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The petroleum sector

The petroleum industry is very important to Norway. The industry accounts for a third of state income (2005 figures). Around 80 000 people are employed by petroleum-related businesses, and the knock-on effects on other industries are considerable. Norway is the world’s third-largest exporter of oil and gas. In the 2006 national budget, the value of remaining petroleum reserves on the Norwegian continental shelf was estimated at NOK 4 210 billion. Less than a third of Norway’s estimated petroleum reserves have been extracted. There is a very high level of activity on the Norwegian continental shelf. In 2005, 250 million standard cubic metres of oil equivalents were produced. This equates to the annual consumption of more than 100 million Norwegian households.

After almost 40 years of oil and gas production in seas that are home to some of the world’s worst weather, Norway has acquired the knowledge and expertise needed to extract petroleum resources in an efficient and safe way. Building up Norwegian petroleum expertise has been an important element in Norway’s petroleum policy. To begin with, Norway primarily drew on the knowledge of foreign companies, but today its petroleum industry is well-developed and internationally competitive. This applies not only to oil companies, but also to the supplier industry and research institutions. The oil and gas industry also boosts innovation and technological development in other Norwegian industry sectors.

Norway is to be a world leader in both the technological and environmental fields. It is important to ensure that the petroleum industry does not come into conflict with environmental considerations. The effort to establish a CO2 value chain is an important step forward in this respect.

Norwegian suppliers are active in most links of the value chain, from exploration activities and development to production, processing and transport. Norwegian suppliers are now among the world’s leading companies in many areas. Supplier companies are found in all of the country’s counties, and some of the petroleum industry’s local and regional knock-on effects significantly affect parts of the country not normally associated with this industry.

The authorities are pursuing a proactive High North strategy, with the aims of strengthening cooperation across national borders and helping to increase the transfer of expertise between countries. A focused, long-term effort in the High North will also have positive effects on remote areas.

Norwegian technology has a good international reputation, and the large Norwegian suppliers of subsea technology have a leading position in the global market, with annual exports valued at many tens of billions of kroner.

In 2007, production from two large gas developments will begin. Each of these developments has involved world-class pioneering technology.

Snøhvit is a gas field located at a depth of 340m in the Hammerfest Basin. It contains condensate and an underlying oil zone. The production facility consists of 19 production wells and a CO2 injection well. There are 160 billion cubic metres of recoverable gas reserves. The untreated well stream will be directed through a 160km-long pipeline to the facility at Melkøya, where the gas will be processed and cooled to liquefied form (liquefied natural gas – LNG). The CO2 in the gas will be extracted and sent back to the field to be reinjected. The LNG will be transported to markets by ship.

Ormen Lange is located at depths of between 800 and 1 100 metres, off the coast of mid-Norway. It contains 375 billion cubic metres of gas. Twenty-four wells are planned for Ormen Lange, in four seabed templates. The untreated well stream will be directed through two multiphase pipes to an onshore facility at Nyhavna, where the gas will be dried and compressed before being sent 1 200km to the United Kingdom, through the world’s longest offshore gas export pipeline.

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Petrojarl, an oil production vesselPhoto: (c) Knut Vadseth

Photo: Norsk Hydro

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