Denmark expected to be a net exporter of oil and gas for another eight to ten years

Denmark can expect to continue being a net exporter of oil until the end of 2018 and of gas until the end of 2020. If expectations for the exploration potential are met, Denmark will be able to maintain its position as a net exporter of oil until 2035.

June 8, 2010

By Steen Hartvig Jacobsen, journalist

The DEA’s projections for the future production of oil and gas from the North Sea show that Denmark can expect to continue being a net exporter of oil until the end of 2018 and of gas until the end of 2020. The most recent five-year forecasts show declining production until 2015, when new fields are to be brought on stream and planned developments of existing fields will have been completed.

Forecasts show declining production

In the short term, oil production is expected to decline by one third, from about 15.2 million m3 in 2009 to about 10 million m3 in 2014. Production is expected to total 13.4 million m3 in 2010.

As part of its twenty-year forecasts, the DEA draws up an expected production profile, which is supplemented by possible contributions from improved recovery technology and expected new discoveries. For instance, if the companies succeed in raising the average recovery factor from the expected 23.6 per cent by five percentage points until 2035 and beyond, and if the DEA’s expectations for the exploration potential are met, Denmark will largely be able to maintain its position as a net exporter of oil until 2035. In the period until 2020, various technological improvements are expected to increase technological resources, while CO2 injection may gain importance after 2020. Mærsk Olie og Gas is cooperating with Finnish partners, among others, to obtain EU support for a demonstration project using this technology in one of its Danish fields.

For gas, the development of new well technology combined with new discoveries may allow Denmark to maintain its position as a net exporter beyond 2030.

The DEA updates its five-year forecast about twice a year, while the twenty-year forecast is updated every year in connection with the publication of the oil and gas report.

New classification system for resources

The new forecasts have been prepared using a revised classification system for oil and gas resources that more closely matches the internationally recognized SPE-PRMS classification system drawn up by the Society of Petroleum Engineers, SPE. PRMS stands for Petroleum Resources Management System, and categorizes the resources in three classes: reserves, contingent resources and prospective resources. The DEA has added a fourth class to its classification system, “technological resources”, which is the possible recovery expected to result from the use of new or improved technology.

The reserves class comprises recovery from existing production facilities and projects justified for development. This class is divided into two categories: (1) “ongoing recovery” from existing production facilities and recovery resulting from plans “approved for development”; (2) “justified for development”, which comprises the further development of existing installations and the development of new fields based on development plans not yet approved and plans expected to be implemented within the next five years or so.

The class “contingent resources” comprises potential development projects for which the technical or commercial decision-making basis has not yet been completed. The category “development pending” comprises projects for which the acquisition of seismic data and/or appraisal wells show specific potential for commercial development. “Development unclarified or on hold” comprises projects that require further investigation or that have potential for commercial development if, for example, the oil price increases. “Development not viable” comprises projects for which the infrastructure conditions, technical conditions, reservoir size or oil price level does not suffice to make the project commercially viable.

The DEA prepares its production forecasts on the basis of these two classes after making a risk assessment of contingent resources. Thus, the amount of production assessed on the basis of the expected production profile is somewhat smaller than according to the previous method, where the expected production profile comprised ongoing and approved recovery, planned recovery and possible recovery without any risk weighting.

The DEA has retained a fourth class in its classification system, “technological resources”, to reflect the production potential that may result from new technology in the highly complex Danish chalk reservoirs. The class termed “prospective resources” in the new system is identical to the previous contribution from exploration and does not completely match the corresponding SPE class.

The new assessment of oil production and oil resources incorporates an upward adjustment of production of 9 million m3 due to the new development plan for South Arne, while prospective resources have been written down by 15 million m3 on the basis of new well data.