1

2

Rapidly declining production on the NCS

Ref.:Norwegian Petroleum Directorate

• Production from producing fields will be halved by 2023

• Production levels can be kept higher through a higher recovery rate from the reservoir reserves and new discoveries

0

50

100

150

200

250

300

1975

1980

1985

1990

1995

2000

2005

2010

2015

2020

2025

2030

•Production•Million Sm3 o.e. per year•Reserves and resources in fields reported to RNB

• Gas

• Oil

• 2008

3

The easy oil has been discovered

Ref.:Norwegian Petroleum Directorate

0

500

1 000

1 500

2 000

2 500

3 000

•1967-1971

•1.503

•1972-1976

•2.208

•1977-1981

•2.739

•1982-1986

•469

•1987-1991

•471

•1.223

•863

•1997-2001

•235

•2002-2006

•Discoveries <5 mill. Sm3 o.e.

•Discoveries 5-10 mill.Sm3 o.e.

•Discoveries 10-15 mill.Sm3 o.e.

•Discoveries 50-100 mill. Sm3 o.e.

•Discoveries >100 mill.Sm3 o.e.

•1992-1996

•Million Sm3 o.e

4

Low rate of reserve replacement on the Norwegian Shelf

Ref.:Norwegian Petroleum Directorate

0

100

200

300

400

500

600

•1999•2000•1998 •2002•1994•1995•1996•1997 •2003•2001•1993•1992

•Resource growth

•1991

•Production

•1990 •2006•2005•2004

Annual resource growth and productionMill. Sm3 o.e

5

How much more can we expect to find?

Ref.:Norwegian Petroleum Directorate

Estimates for undiscovered resource potential on the NCS contain considerable uncertainty …Mill. Sm3

•1,3

•4,7

•4,6

•10,6

•P90

•3,4

•5,2

•4,6

•13,2

•Anticipated

•6,6

•5,7

•4,6

•16,9

•P10

• Sold and delivered

• Contingent resources, measures • Undiscovered resources

•1,3

•P90

•3,4

•Anticipated •P10

•Barents Sea

•Norw.Sea

•North Sea

•6,6

… especially for less mature areas Undiscovered resources, Mill. Sm3

6

Total NCS

0

10000

20000

30000

40000

50000

60000

70000

1965 1970 1975 1980 1985 1990 1995 2000 2005

Year

106 bbls o.e.

0

10

20

30

40

50

60

70

80

No.

of

explo

ration w

ells

Mmboe cumulative

Mmboe per year

No. of wellls per year

Ekofisk Statfjord Oseberg Troll Ormen Lange

The story so far

7

Fields and discoveries, NCS

0,0

100,0

200,0

300,0

400,0

500,0

600,0

700,0

800,0

1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

Discovery year

Dis

cove

ry s

ize,

rec

ove

rab

le M

Sm

3

Fields

Discoveries with probabledevelopment

Discoveries in the planning phase

Discoveries with developmentdecision

EkofiskEkofisk

StatfjordStatfjord

Ormen LangeOrmen Lange

OsebergOseberg

GullfaksGullfaks ÅsgardÅsgard

EldfiskEldfisk SnorreSnorre

What’s in the bank

8

Discoveries, NCS

0,0

20,0

40,0

60,0

80,0

100,0

120,0

1970 1975 1980 1985 1990 1995 2000 2005 2010

Discovery year

Dis

cove

ry s

ize,

rec

ove

rab

le M

Sm

3

Discoveries with probabledevelopment

Discoveries in the planning phase

Discoveries with developmentdecision

ViktoriaViktoria

SkarvSkarv

GoliatGoliatGudrunGudrun

ValemonValemon

GjøaGjøa

VegaVegaOnyxOnyx

StetindStetind

PeonPeon

What’s on the shelf

9

. . . but long-term production is depends on exploration

Ref.:Norwegian Petroleum Directorate; Project group 1

•07•08•09•10•11 •23•18 •21•22•20•19•0

•26•24

•1,0

•25

•1,5

•12•13 •17•15•14 •16

•2,5

•3,0

•2,0

•0,5

•4,0

•3,5

•4,5

•5,0

•Mill. b.o.e. a day

•Yr.

•Base estimate assumes considerable production of oil&gas from undiscovered resources already in 10-15 years• 2.5 x Ormen Lange• 8 x Goliat

• Conditions to enable this: Clarification of the resource potential on the NCS

• Access to unopened areas from 2010 at the latest

•Reserves

•Resources in field

•Resources in discoveries

•Undiscovered resources

•NPD forecast for overall production, 2007-2026

•New field development projects crucial to maintaining and developing the industrial complex

10

Where are the recent discoveries?

MBOE rec, equity

98ILX

124Growth

30Frontier

252Total

537,6

1.406,5

195,7939,7

744,0

2.883,8

Prospect type # of wells Total volume

Ormen Lange

2 Bbbl discovered in established petroleum provinces

2 Bbbl discovered in established petroleum provinces

11

0 100 200 km

G:\T&P\ANT\MBM\NKG\Mapdata\NO\Norge_Oversikt\Lisenskart\Mxd\Statoil_Hydro_let_lic_tot_20070401vle.mxd

Proven Petroleum Provinces, NCS (SHØA)

39

2824

16

26

20

149 10

18 18

0

100

200

300

400

500

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Mill b

oe

0

10

20

30

40

50

No

of w

ells

Pre-drill volume

Post-drill volume

Number of wells

The reliable volumes

12

Striving for business impactBirds and elephants

0 100 200 km

G:\T&P\ANT\MBM\NKG\Mapdata\NO\Norge_Oversikt\Lisenskart\Mxd\Statoil_Hydro_let_lic_tot_20070401vle.mxd

Established provinces - volume predictions reliable, but moderate per well

• High well count gives higher returns

Established provinces - volume predictions reliable, but moderate per well

• High well count gives higher returns

Frontier areas - high return when successful

• Prioritising the right prospects

Frontier areas - high return when successful

• Prioritising the right prospects

13

Making the right decisions – together

0 %

10 %

20 %

30 %

40 %

50 %

60 %

70 %

80 %

90 %

100 %

1 10 100 1 000

Mean rec vol mmboe StatoilHydro equity

Cha

nce o

f success

Drilling Candidates

Dropped prospects

14

ILX challenge is the threshold level

0

10000

20000

30000

40000

50000

60000

70000

0 500 1000 1500 2000 2500 3000 3500 4000 4500

No of wells

Mill

. bb

ls o

.e.

UKCS

NCS

The UK history indicates that in the proven petroleum provinces more

wells = more volumes –

but the discovery sizes will be small…

The UK history indicates that in the proven petroleum provinces more

wells = more volumes –

but the discovery sizes will be small…

15

2005 2010 2015

OPEXMboe / d

Threshold level

Field close down if no

new resources

Delayed field close

down if new resources

Prospect A

Extending field life and maximizing recovery

16

Need the best new acreage

• To effectively determine the resource potential, the industry must have access to the most prospective acreage

• Nordland VI and VII have been identified as the top priority area with the best and most certain potential

Ref.:Norwegian Petroleum Directorate

17

Picking the best acreage - together

• 20th round

– 301 blocks are nominated by the

companies; 129 in Barents Sea, 164 in

the Norwegian Sea and 8 in the North

Sea

– 46 companies nominated blocks

compared to 19 in the 19th round

18

Securing capacity and doing it right - together

• Market

• Safe, efficient and green operations

• Co-existence

19

0

10

20

30

2004 2005 2006 2007 2008

Exploration revived?