Fact box 4.5 Rising unit costs and timely exploration

Big investments have been made in field and gas transport facilities on the NCS.

An expected decline in petroleum production from 2025 means that much spare capacity will become available in several parts of the infrastructure. Exploration in recent years has yielded many discoveries, but these are generally smaller than before (see chapter 2).

Phasing into existing facilities will therefore be the most likely development solution for most of them. Spare capacity in the infrastructure will create opportunities for good resource management. But it also presents challenges. Over the next few years, many of the fields will be in a mature phase with declining outputs and thereby rising unit costs. Phasing in discoveries before unit costs get too high is important.

Future discoveries thereby depend not only on spare capacity being available, but also on this having sufficiently low unit costs. Timely exploration and development will therefore be increasingly important in ensuring good profitability for future discoveries (figure 4.16).

 

 

Figure 4.16 Timely and time-critical resources. Timely resources: those phased in while unit costs on the host field are low enough and thereby provide high value creation. Time-critical resources: those phased in at a time when unit costs on the host field are rising quickly. The resources will thereby be produced with lower profitability and/or might be lost.