The North Sea was the starting point for Nor-way’s petroleum industry, and much of the area was opened for exploration as early as 1965. Pro-duction started in 1971 on the Ekofisk field. The North Sea still has considerable petroleum poten-tial and will generate substanpoten-tial value added for many years to come.
The petroleum industry is by far the largest of the industries in the management plan area in terms of both value added and employment.
Over the last 40 years a comprehensive set of tools has been developed that takes other indus-tries and the natural environment into considera-tion in every phase of petroleum activity, from the opening of new areas for petroleum activities, via the award of production licences, exploration, development and operation, to field closure.
The North Sea differs from Norway’s other sea areas in the scale of oil and gas activities. In 2010, the North Sea fields accounted for about two-thirds of production on the Norwegian shelf.
The geology of most of the area is known, there are fewer technical challenges than elsewhere, and there is a well developed or planned infra-structure.
The present management plan provides a good basis for sound management and a predicta-ble regulatory framework for the oil and gas industry. Petroleum activities are already in pro-gress or planned in large areas of the North Sea, and these activities must coexist with the fisheries and comply with general environmental require-ments. Comprehensive legislation has been estab-lished to ensure this. The current legislation lays down strict requirements for the industry, and a wide range of measures have been implemented to ensure that fisheries interests and environmen-tal concerns are taken properly into account.
4.3.1 Activities and resources Exploration drilling and production
Since the oil and gas licensing round in 1965 and up to autumn 2012, 1410 exploration wells have been drilled and 659 production licences awarded in the North Sea. Many large discoveries have been made that are still on stream, and new large discoveries are still being made.
According to figures from 2010, a total of 68 fields are on stream on the Norwegian continental shelf, 55 of them in the North Sea. In the same year, the North Sea fields accounted for about
two-thirds of production on the Norwegian shelf, or 153 million Sm3 oil equivalents. Ekofisk, Ose-berg, Troll and Statfjord are large and important fields in the North Sea. In 2010, the first three of these accounted for 40 % of oil and gas production in the North Sea and 28 % of total production on the Norwegian shelf. The North Sea fields are mainly oil-producing.
Surveys of oil and gas resources
The North Sea is the most comprehensively sur-veyed petroleum province on the Norwegian con-tinental shelf. Many wells have been drilled and the geology of most of the area is known. Up to the end of 2011, 85 % of Norway’s total production of oil and gas had come from the North Sea, and 56 % of the remaining resources on the Norwe-gian shelf are expected to be discovered in this sea area. The figures show that the North Sea still has great potential for further discoveries, even large ones, as shown by the Johan Sverdrup oil discovery (16/2–6).
Production forecasts
The forecast for the petroleum sector up to 2030 is based on the authorities’ forecasts of future petro-leum production on the Norwegian continental shelf, which in turn are based on the petroleum companies’ reports and the Petroleum Directo-rate’s resource estimates. The forecast for the North Sea is based on the assumption that pro-duction will be relatively stable up to 2020, fol-lowed by a decline up to 2030. After 2020 an increasing proportion of the estimated production is attributed to undiscovered resources, and the figures are more uncertain. Since this forecast was made, there have been new large discoveries in the North Sea, and production in this area is therefore expected to be higher than previously forecast, especially in the period 2020–30.
4.3.2 Value creation and employment
The oil and gas industry is Norway’s largest, measured in terms of value added, state revenues and export value. It currently generates about one-fifth of Norway’s total value added and a quar-ter of state revenues. Oil and gas account for half of the total value of Norway’s exports. Since the start of oil and gas production, the value added generated by the industry has amounted to around NOK 9000 billion at the current monetary value. The petroleum industry and related
activi-ties account for over 90 % of value added from sea-related industries in the North Sea and Skagerrak and the adjoining counties. In 2009, value added from oil and gas extraction in the North Sea amounted to around NOK 310 billion.
About 43 000 people are directly employed in the oil and gas industry in the country as a whole,
and over 200 000 jobs are directly or indirectly related to the activities on the Norwegian conti-nental shelf.
The oil and gas industry generates more jobs than any other activity in the management plan area. In 2010, about 18 000 persons were directly employed in oil companies that operate the fields Figure 4.8 Petroleum activities in the North Sea.
