It is pivotal to have access to acreage in order to discover oil and gas. As of 31 December 2012, Det norske holds interests in 67 licenses on the Norwegian Continental Shelf (NCS), of which we operate 26.
Det norske is one of the most active exploration companies on the Norwegian shelf, and has adopted a two-fold exploration strategy. Approximately two thirds of the company’s exploration resources are invested in mature areas in the North Sea, where the infrastructure is good and the discovery rate still high. The remaining exploration resources are invested in exploration in less mature areas, so-called “frontier areas”.
In 2011 and 2012, eight significant new discoveries were made in the North Sea, mainly oil. Det norske participated in three of these; Geitungen (license 265), Krafla (license 272) and Garantiana (license 544). During the same period, five considerable oil and gas discoveries were made in the northernmost areas on the shelf. Det norske participated in one of these, the gas discovery on Norvarg (license 535) in the Barents sea.
In 2012, total investments in exploration activities amounted to approximately NOK 1.7 billion. Det norske is planning to participate in 10 – 12 exploration and appraisal wells in 2013.
See our licensemap here.
|Licensed to explore
Licensing rounds are very important for Det norske, and the best way of gaining access to new acreage. Since 1965, the authorities have carried out 22 licensing rounds. These are awards of acreage in “new” areas that have not yet been sufficiently explored. The licensing rounds are announced every other year and consist of a nomination phase, a hearing phase and the announcement. The application area has remained unaltered for the last 15 years.
In addition, the Norwegian authorities introduced the Awards in Predefined Areas (APA) rounds in 2003. These licensing rounds comprise new calls for applications in mature areas of the Norwegian shelf. The APA rounds are usually conducted on an annual basis.
Det norske applies for new licenses and operatorships both in the regular licensing rounds as well as in the APA rounds. In the 2012 APA round
, Det norske was awarded eight licenses, of which we will operate three. Det norske has also applied for new acreage in the 22nd
licensing round. Here, the awards will be announced by the Ministry of Petroleum and Energy (MPE) in the summer of 2013.
More on licenses
The production licenses are awarded to a commonality of interest, in which normally consists of several companies. The production license regulates each company’s rights and obligations towards the State. All partners in a license are jointly and severally responsible in fulfilling whatever obligations the production license assumes. Initially, the license is valid for a period of up to ten years. During this period, a pre-established work program will be completed in the form of geological and geophysical pre-studies and/or exploration drilling, plus environmental surveys in vulnerable areas.
When a production license has been awarded, the licensees must enter into a joint cooperation and accounting agreement, subject to conditions stipulated by the authorities. These agreements regulate many aspects of the relationship between the partners and the operator, and also the relationship with the authorities. The operator in each production license is appointed by the authorities, and this company is responsible for the day-to-day license operations.
The steering committee is the supreme authority in a production license. Each of the partners in the license is represented on the steering committee. The voting rules are normally designed so that a majority in terms of both interests and the number of votes is required for a decision to be valid. The way the voting rules work, an owner with an interest of more than 50 percent cannot adopt a proposal alone.
The licensees can buy, sell and swap license interests, but this is conditional on the approval of the Ministry of Petroleum and Energy, as well as by the Ministry of Finance in matters relating to tax.