Investment requirement for extraction of the remaining oil & gas resources in the Norwegian Continental Shelf
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The oil and gas industry is a major contributor to Norway’s economy and the country as a whole. In the last 50 years, 6.6 billion standard cubic metres of oil equivalents have been extracted from the Norwegian continental shelf (NCS). There are an estimated 7.7 billion standard cubic metres of oil equivalents left in the ground. This includes both oil and gas. To be able to extract the remaining resources, there is a significant need for further investments. This thesis will try to answer the following question: What is the estimated future requirement for investment in the NCS in order to extract the remaining oil and gas resources? The Norwegian Petroleum Directorate (NPD) has a database that contains information of all the resources. The resources are divided into four: undiscovered resources, discovered resources, resources in production and sold resources. This information has been used to find the remaining resources for each class in barrels per oil equivalent. Rystad Energy has a database containing costs per field at fields in the NCS. Using this database they have estimated the future unit costs to be 8 for exploration, 14 for development and 9 for production. All costs are in USD per barrel of oil equivalents. The conclusion of this paper estimate future requirement for investment in the NCS to extract the remaining oil and gas resources to be USD 1058.6 billion. The need for investment to explore, develop and produce the undiscovered resources is USD 569.4 billion. Discovered resources have a need for investment of USD 368.8 billion to be developed and produced. Resources in production have a need for investment of USD 120.4 billion to be produced. NCS is divided in three regions, The North Sea, the Norwegian Sea and the Barents Sea. The estimated need for investment for each region is USD 475.3 billion for the North Sea, USD 261.2 billion for the Norwegian Sea and USD 321.8 billion for the Barents Sea. In the work of this thesis there have been used different unit cost scenarios to show how this affects the overall need for investment in the NCS and for each region. Results regarding an overall unit cost increase, investment needed at different sizes of undiscovered resources and resource life are also presented in this paper. The results are uncertain for many reasons. The undiscovered resources are only estimated values based on geological methods and the exact size of the remaining resources can only be taken for granted when the resources eventually are produced and sold. The unit cost per barrel of oil equivalents is an estimation of future costs which is by nature uncertain.
Master's thesis in Economic analysis