TPG 4140 NTNU Natural Gas in Norway Professor Jon Steinar Gudmundsson Department of Petroleum Engineering and Applied Geophysics Norwegian University of Science and Technology Trondheim September 3, 2013

Oil Equivalent 1000 Sm3 gas = 1 Sm3 o.e. The total petroleum production for the first seven months in 2013 was about 127.1 million standard cubic meters oil equivalents. (MSm3 o.e.), broken down as follows: about 49.5 MSm3 o.e. of oil, about 13.0 MSm3 o.e. of NGL and condensate and about 64.6 MSm3 o.e. of gas for sale.

Outline Actors in oil and gas industry Blocks and fields offshore Norway Receiving and processing terminals Licence, partner and operator Resources and reserves Field development Gas production and forecast Gas transport system Petoro, Gassled and Gassco Tax and “Pension Fund”

FACTS 2013 Norwegian petroleum history Framework and organization The petroleum sector – Norway’s largest industry Petroleum resources Exploration activity Development and operations Gas export from the Norwegian shelf Research in the oil and gas activities Environmental considerations in the Norwegian petroleum Sector Fields in production Fields under development Future developments Fields where production has ceased Pipelines and onshore facilities

Oil and Gas Exporters 2011

State organization of petroleum activities

Oil and gas names Ministry of Petroleum and Energy (MPE) Norwegian Petroleum Directorate (NPD) Petroleum Safety Authority (PTIL) Norwegian Climate and Pollution Agency (KLIF) Petoro AS, Statoil ASA, Gassco AS, Gasled JV PDO = Plan for Development and Operation PUD = Plan for utbygging og drift SDFI = State’s Direct Financial Interest SDØE = Statens direkte økonomiske engasjement NCS = Norwegian Continental Shelf

Internet addresses (MPE) Olje- og energidepartementet www.oed.no (NPD) Oljedirektoratet www.npd.no (PSA) Petroleumstilsynet www.ptil.no Petoro www.petoro.no Statoil www.statoil.com Gassco www.gassco.no

State’s oil and gas MPE state’s highest authority NPD state’s resources authority PTIL health and safety authority Petoro (100% state owned) largest percentage in licenses on NCS Statoil owned 67% by state

Infrastructure Offhore and on Land Production platforms (fixed and floating) and subsea systems (to platforms and subsea-to-beach) Pipelines (flowlines from wells to platforms, transport to land and to the Continent and UK) Receiving and processing terminals (Kårstø, Kollsnes, Sture, Tjeldbergodden, Nyhamna, Melkøya)

Receiving and Processing Terminals Kårstø, larges terminal, receives gas and condensate, processes and compresses for transport to Europe. Combined cycle gas fired power plant. Kollsnes, receives gas from Troll, processes and compresses for transport to Europe. Compressors driven by hydroelectricity. Mongstad, refinery, shuttle tankers arrive with crude oil, also by pipeline. Combined gas as fired power plant. Sture, receives oil and condensate from offshore fields. Nyhamna, receives gas from Ormen Lange field, processes and compresses for transport to United Kingdom (mainly). Facility uses hydroelectricity, but has gas fired back-up. Tjeldbergodden, receives gas from Heidrun field (and some from others), produces liquid methanol. Facility uses hydroelectricity, but has gas fired back-up. Melkøya, recives gas from Snøhvit field, produces LNG for export by ship. Facility receives electricity for compressors and process from own gas fired power plants.

Kårstø and Kollsnes www.statoil.com (2012)

Mongstad and Sture www.statoil.com (2012)

Nyhamna and Tjeldbergodden www.statoil.com (2012) & www.shell.com (2012)

Snøhvit, Melkøya and Hammerfest www.statoil.com (2012)

Subsurface resources Oil and gas resources on NCS owned by the state (the people) The State offers blocks to companies Companies nominate (apply for) blocks MPE issues percentages in blocks (licenses) and operatorship Companies pay 78% (28+50) in tax

Kristin License An Example Operator: Statoil ASA Partners (rettighetshavere): Statoil ASA 55.2991 per cent Petoro AS 19.5770 per cent ExxonMobil production 10.8761 per cent Eni Norge AS 8.2478 per cent Total E&P Norge AS 6.0000 per cent

Resources and Reserves Plan for Development and Operation (PDO) describes the development of a petroleum (oil and gas) deposit. Plan for Installation and Operation (PIO) applies to installation and operation of facilities for transport and exploitation of petroleum.

