Published on 03/24/2006

The North Sea holds the majority of these reserves, but there are also significant quantities in the Norwegian and Barents Seas. Norway is the eighth-largest natural gas producer in the world, producing 2.59 Tcf in 2003. However, because of the country's low domestic consumption, which totaled only 146 billion cubic feet (Bcf) in 2003, Norway was the world's third-largest net exporter of natural gas in 2003, behind Russia and Canada

Norway is the second-largest supplier of natural gas to continental Europe

According to OGJ, Norway had 73.6 trillion cubic feet (Tcf) of proven natural gas reserves as of January 2005. The North Sea holds the majority of these reserves, but there are also significant quantities in the Norwegian and Barents Seas. Norway is the eighth-largest natural gas producer in the world, producing 2.59 Tcf in 2003.

However, because of the country's low domestic consumption, which totaled only 146 billion cubic feet (Bcf) in 2003, Norway was the world's third-largest net exporter of natural gas in 2003, behind Russia and Canada.

As is the case with the oil sector, Statoil and Norsk Hydro dominate natural gas production in Norway. Several international majors, such as ExxonMobil and BP, also have a sizable presence in the NCS gas sector, though they often work in partnership with Statoil or Norsk Hydro.

Norway has begun to slowly reform the midstream and downstream gas sectors. In June 2001, the Norwegian government eliminated controls on natural gas prices. Also in 2001, the government created Gassco, a state-owned company responsible for administering the natural gas pipeline network. Previously, Statoil and Norsk Hydro had controlled the network; it is hoped that placing control of the system with an independent company will ensure fair, indiscriminate access for all companies.

The company also manages Gassled, the network of pipelines and receiving terminals that exports Norway's natural gas production to the United Kingdom and continental Europe.

Exploration and Production of Natural Gas in Norway

A small group of fields account for the bulk of Norway's total natural gas production. The single largest field is Troll, which produced 930 Bcf in 2004 and represents about one-third of Norway's total natural gas production. Other important fields include Sleipner Ost (450 Bcf), Asgard (360 Bcf), and Oseberg (250 Bcf). These four fields compose over 70 percent of Norway's total gas production (see chart).

Despite the maturation of its major natural gas fields in the North Sea, Norway has been able to sustain annual increases in total natural gas production by incorporating new fields. In October 2004, the Kvitebjorn field came onstream with an expected production level of 710 million cubic feet per day (Mmcf/d).

Statoil expects to bring the Halten Bank West project onstream in October 2005, which includes estimated reserves of 1.2 Tcf spread among five fields (Kristin, Lavrans, Erlend, Morvin, and Ragnfrid).

Over the long term, Norway is counting on non-North Sea projects to provide significant natural gas production. In the Norwegian Sea, Norsk Hydro is currently developing the Ormen Lange field. The project consists of an offshore production facility and a subsea pipeline linking the field to the gas processing terminal in Nyhamma.

In addition, the Ormen Lange project includes a pipeline linking Nyhamma to Easington, England (see below). Ormen Lange holds an estimated 14 Tcf of recoverable reserve and will have a full production capacity of 710 Bcf per year. Shell will take over as operator of the project from Norsk Hydro in the production phase, which is scheduled to begin in 2007.

Also in the Norwegian Sea, Shell announced in 2005 that it had made a major discovery in the Onyx prospect, west of the company's existing Draugen field. According to the Norwegian Petroleum Directorate (NPD), the find could contain as much as 2.1 Tcf of recoverable gas reserves.

Natural Gas in The Barents Sea

In the Barents Sea, Statoil is developing the Snohvit project, which contains an estimated 5.7 Tcf of proven natural gas reserves. Snohvit will combine production from three gas fields (Snohvit, Albatross, and Askeladd), a pipeline connecting these fields to an onshore receiving terminal near Hammerfest, and a liquefied natural gas (LNG) export terminal.

According to Statoil, first production from the Snohvit field should occur in 2007, with production from the other two fields beginning in over the following 5-10 years.

Norway is the second-largest exporter of natural gas to the EU, behind Russia. According to Statistics Norway, the country exported an exported 2.0 Tcf of natural gas to the EU in 2004. Germany is the largest source of Norway's gas exports, followed by France, the United Kingdom, and Belgium.

Source: Energy Information Administration