Norway Offers 56 New Production Licences on Continental Shelf

Norway's government agency in charge of hydrocarbon permitting, the Norwegian Petroleum Directorate (NPD), has offered 56 production licences on the Norwegian Continental Shelf.

In an announcement on the NPD website on January 19, the agency said that 36 companies out of 43 applicants had won the Awards in Pre-defined Areas (APA) 2015 round.

Of the licences offered, 27 are in the North Sea while a further 24 are in the Norwegian Sea. "There has been considerable interest this year in the Norwegian Sea," NPD's director of exploration, Sissel Eriksen, said. "The companies' applications show consistent high quality, and some have submitted very interesting exploration concepts. Most of the companies will be rewarded for their hard work through awards in APA 2015.

"It is an advantage that the geology is relatively familiar, even though surprises cannot be ruled out. Many of these areas have existing fields that are nearing the end of production, with infrastructure that can be exploited. It is therefore important that we explore the surrounding areas so that potential resources are not lost."

The announcement came a matter of days after the NPD released its annual review of the Norwegian Continental Shelf. In that review, the agency encouraged investors to take a long-term view of the prospects on the Shelf rather than a short-term one. 

"Activity will remain high in the years to come, in spite of the decline since 2014," NPD director Bente Nyland said on January 14. "Therefore, it is important that the companies make wise decisions and keep a long-term perspective."

The NPD is concerned that a short-term view could mean that a massive amount of hydrocarbon reserves in the Norwegian Continetal Shelf--about 50%--could remain unexploited.

The licences offered to the 36 companies under the APA 2015 awards come with a number of requirements. The chosen companies will be required to acquire new seismic data in four areas, and two wells must be drilled. The remaining production licences, outside those four areas, are subject to a "drill or drop" requirement, the NPD says. Under that requirement, the licence holders must decide within one to three years if they wish to drill an exploration licence. If they do not, the production licence will lapse.