Tale på IO-Conference i Trondheim

Tale på IO (Integrated Operations)-Konferansen i Trondheim 30.september 2014.

Check against delivery

Distinguished guests, dear friends of the energy industry, thank you for the invitation, and for thank you for the opportunity to speak here today.

When addressing an audience that mainly consists of scientists– both from Norway and abroad – there is reason to be humble. It is people like you that work with practical solutions to our ambitions.

A month ago I gave a speech at Norway´s biggest oil and gas event –the ONS. My chosen title was “Perspectives on the future of the Norwegian Continental Shelf”.

We have more than forty years of history, and are a well established and successful petroleum province. The discovery of Ekofisk in 1969 marked the beginning of a fantastic adventure. Since then, Norwegian petroleum activities have been our dominant industry, and have contributed to enormous value creation, jobs and ripple effects all over the country. This is a remarkable achievement that should make all of us feel quite humble.  And it did not come by itself.

The success story of the Norwegian petroleum sector is a result of dedication and effort from all actors involved – operators, suppliers, research institutions, and a sound and predictable framework. Put simply; I want this adventure to continue. That is why I am very pleased to be here at the Integrated Operations-Conference today. Let me begin with a bird’s eye view of the Norwegian Continental Shelf, the NCS.

 A bird’s eye view of the NCS

Recent news indicate that the industry is facing a drop in the activity level. This situation is not limited to the Norwegian Continental Shelf. It is an international trend. There is reason to be concerned as projects are being put on hold and parts of the industry are dealing with layoffs.

Yet, we must not forget that the activity level on the NCS has been at an all time high. Rising costs tell me that such an activity level would have been difficult to sustain in the future. There will have to be some adjustments after several years of growth. Not everybody in this business will experience a soft landing. However, let us not forget that there are some great opportunities.

There are considerable resources, both in existing fields and in new discoveries. 56 percent of our expected recoverable resources are still in the ground after more than 40 years of production!  
 
From a government perspective, we don’t explore for oil and gas ourselves. We award attractive acreage to the companies. That is our main tool to ensure a continued high activity level. In that context, the exploration activity at the NCS has been stable and successful over the past decade, resulting in many discoveries. The potential is great for creative and competent companies to develop these resources efficiently and timely.

The general tendency is that our petroleum activity is moving north. Today, the activity in these regions is record high.

o Snøhvit – the northernmost LNG-facility in the world- is producing.
o The first oil field – Goliat – will come on-stream next year.
o The largest current field development, Aasta Hansteen, is planned to come in production in 2017.
o The development of Castberg is under way.
o The exploration activity is higher than ever.
o There is great interest for additional exploration acreage.

The work with the 23. Licensing round is well underway. For the first time in more than 20 years, totally new exploration acreage is available in the southeastern part of the Barents Sea. All of this contributes to an increased optimism to our northernmost counties: More jobs and more ripple effects.

The mature areas of the NCS also represent great potential. A few weeks ago the Ministry received the applications for the Awards in Predefined Areas – the APA - 2014 round. This confirmed the vast opportunities many players see in these areas. We are very pleased with a record number of applications from 47 different companies.

One of the world's biggest offshore oil discoveries in recent years, Johan Sverdrup, was made in the APA area in the North Sea.I can assure you that the Minister of Petroleum and Energy, yours truly, will be very happy with more discoveries like that. 

 Why Petroleum R & D?

That was the bird’s eye perspective on the NCS.

Now, I will turn specifically to petroleum research and development. Why is this important and how should we move forward? Innovation and technology have been key drivers behind our success since the beginning. The NCS has been a “laboratory” for technological developments. With each field development, new challenges had to be conquered.

The Government’s main ambition for R&D in the petroleum sector can be summed up quite simply: We want this sector to contribute through increased value creation for the Norwegian society - just as it has done for more than forty years. At the same time, we need a development that safeguards the environment.

To achieve this, we have to find solutions to complex challenges like:

 -> Development and operation in northern and Arctic areas, with long distances, lack of infrastructure and tough weather conditions.

