A record 31.4 billion crowns (US $5.4 billion) will be spent on oil and gas exploration on the Norwegian Continental Shelf in 2009, according to Statistics Norway.
That compares with the 25.1 billion crowns expected to be spent on oil and gas exploration in 2008 – and reflects the race by international energy groups to replenish the maturing North Sea fields with new finds.
The 2009 figure was rivsed up by 15.9 billion crowns compared with a previous survey in May, officials said, partly because oil and gas companies had not finalised their spending levels then.
Statistics Norway says the estimate for 2009 is the highest exploration estimate since it started collecting estimates in 1985, measured in current prices.
Total investments in oil and gas activities for 2009, including pipeline transportation, are estimated at 132.8 billion crowns – 13.8 billion crowns higher than the corresponding estimate for 2008.
Surging rig costs
Senior consultant Stale Maeland told Offshore247 that one explanation for the ballooning of expected spending in 2009 was surging rig costs, reflecting in turn hot demand for limited facilities from the energy producers.
“Another reason is the oil price. It gives a huge incentive to discover new oil and to sell it at a higher price,” said Maeland.
“Also the tax rules have been relaxed for new companies to enter exploration, which has seen the number of exploration companies double in the last three to four years,” he added.
Investments for field development and fields on stream are now estimated at 95.6 billion crowns, an increase of 1.4 billion crowns compared with the estimate in the previous quarter and 7.9 billion higher than the corresponding estimate for 2008.
Onshore activities and pipeline transportation are estimated at 5.4 billion and 0.5 billion billion crowns respectively.