How Mature is Mature?
It’s a new year, with new hopes and aspirations. This year has begun with the promise of increased in activity on the Norwegian Continental Shelf, including more exploration in newly opened areas as well as in more mature areas where new blocks have just recently been awarded. For many, last year’s activity proved disappointing. Looking at the number of exploratory wells drilled, there’s no doubt that 2004 was a slow year in that arena. But it can be said that 2004 made a promise to the future, and this year will be the beginning of that promise’s fulfilment.

A big part of the promise includes plans for increased exploration. This is really no surprise, as the awards that resulted from the 18th round exceeded any other round to date. And exploration is certainly one way to guarantee future development, future activity. The “carrot” may have been the number of blocks offered in the round, but the “use it or lose it” approach adopted last year is certainly the “stick”. For those who find affirmation in exploration, the future does look brighter.

But even if 2004 was a disappointing year when counting up wildcat and exploratory wells drilled, such activity may not really be the best barometer of activity as a whole. The year just past included a host of contracts concerning Ormen Lange – both on and offshore, development activities such as the work done towards completion of the Kristin field and ongoing activities in the Barents Sea – Snøhvit and Melkøya being the most visible. But add to that agreements made with both the British and the Russians, and the argument for optimism is only strengthened.

The popular Norwegian media began this year by pinning all hopes on the Barents Sea. In some respects, the popular media has done a great disservice to the industry efforts on the NCS. By sensationalising mega-finds – occasionally doing so for discoveries that prove to be only marginal – the media has led the public to only take notice of the largest discoveries, without taking much notice of the years of planning and development to bring the fields on-line. The Barents Sea is only part of the picture – estimates are that a full third of the oil yet to be discovered lie there. Justifiably, the Barents is news because it is new, but it is only a part of the total future activities.

There is promise in the Barents, whether you consider Statoil’s 8 billion barrel oil-equivalent estimate or the Petroleum Directorate’s 6 billion barrel appraisal. And there may be a mega-find or two waiting in the far north, but what will ensure a healthy, prosperous industry is continued development of all areas in the North Sea. The Norwegian authorities took a lot of heat during the 18th licensing round, primarily for not opening as many new areas as some felt they should. But now we are moving toward the 19th round, and the Barents is among the offered areas.

Perhaps this strategy will pay off. Perhaps the 18th round has helped the industry to take a second look at more-developed areas, while postponing exploration in the new areas just long enough to hopefully spread resources efficiently. Time will tell if this strategy will work.

Everyone agree the NCS has now reached maturity. Even the best estimates indicate that reserves are more or less equal to what has been produced since the adventure began. Whether maturity is marked by these estimates or the reality of decommissioning (which in itself means a great deal of activity), we can all hope that we can avoid a mid-life crisis.