->  Increasing the rate of recovery from existing fields where the potential is huge.

->  Cost control and cost reduction

These are important and recurring themes in the oil and gas industry. These challenges should make all IO scientists thrilled! 

In my view, the way to succeed is to integrate technology, people and ICT solutions. Integrated operations will not only be part of the solutions to such challenges – it could be a major driver. One very ambitious goal that I would like to see materialize is the subsea factory. I am aware that Petrobras, Shell and Statoil are currently working on this concept. Having you on board as industry partners in the IO centre makes me optimistic. I believe that the strong subsea clusters of Brazil and Norway will be instrumental in making the subsea factory a reality.

 Government role in R & D

In order to come up with better solutions to such complex challenges as the subsea factory we need continuous technological development – from all parties involved.

Research and development activities are closely integrated in our oil and gas sector. The Government also contributes where it can. From a government perspective it is important that we allocate funds to areas that can compliment industry efforts. 

We do not want to duplicate efforts. Basic research is one obvious example. Generally speaking, the government has a longer term horizon than the industry. The Government can also help minimizing risk when it comes to larger scale demonstration projects. By sharing risk with the industry, projects of strategic value can come off ground despite technical and economic complexity.

However, we do not solve complex technical challenges in the ministry. Personally, I am a politician, and a historian by education, not an engineer. The industry is and must be the initiator. Elon Musk, the head of the Tesla company, described this in a good way when saying that Government isn't that good at rapid advancement of technology. It tends to be better at funding basic research. To have things take off, you've got to have commercial companies to do it.

The government´s role is to create suitable framework conditions and incentives that stimulate research and development. This is where our national body for R&D in the petroleum sector, OG Twenty One, is very useful. OG 21 brings together oil companies, universities, research institutes, suppliers and governmental bodies, to develop and implement a national petroleum technology strategy for Norway.

Through our National Research Council we also contribute with public funding for two programs dedicated to petroleum research; these are Petromaks 2 and Demo 2000. Both programs have supported projects that have delivered real technological breakthroughs, and are important tools in the implementation of the strategies and plans laid down by OG21.

So far, I have also had the great pleasure of attending the opening of three centres dedicated to petroleum research. Two of them are about increased oil recovery. This is the national centre for increased oil recovery located at the University of Stavanger, and Statoil´s new centre at Rotvoll – not far from here. Last winter I also attended the opening of ArcEX – The Research Centre for Arctic Petroleum Exploration – in Tromsø.

From a government perspective, it is important to point out that our ambitions and goals can only be effective if they are aligned with those of the industry. Collaboration between all parts involved is the real key to success. That includes authorities, industry and scientists - both Norwegian and international.

International cooperation – Brazil

Oil and gas is a global arena, and innovation is also about sharing ideas - across organizations and across borders. This is why I am pleased to observe the international attendance here today. Particularly, I note a considerable Brazilian presence.

Brazil and Norway share many of the same challenges related to our offshore activities. That is why we have a mutual interest in cooperation. Earlier I mentioned the Petromaks 2 program. This is a concrete example of such cooperation: More than 10 per cent of the projects that applied for funds in the latest call, have listed cooperation with Brazil.

These are projects within fields like exploration, increased recovery and multiphase transport. Last November, my deputy Minister, Kåre Fostervold, signed the bilateral agreement in the field of petroleum research and development – BN21: Brazil-Norway in the 21st Century.

He also visited the Rio Oil and Gas Conference a couple of weeks ago. Just as many Brazilians visited  the ONS –in Stavanger before that.
 
 Concluding remarks

Dear friends of the energy industry, it is time to summarize.
 
Finding solutions to some of the complex challenges I have mentioned today certainly requires dedication and hard work – from all parties involved.

We have more than forty years of history on the NCS where cooperation between operators, suppliers, research institutions and government has been critical to our success.

Going forward – I believe this will be just as important in the future. We are all in the same boat! Oscar Wilde once said that success is a science; if you have the conditions, you get the results.

Having conferences like this one, where important actors meet to discuss common challenges is exactly just that –a vital condition for future success. 

Thank you for your attention!