CAPITAL SPENDING OFF NORWAY SEEN PEAKING THIS YEAR

Capital outlays off Norway will peak this year at 51 billion kroner ($6.7 billion) with the state contributing 63%.

Spending will decline to about 20 billion kroner/year by the turn of the century.

Further spending is due in some producing fields, said Wood Mackenzie Consultants Ltd., Edinburgh.

For example, Ekofisk field, operated by Phillips Petroleum Co. Norway, may require 10 billion kroner ($1.4 billion) for at least one more platform (OGJ, Jan. 11, p. 28).

Amoco Norway Oil Co. started a waterflood in Valhall field, along with extended reach drilling. A new wellhead platform is expected to be used in Valhall to maintain production levels.

The analyst reported development drilling continuing in Statfjord and Gullfaks fields, operated by Den norske stats oljeselskap AS, and Oseberg field, operated by Norsk Hydro AS.

Exploitation of a gas cap in Oseberg and second phase development in Snorre field, operated by Saga Petroleum AS, are expected to require significant spending in the late 1990s and early next century.

Revisions of estimates in producing fields during the last 5 years added 35%, or 2.2 billion bbl, to oil and natural gas liquids reserves and 15%, or 1.6 tcf, to gas reserves. Norway's total remaining recoverable reserves were pegged at 13.6 billion bbl of oil and NGL and 98 tcf of gas.

NEW FIELDS

With a number of major new field developments such as Troll East and West, Sleipner East and West and Heidrun under way, capital expenditure on fields under development at present is expected to peak at around 37.7 billion kroner ($5.4 billion) in 1993, Wood Mackenzie said.

Current development projects have been characterized by cost overruns and delays.

Sleipner East's first platform sank, leading to additional costs estimated by Wood Mackenzie at 2 billion kroner ($289,000), much of which is expected to be covered by insurance (OGJ, Nov. 9, 1992, p. 28).

Design changes in platforms and topsides increased costs in Troll, Draugen, Heidrun and Sleipner West fields. Delays in Statfjord and Oseberg satellite development projects resulted from unexpectedly high production from the main fields.

"Most of the fields currently under development are likely to be completed within originally planned budgets," said Wood Mackenzie, "but with most budgets containing contingency elements on the order of 5-10% this is not surprising."

Production from fields under development is predicted to increase Norwegian oil and NGL flow to a peak of about 2.5 million b/d in 1996. Production is set to remain significantly above 2 million b/d throughout the 1990s.

Gas sales will rise sharply during the mid to late 1990s, topping 5 bcfd by the turn of the century, a 70% increase from 1992 levels.

Wood Mackenzie noted there were no new applicants to enter the Norwegian sector by securing 14th licensing round acreage. This may have been due to tight regulatory and fiscal terms, as well as oil company funds being diverted to C.I.S. projects.

However, all the main players currently active off Norway have applied for 14th round acreage with the exception of Norsk Fina AS. Twenty companies bid for blocks, with most interest shown in North Sea acreage (OGJ, Dec. 28, 1992, p. 24).