Tale/innlegg | Dato: 15.04.2015 | Olje- og energidepartementet
Check against delivery
Excellencies, ladies and gentlemen,
It is a great pleasure for me to open the Subsea Valley Conference. I am also very happy to hear about this year´s record attendance.
The NCS – Status
Two days ago, we celebrated an anniversary in my ministry.
On the 13th of April 1965, the first licensing round was announced on the Norwegian continental shelf - through a 36 line advertisement.
Companies were for the first time officially invited to explore for petroleum deposits in the North Sea.
Knowing what happened next, I think it is fair to say that these 36 lines changed Norway. The advertisement is also the most profitable piece of ink ever written in our history.
This is certainly an anniversary worth celebrating. Not just for the Minister of Petroleum and Energy, but for all Norwegians. And I assume also for the next speaker – Mr. Pedersen from the Ministry of Finance!
We have a fantastic history, but we also have a promising future.
After more than forty years of production, the Norwegian continental shelf is still a vibrant petroleum province.
So far, less than half of the expected recoverable resources on the NCS have been produced.
The oil and gas industry is Norway’s most important industry, and it will continue to have a vital role for many, many years – in our economy, jobs and value creation throughout the country.
It is therefore not a question of what we will do after the oil age, but rather what we will do in addition to oil.
This does not imply that we should close your eyes to the challenges currently faced by the industry.
During the last decade, the soaring activity level combined with high crude oil prices have resulted in a high cost level on the NCS which is not sustainable.
For the last couple of years, the industry has taken steps to cut costs, standardize and industrialize to become more competitive. We have already seen results of these initiatives.
Just before Easter, I had the pleasure of visiting Aibel in Asker to congratulate them after winning the contract for the deck of the drilling platform on the Johan Sverdrup field.
Yesterday, I visited Kværner at Stord where they have together with their suppliers been able to deliver the Edvard Grieg EPC-project both on time and on cost.
This is a great achievement in an international oil and gas industry characterized by major cost overruns and delays.
Also yesterday, the Ministry of Petroleum and Energy published a new study conducted by Agenda Kaupang. The study has analyzed Norwegian value creation in seven field development projects on the NCS.
The main conclusion is that you increase Norwegian value creation by 15 to 20 percentage points by building the structure in Norway compared to building it outside Norway.
The interplay between operators on the NCS and Norwegian service and supply industry has been instrumental in the success of the development of the NCS.
The more recent fall in oil prices has, of course, intensified the industry’s efforts to reduce cost levels, and going forward, working together will be equally important.
We have not yet seen the full consequences of the fall in oil prices. But so far, projects have been postponed and the investment level is expected to be down 15 per cent compared to the 2014 level.
Nevertheless, I am confident that the Norwegian petroleum industry will adjust and “weather the storm”. You have been through tough times before, and you usually return even stronger!
We have both the resources and the competence to continue our journey.
I would like to mention a few factors that contribute to my positive view of the future.
First of all, the largest offshore petroleum discovery in the world in 2011 is about to be developed on the NCS. This is, of course, the Johan Sverdrup field.
This is our largest oil discovery on the Norwegian continental shelf since the 1980s.
Anticipated recoverable resources are expected to be between 1.7 and 3 billion barrels of oil.
Sverdrup is the largest industrial project in Norway since the Troll project, and will represent enormous value creation and employment opportunities for decades to come.
Start of production is planned for 2019. And to illustrate the long term perspective: This is a field where your grandchildren can work!
The Sverdrup discovery also illustrates that the mature areas on the Norwegian shelf contain significant undiscovered assets.
New acreage – The Barents Sea
Secondly, I would like to highlight the launch of the 23rd licensing round.
In the end of January, I announced the 23rd licensing round. For the first time since 1994 we start exploration in new areas.
Opening up of the Barents Sea South East will allow the industry to grow further north, create new jobs and strengthen the economy – especially in Northern Norway.
At the same time, the Government also offered ownership interests in 54 new production licenses to 43 different companies as part of the Awards in Pre-defined Areas 2014 (APA 2014). With the industry gradually moving north, we are optimistic about the opportunities this will bring. Northern Norway is a priority area for the Norwegian government.
