and natural gas and transport via pipelines. 2007-2012. NOK million
• Table 2 Accrued investment costs for oil and gas exploration, by cost category. Q2 2009-Q2 2011. NOK million
• Table 3 Accrued investment costs for field development and fields on stream. Q3 2009-Q3 2011. NOK million
• Table 4 Estimated and accrued investment costs for oil and gas extraction and pipeline transport. 1985-2012