A specialist regulator to challenge the industry

Chapter 6: The NPDs role

The NPD holds extensive information on the Norwegian petroleum industry. Giving priority to issues where it can make the biggest contribution to value creation is important.

This applies typically in cases where a push is required to ensure the solution which yields the highest value for society. As part of the pressure it applies on priority issues, the NPD holds regular meetings with licensees. It also issues requests for supplementary information and studies.

Own technical work

In order to play an active role in discussions on development solutions, drainage strategies and options for improved recovery, the NPD must be in a position to understand the decision base used by companies and to challenge this where necessary from a risk and profitability perspective. By undertaking its own technical work on geological models and reservoir simulations, for example, the directorate can challenge company assessments of the resource potential.

Relevant solutions could be present during a development phase which are not identified or assessed by the licensees.

Commercial calculations by the companies could point to solutions other than the one which yields the greatest overall value. Effects might exist which are not picked up by company profitability assessments, but which nevertheless affect overall value creation on the Norwegian continental shelf (NCS). That could apply, for example, if a decision in one production licence has consequences for others.

Integrated and long-term thinking necessary

Understanding the consequences of a project for overall value creation on the NCS can be demanding. Such assessments nevertheless provide a necessary basis for managing resources to create value.

Area- and NCS-wide assessments are an important part of the NPD’s responsibility. It has access to information from all production licences, which provides a good basis for identifying gains from coordinating petroleum activities.

The NPD applies a long-term perspective to oil and gas operations, and therefore serves as a driving force for solutions which ensure value creation and flexibility for the future.

Instruments

Norway’s petroleum industry is administered through operating parameters and requirements for government approval, permission or consent at various milestones. In practice, much of the administration is exercised through dialogue rather than legal instruments..

READ MORE: Instruments available to the government

Environmental considerations

The Petroleum Act requires that the natural environment be taken into account in the administration of petroleum resources, and various instruments and measures are in place to ensure that licensees on the NCS do so. That applies to both emissions to the air and discharges to the sea. The NPD sees to it that relevant options are assessed and/or studied, and carries out cost/benefit evaluations when required. It works to ensure that the most cost-effective environmental measures are chosen where appropriate.

The NPD’s various roles

The roles played by the NPD vary according the stakeholders involved. In addition to following up activities on NCS fields and discoveries, it provides guidance to the petroleum industry on Norwegian regulations. The directorate also serves as an advisor on resource management to the Ministry of Petroleum and Energy.

The NPD’s roles in relation to the ministry, the industry, society and other government agencies.

In relation to other government bodies, the NPD acts as the sector regulator and participates in that context in various fora. The directorate has a national responsibility for data from the NCS. Its data, overview and analyses provide an important factual basis for industry as well as political decision-makers and other players in Norwegian society.

A number of platforms are used by the NPD to communicate factual information. The fact pages and maps on its website contain extensive data on the NCS. Part of this information is also available through the Oilfacts app.

In cooperation with the Ministry of Petroleum and Energy, the NPD has established the norskpetroleum.no website as a further source of information about oil and gas activities on the NCS.

Communication of facts by the directorate also takes the form of presentations and contributions to various fora and through regular publications.

Want to know more about the NPD’s roles and how it works?

An invitation from the NPD to attend a course for the petroleum industry on its duties and roles aroused great interest. Almost 150 personnel from the sector attended this session on 12 December 2016