Source: Norwegian Petroleum Directorate, Norwegian Mapping Authority 29
5° 10°
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Norway
Denmark Legend
North Sea–Skagerrak management plan area Predefined areas (APA) Pipelines
Active production licences, 2013
Skagerrak
North Sea
in the North Sea, but suppliers and subcontrac-tors also account for a large number of jobs, an estimated 110 000. The figure is expected to increase marginally up to 2020, and to decline to around 60 000 by 2030.
Suppliers to the petroleum industry come from many different sectors. This means that demands from the industry influence activities in a broad range of sectors, such as construction, transport, retail, banking/insurance and other pri-vate services. The substantial growth in the petro-leum supplier industry over the last 10 years has resulted in higher employment, turnover and value added.
The economic region with the largest number of person-years in the petroleum supplier industry is the Stavanger region, but robust industries have developed in other parts of the country as well, for example in the Bergen region, the Kongs-berg/Asker region, Sunnmøre, Sunnhordland and Southern Norway.
In addition to the spin-off effects in Norway, oil and gas activities have helped to build up a com-petitive Norwegian petroleum supplier industry that over the last 10 years has experienced sub-stantial growth in international sales.
4.3.3 Framework and management
Each of the management plans establishes an overall framework for petroleum activities in the sea area in question. The management plans clar-ify where petroleum activities will be permitted within areas that have already been opened and within a specific time frame. The framework for activities in areas that have been opened may include environmental and fisheries-related requirements, spatial restrictions and restrictions on when drilling is permitted, and applies to new production licences regardless of whether they are issued during numbered licensing rounds or through the system of awards in predefined areas (APA).
Environmental requirements are applied to all phases of oil and gas activities, from decisions on whether to open areas, via exploration, assess-ment of whether a field should be developed, the production phase (in specific licences and annual amendments to the licences) to shutdown and decommissioning of installations.
Granting of production licences
The Norwegian continental shelf is generally divided into mature and frontier areas, and large parts of the North Sea are now mature areas. Oil and gas production in these areas goes back more than 40 years, which means that the geology of most of the area is known, there are fewer techni-cal challenges and there is a well developed or planned infrastructure. It is very likely that new discoveries will be made in these areas, but less likely that they will be large, even though the suc-cessful exploratory activities of the last few years indicate that this cannot be excluded. Small dis-coveries are seldom worth developing on their own, and production will therefore have to depend on use of the existing infrastructure.
The Government introduced the APA system in 2003 to ensure that mature areas are thor-oughly explored. The awards are made in an annual licensing round. Within the framework established in the management plans, petroleum-related assessments are used to determine which areas are to be included in the APA system and which should be announced in numbered licens-ing rounds. This arrangement is an important fea-ture in the management of petroleum resources, and has proved to be an effective licensing policy and to contribute to sound utilisation of resources.
The Government has evaluated the APA sys-tem in a consultation round in which all the rele-Figure 4.9 Total employment effects attributed
to oil and gas activities in the North Sea.
Source: MENON and IRIS 0
20000 40000 60000 80000 100000 120000
Employment, person-years
North Sea 2010
Employment by suppliers due to investments
Employment by suppliers due to operational expenditure
Employment by operators
vant actors were invited to contribute input on their experience of the system. On the basis of the evaluation, the Government decided in summer 2011 to continue the APA system as an annual licensing round for all mature areas on the Nor-wegian shelf. It was also decided to introduce pub-lic consultations in connection with the APA licensing rounds in the same way as for the num-bered licensing rounds. If the areas are covered by an integrated management plan for a sea area, the authorities will ask to be notified of any impor-tant new information obtained since the adoption of the plan that is relevant to the plan’s provisions on where petroleum activities are to be permitted, and whether new or amended environmental or fisheries-related requirements are needed. The consultation round will thus ensure that relevant information acquired between updates of the man-agement plans is taken into account. The num-bered licensing rounds apply to frontier areas on the Norwegian shelf. The most recent allocation of blocks in the North Sea was in 2006. Numbered licensing rounds are normally held every other year. Petroleum companies are invited to nomi-nate blocks. On the basis of these nominations and its own evaluation, the Petroleum Directorate then recommends which blocks should be announced. The Ministry of Petroleum and Energy makes a further assessment of which blocks should be announced, and holds a public consultation on its proposal. On the basis of the assembled responses, the Government makes a united decision on the areas to be announced, and a licensing round is held for these blocks. After the applications have been processed, negotia-tions are held with the applicant companies on the licensing conditions, and the Government makes the final decision on which companies are to be awarded licences.
