We expect the production of natural gas to constitute a larger share of the total production on the NCS in the future.
Total production from the NCS is at a historical high level. In 2007, the total production from the NCS was 4.1 mmboe per day. However, production of oil on the NCS has decreased since peaking in 2001 and it is now at the lowest level since 1993/94. While oil production on the NCS shows a falling trend, natural gas production is increasing and we expect the production of
natural gas to constitute a larger share of total production in the future. This will
affect both the level of activity and profi tability on the NCS.
Exploration
In 2007, we participated in 24 exploration wells, 16 of which resulted in discoveries. We operated 19 of the 24 exploration wells, including 14 of the 16 discoveries. In addition, we operated two exploration extensions, both of which resulted in discoveries.
In 2007, the most important discoveries in the North Sea were Ermintrude and Ragnarrock, both close to the Sleipner field. In the Oseberg area, production tests carried out on the Shetland Chalk oil discovery
confirmed recoverable resources in chalk reservoirs. In the shallow water of the Norwegian Sea, the Onyx South West gas discovery increased the probability of a new gas province development. In the Barents Sea, the Goliat West well proved additional resources in deeper segments, and the Nucula discovery confi rmed the oil potential in this part of the Barents Sea.
New development projects
Alve. The Alve field, in which we hold an 85% interest, is located in PL159B in the Norwegian Sea, 14 km south-west of the Norne field. The Plan for development and Operation (PDO) was submitted to the Norwegian
authorities in January 2007 and approved in March 2007. The fi eld will be
developed through the installation of a four-slot subsea wellhead template that
will be tied back to the Norne FPSO. Production is scheduled to start in early 2009.
Morvin. Morvin, in which we hold an interest of 64%, is an oil and gas field located in the Norwegian Sea, 15 km north-west of Åsgard. The field was discovered in 2001 and the Plan for Development and Operation was submitted in February 2008. The field will be a subsea development with
two templates tied in to Åsgard B for processing through a 20 km long wellstream pipeline. Production from the field is estimated to commence in late 2010.
Yttergryta. The Yttergryta subsea gas and condensate field development in the
Norwegian Sea, 33 km east of Åsgard B, with an investment value of approximately NOK 1.2 billion, is an excellent example of a relatively small but unique project in our portfolio. The discovery was made in the summer of 2007 and the Plan for Development and Operation was submitted in January
2008. Production start-up is expected to take place in early 2009.
Skarv. The PDO for Skarv was submitted in June 2007 and approved by the Norwegian parliament in December 2007. Skarv is an oil and gas fi eld. It is located in the Norwegian Sea and BP is the operator. Production is expected to start in August 2011. Our NCS portfolio consists of licences in the North Sea, the Norwegian Sea and the Barents Sea. We have organised our production operations into three business clusters: Operations North Sea, Operations
West and Operations North.
Operations North Sea
The Operations North Sea area covers most of StatoilHydro’s production activity in the North Sea. Our producing fields in the Operations North Sea are Troll, Fram, Sleipner, Kvitebjørn, Visund, Grane, Brage, Veslefrikk, Huldra, Glitne, Volve, Heimdal and Vale. The area is dominated by the production of natural gas, as 60% of the equity production in 2007 was gas. The petroleum
reserves are located in water depths of between 80 and 330 metres. There is high focus on increasing and prolonging production in the area. Improved oil recovery and field exploration and development have priority. In late 2007, our application for extension of the licence period in the Sleipner area until 2028 was approved, which is expected to have a positive impact on the economic life of the infrastructure in the area.
Operations West
The Operations West area is responsible for a compact geographic area in which StatoilHydro is the sole operator. The main producing fi elds in the area are Statfjord, Gullfaks, Snorre, Oseberg, Tordis and Vigdis. Operations West is the leading oil producing area on the NCS. Even after twenty years of production, we believe there are still substantial opportunities for
increased value creation. We have taken several initiatives to identify and implement measures to increase and prolong production from the Operations West area. These initiatives involve a combination of cost reductions and increased oil recovery, and they have resulted in a prolongation of planned production beyond the current licence period for several of the fields.
Operations North
Our producing fields in the Operations North area are Åsgard, Mikkel, Heidrun,
Kristin, Norne, Urd, Njord and Snøhvit. This region is characterised by petroleum reserves located at water depths of between 250 and 500 meters. The reserves are partly under high pressure and at high temperatures. These conditions have made development and production more difficult and have challenged the participants to develop new types of platforms and new
technology, such as fl oating processing systems with subsea production templates. We plan to increase efficiency by further coordinating our operations in the area and by stemming the decline in production from the mature fi elds through increased seismic activity and well maintenance. In addition, we intend to expand our activities by utilising our installed production and transportation capacity before building new infrastructure.