Resources and Reserves

Norway Petroleum Resources 31.12.2012

Norwegian Petroleum Reserves and Resources

Lifetime of Oil and Gas Developments …på sikker og miljømessig forsvarlig måte Nye funn K. Pedersen, Petoro AS, November 2008, Bodø

PDO Prognosis and Actual Production Examples

Oil and Gas Capex and Opex in Norway

Produced Fluids NCS

Gas Sales

Natural Gas Export Norway 2012

Petroleum Production in Norway

Production and Forecast

Natural Gas Production and Forecast

Sales Gas Norwegian Fields

Gas transport system Pipelines and processing facilities at Kårstø and Kollsnes owned by Gassled (from 1.1.03) Gassled is JV owned by oil and gas companies, including Petoro Gassco responsible for operation of pipelines and processing facilities (from 1.1.02) Gassco owned 100% by state EU’s Gas Directive (separation of production and transport)

Norway supplies natural gas to continent of Europe and United Kingdom

Petoro The Norwegian government has large holdings in oil and gas licences on Norway’s continental shelf (NCS) through the State’s Direct Financial Interest (SDFI). These are managed by Petoro AS. The company’s most important job is to help ensure the highest possible value creation from the SDFI – value which benefits the whole of Norway.

Gassled Gassled is a joint venture for the owners of the gas transport system on the Norwegian continental shelf. The gas transport system consists of pipelines, platforms and onshore process facilities and gas terminals abroad. The system is used by all parties needing to transport Norwegian gas. The receiving terminals for Norwegian gas in Germany, Belgium, France and the UK are wholly or partially owned by Gassled. Gassled’s activities are regulated by the Petroleum Regulations and tariffs for the individual services stipulated by the Ministry of Petroleum and Energy. At the end of 2012, the owners of Gassled were Petoro AS, Solveig Gas Norway AS, Njord Gas Infrastructure AS, Silex Gas Norway AS, Infragas Norge AS, Statoil Petroleum AS, Norsea Gas AS, ConocoPhillips Skandinavia AS, DONG E&P Norge AS, GDF SUEZ E&P Norge AS and RWE Dea Norge AS.  

Gassled Norway, western Europe’s largest gas exporter, will delay proposed cuts to tariffs on natural gas transported through the Gassled pipeline network, responding to a huge reaction from interested parties, according to news reports. A scheduled 90 percent cut in gas transport tariffs, due to come into effect from May 1, 2013 will be delayed as the Oil and Energy Ministry  considers responses to news of the plan. “We can confirm that we are aiming for changes in the tariff regulation to come into force July 1,” according to ministry spokesman. “The ministry has received extensive submissions and will need more time.” Petroleum & Energy Minister recently announced the proposed tariff cut that is intended to boost the economic viability of exploiting marginal finds in mature areas to lift recovery rates. Norway, which is planning to cut tariffs in the network to make more gas discoveries profitable while boosting exploration and recovery rates, has received criticism from investors in the pipeline and their lenders. Investors argue the cut would reduce returns to 4 percent, well below their projected minimum of 7 percent.

Gassled’s Owners 2012 Petoro AS 45.793% Solveig Gas Norway AS 24.756% Njord Gas Infrastructure AS 8.036%   Silex Gas Norway AS 6.102%  Infragas Norway AS 5.006%   Statoil Petroleum AS   5.000%  Norsea Gas AS 2.261%   ConocoPhillips Scandinavia AS   1.678%   DONG  E&P Norway AS 0.983%  GDF SUEZ E&P Norway AS 0.304%  RWE Dea Norway AS 0.081%

Gassco Gassco’s role as a neutral and independent operator of the gas transport system is important in order to ensure that all users are treated equally, both as regards utilisation of the transport system and considerations for increasing capacity. This is necessary to ensure efficient utilisation of the resources on the continental shelf. Efficient utilisation of the existing gas transport system can also contribute to reducing or postponing the need for new investments. Gassco has the operatorship and coordinates and manages the gas streams flowing through the pipeline network to the markets (system operation). In addition, Gassco is responsible for administration of the gas transport capacity (capacity administration) and development of infrastructure.

Tax on Oil and Gas in Norway

Market Value Norwegian Pension Fund

Carbon Dioxide Storage

Summary Resources and reserves is not the same MPE issues licenses (%) and operatorship In year 2010 oil and gas production equal, measured in o.e State owns Petoro (100%), Statoil (67%) and Gassco (100%) Extensive infrastructure offshore and on land makes Norway 7th larges exporter of oil and 3rd larges in export of gas (not production)

Yes, there is progress…

Conversions Used in Norway 53