Higher Norway exploration drilling yields less oil and gas in 2024: regulator

Norwegian exploration drilling yielded 24% less in discovered oil and gas volumes in 2024, despite a 24% increase in the number of exploration wells drilled to 42, the upstream regulator said Jan. 9, urging further exploration to underpin long-term supply.

Overall, 252 million barrels of oil equivalent were discovered in 2024, according to the Norwegian Offshore Directorate's preliminary estimate, down from the 315 million boe estimate for 2023 published at the same time last year.

The success rate for exploration wells remained relatively high, with 42 wells yielding 16 discoveries, however, the average discovery size was 30% lower, at 15.7 million boe.

The Haydn gas field in the Norwegian Sea, drilled by Austria's OMV, was probably the largest discovery of 2024, with a mid-point estimate of 49 million boe, followed by the Othello oil field in the North Sea, drilled by independent DNO and holding an estimated 40 million boe.

In likely third place was the Cuvette gas and condensate field at 28 million boe, which was drilled by Wintershall Dea, a company subsequently bought by the UK's Harbour Energy, the NOD said.

"Norway still has extensive oil and gas resources... These resources can provide a basis for high levels of production, export and value creation for society for many years to come. However, this potential future will not simply materialize on its own," it said.

Norway's gas production hit record highs in 2024, while oil production rates have stabilized on the back of the giant Johan Sverdrup field, which came on stream in 2019. However, the largest undeveloped oil field, Wisting, at nearly 500 million boe, lies in remote Barents Sea waters, some 300 km north of the Norwegian mainland.

Its successful development is seen as hinging on the successful development of the Castberg field, also in the Barents Sea, which is due on stream in January-February.

The NOD "expects overall production to decline in the later 2020s. In order to slow this decline, exploration will need to take place close to infrastructure and in more frontier areas, in addition to making more investments in fields, discoveries and infrastructure. Failure to invest will lead to rapid dismantling of the petroleum activities," it warned.

On the 2024 discoveries, it said: "Most of the discoveries are small, but several are being considered for development tied back to existing fields. We've seen that even small discoveries can generate substantial values. An NOD analysis of exploration activity over the last 20 years (2004-2023) shows that the discoveries are valued at three times the costs expended."

Supply anchor

Norway is by far western Europe's largest oil and gas producer and an increasingly important supply source for the EU following the Russian full-scale invasion of Ukraine and subsequent cutting of Russian gas supplies to the bloc.

The NOD also highlighted cost increases in the sector, as it forecast a 2.5% increase in investment levels in 2025 to NOK 264 billion ($23.2 billion).

"Significant activity and scarce capacity in parts of the supplier industry, a weakened Norwegian currency and growth in costs have led to higher cost and investment projections for 2024-2026 in particular, compared with what was presented at the end of 2023," the NOD said. "Higher drilling costs per development well also contribute to a higher level of investment."

Analysts at S&P Global Commodity Insights expect Norway's crude production to rise some 50,000 b/d in 2025 to 1.84 million b/d, but annual declines to set in from 2026 onward, accelerating to almost 100,000 b/d in 2029.

The Platts Dated Brent benchmark was assessed at $77.24/b on Jan. 8, down 66 cents/b on the session.