The Skagerrak
The Skagerrak was opened for oil and gas activi-ties in 1965 together with the rest of the North Sea, without a preliminary impact assessment.
However, after the end of the 1970s there was little interest in exploration activities in the area. In 1987 preparations were started for an impact assessment under the Petroleum Act for the whole of the Skagerrak. This was presented in 1994 in a white paper on challenges and perspec-tives for petroleum activities on the Norwegian continental shelf. Based on the white paper the Storting decided to open part of the Skagerrak for limited exploration activities in 1994. An area
north of 57° 40’ N and east of 8° 30’ E is open for exploration activities under certain conditions. A licence may be awarded to drill up to four explora-tion wells in the area before any proposal to open the area for further activity is submitted to the Storting. Several dry wells have been drilled just west of the area, and according to the Petroleum Directorate, the potential is greatest in the south-ern part. The remainder of the Skagerrak is not open for oil and gas activities, and little seismic data is available.
Legislation
The key legislation for the management of Nor-way’s petroleum resources is the Petroleum Act and the Petroleum Regulations. They include pro-visions on exploration licences, production licences (including for petroleum extraction), shutdown, environmental impact assessments, materials, information and management systems for activities.
The Pollution Control Act and Pollution Regu-lations contain provisions relating to pollution from oil and gas activities. New regulations on health, safety and environment in petroleum activ-ities and certain onshore facilactiv-ities entered into force on 1 January 2011. The regulatory frame-work now consists of:
– The Framework Regulations (which deal with health, safety and the environment in petro-leum activities and at certain onshore facili-ties). The supervisory authorities are the rele-vant ministries, the Petroleum Safety Authority Norway, the Climate and Pollution Agency and the health authorities.
– The Management Regulations (which also deal with the duty to provide information), which apply to offshore activities and certain onshore facilities. The supervisory authorities are the Petroleum Safety Authority Norway, the Cli-mate and Pollution Agency and the health authorities.
– The Technical and Operational Regulations for onshore facilities (these regulations have the same general structure as the Activities Regu-lations and the Facilities ReguRegu-lations). The supervisory authorities are the Petroleum Safety Authority Norway and the health authorities.
– The Activities Regulations, which apply to off-shore activities. The supervisory authorities are the Petroleum Safety Authority Norway, the Climate and Pollution Agency and the health authorities..
– The Facilities Regulations, which deal with the design and outfitting of offshore facilities The supervisory authorities are the Petroleum Safety Authority Norway, the Climate and Pol-lution Agency and the health authorities.
At important stages and decision-making points in each project, operators must seek approval from the Petroleum Safety Authority Norway and apply to the Climate and Pollution Agency for a dis-charge permit (which includes requirements for emergency preparedness and response) under the Pollution Control Act. Operators must also apply to the Norwegian Radiation Protection Authority for a discharge permit in the case of radioactive substances. In addition the Ministry of Petroleum and Energy awards annual production licences and flaring permits, and the Petroleum Directorate awards drilling permits for explora-tion wells. Operators must demonstrate that they have sufficient control to ensure that activities will proceed in accordance with the legislation.
International instruments
The Convention for the Protection of the Marine Environment of the North-East Atlantic (the OSPAR Convention) provides a comprehensive framework for protection of the marine environ-ment against pollution and other environenviron-mental pressures. The OSPAR Commission adopts legally binding decisions and issues recommenda-tions for action to combat pollution and protect the environment. These include common provi-sions and recommendations aimed at preventing and eliminating pollution and environmental dam-age from offshore oil and gas activities. Norway has incorporated OSPAR decisions on produced water, the disposal of disused offshore installa-tions, and the use and production of chemicals into Norwegian law.
Common requirements for reporting and mon-itoring make it possible to evaluate progress and monitor environmental status and pressures on the marine environment so that further action can be taken if necessary.