The petroleum-related service and supply industry
Finally, the growth and success of our petroleum-related service and supply industry is impressive – not least demonstrated by the companies present here at the Subsea Valley Conference.
Each major development project on the Norwegian Continental Shelf has had its challenges, making it a “laboratory” for technological development.
After more than forty years of experience on the NCS, we have developed a world-class, innovative and globally competitive petroleum-related service and supply industry.
The service and supply industry is Norway’s largest industry. In 2013, it represented revenues totaling 524 billion NOK. 126 000 people are directly employed in this industry – located all over the country
Interestingly, many of these jobs are not visible to most Norwegians as they are “hidden away” in offices.
While it is fantastic to feel the smell of fresh welding on a yard in western Norway, it is equally important to understand the enormous values created at high tech offices like in the Subsea Valley. About 40 per cent of the industry’s revenue originates in international markets. The industry is present in more than 80 countries, the major markets being South Korea, Brazil and the UK.
Recently, I visited another important market – Australia, where I had meetings with energy officials and Norwegian industry established “down under”. There, especially our subsea-technology is in high demand.
Subsea technology and competence represent both an important industrial cluster in Norway, and a competitive advantage internationally.
Subsea equipment and –installation stands out as one of the most important segments for the Norwegian oil service and supply industry internationally.
It represented a turnover of 26 billion NOK in 2013, which is a 15 % increase compared with the year before.
Key players in this segment are well represented here today as part of the Subsea Valley cluster, and have a strong position in international markets
The subsea market is expected to have a strong growth in coming years. According to Rystad Energy, the subsea market is anticipated to increase, from around USD 36 billion annually in 2015 to USD 50 billion annually in 2018.
An increasing amount of resources brought on-stream in coming years will be developed with floating facilities and subsea tie-backs.
Subsea technology will also be important as standardized solutions in mature areas in order to cut costs and for time-critical projects.
By 2030, global subsea production is expected to increase to 35 million barrels per day, which will be on par with the production from traditional platforms offshore.
A key driver behind the growth in the subsea market is deepwater production, in markets such as Brazil, the US Gulf of Mexico, Angola and Australia – in addition to subsea developments in the Norwegian offshore market.
According to The Norwegian Petroleum Directorate, subsea facilities represent the most relevant solution for 68 of the 88 discoveries on the Norwegian shelf.
Research and technology
The subsea-area is part of a bigger trend where research, technology and innovation have been key drivers behind the successful developments of the Norwegian shelf.
The Norwegian Subsea Cluster is broad and has roots in several research environments.
As an example I would like to mention the role played by The Norwegian Defense Research Establishment – the FFI. The FFI has the primary responsibility for defense-related research in Norway.
As part of its core activities it developed an underwater vehicle to investigate sea floor conditions for mine detection.
Based on this technology concept called HUGIN, Kongsberg Maritime has developed a commercial product for the offshore sector.
Hugin offers remote subsea survey capability, like pipeline and subsea structure inspections. Hugin is also being used to look for the missing airplane from Malaysian Airlines, deep in the Indian Ocean.
Another example to illustrate long-term industry collaboration is research on multiphase flow. Over the past 30 years this has been driven by two Norwegian institutes: SINTEF and IFE – the Institute for Energy Technology.
These institutes developed a technology that made it possible to transport oil and gas in a single pipeline over long distances, known as multiphase transport.
Ladies and gentlemen, it is time to summarize.
I started my speech reminding ourselves about how this adventure all started – through 36 lines in a small announcement - exactly fifty years ago.
In the same year, the Ministry of Industry hired the first employees to work with oil related issues.
The positions at the newly established “Oil office” were temporary – this was supposed to be just a short episode – something that wouldn’t last for long.
Fifty years on, I still believe we have a promising future. We have the resource-base and we have the knowledge-base. But it will demand hard work from all parties involved.
This is an industry that has overcome challenges since the very beginning. And I am confident it will continue to do so for decades to come.
While The Silicon Valley is world leader in IT technology, the area from here to Kongsberg, is a stronghold for subsea technology.
From here, we export advanced technological solutions to all over the world. The subsea Valley is an excellent example of how far we have come.
I wish you all an interesting and rewarding conference.
Thank you for your attention!