Growth, dip and Johan Sverdrup
Over the last ten years, operations on the Norwegian continental shelf have seen growth, major investment, technological innovations, plummeting oil prices and efficiency improvements.
There has been a high level of activity on the continental shelf in the ten years that have passed since the merger between Statoil and the oil and gas division of Norsk Hydro. Exploration activity picked up. And licensees have decided to develop many of the new discoveries in the period, topped with the giant field Johan Sverdrup, laying the foundations for a new generation of projects.
During the same period, many ongoing field developments have reached the final phase and start-up, such as Tyrihans, Valemon, Gudrun and Gina Krog. At the same time, major investments have been made on fields in operation. The level of investment has risen steeply during this period and is still high in historical terms, even after the drop in oil prices. The main benefit of these investments is increased resource utilisation from the fields.
Since 2010 our annual investments on the Norwegian continental shelf have increased by 75 per cent. Through new technology combined with innovative exploration and production methods, we are now able to extract valuable resources that were previously regarded as inaccessible. None of which would have been possible without good teamwork by clever minds.
Our industry creates a very large wealth for the Norwegian population and equally large ripple effects in the mainland economy through direct and indirect jobs and deliveries. Today, around 180,000 people in Norway are employed related to our operations.
We aim to reduce CO2 emissions from the NCS by another 2 million tonnes by 2030, a total of 3.2 million per year.
From growth to profitability
An important change has occurred during the ten years since the merger. Up until 2013, high and increasing prices made growth profitable and important for value creation. Statoil identified before many others, however, that the increase in costs was unsustainable, and started its improvement efforts before the oil prices fell sharply in 2014. Some of the measures was felt as drastic and painful, but the entire industry has since had to undergo a necessary process of change. We have cut costs significantly. We have become more efficient and better at planning, drilling more quickly and finding smarter solutions.
Underpinning the Norwegian economy
The oil and gas industry will continue to play an important role in the Norwegian economy for decades to come. Value creation, investments, ripple effects, exports and revenues in Norway underlines the Norwegian offshore industry’s importance to the Norwegian economy. The new projects prove that the Norwegian continental shelf will continue to play an important role in the future too. At the same time, many of the old fields still have large remaining reserves, some of which are increasing, as small discoveries nearby are tied in.
The Norwegian continental shelf will continue to be the backbone of Statoil and an important area for investment in the years to come. Since the merger in 2007, Statoil has paid taxes of almost NOK 1000 billion to the Norwegian state. When it comes to dividend to shareholders, Statoil has since the merger paid more than NOK 200 billion in dividend to its shareholders. Around 2/3 of this have gone to the Norwegian state.
Statoil believes that it will be possible to maintain a high level of activity on the NCS until 2030 and beyond. Statoil has therefore set the following ambition: Statoil intends to maintain profitable and sustainable production at current levels on the Norwegian continental shelf until 2030 and beyond.
However, this is a challenging ambition, and we need to maximize our production from existing fields, strengthen our competitiveness and profitability in our projects and do more discoveries that can be put into production to succeed. Statoil has an ambition to be the industry leader within HSE. The Norwegian Continental Shelf is an important contributor to Statoil achieving this ambition. Safety is essential to everything we do at Statoil, and we have a clear zero-tolerance philosophy when it comes to HSE incidents.
Statoil has already achieved its 2015 target of reducing the annual CO2 emissions from the Norwegian continental shelf by 1.2 million tonnes from 2008 to 2020. The reduction equals the emissions from some 600 000 private cars annually, or almost every fourth car on Norwegian roads. We aim to reduce CO2 emissions from the NCS by another 2 million tonnes by 2030, i.e. a total of 3.2 million per year.
Statoil-operated installations on the NCS have an average CO2 intensity of 9 kg per barrel of produced oil. The global average is 17 kg of CO2 per barrel. Statoil’s target for 2030 is a carbon intensity of 8 kg per produced barrel for our global operations.
We operate with the world's most stringent requirements for safe and sustainable operation.
An industry with a bright future
Through our 50-year history, the industry has always moved step-wise into new areas, acquiring new knowledge and implementing technological developments. We operate with the world's most stringent requirements for safe and sustainable operation. And we have a fundamental self-interest in operating in close collaboration with other industries.
Activities offshore provide a basis for activity and ripple effects onshore. The extensive project portfolio that Statoil has developed over the past ten years creates enormous wealth for society and pays for large portions of the Norwegian welfare system, cementing the position of oil and gas industry as Norway's most important industry for decades to come.