High costs threaten Norway's oil recovery

[phantom power]

optimism!

STAVANGER, Norway, (Reuters) - Oil production in Norway, the world's eighth-biggest exporter, will fall to a 25-year low in 2013 and an anticipated slow recovery in subsequent years is threatened by rising costs and bottlenecks, energy authorities said.

Production will fall to its lowest level since 1988 as fields, particularly in the mature North Sea, become depleted and a slew of new developments need more time to come onstream, the Norwegian Petroleum Directorate (NPD) said on Friday.

Still, record investments, big discoveries, high oil prices and a decisive move into Arctic waters support the industry's optimism, underpinning expectations that production will start to recover starting as soon as 2014, the NPD said.

"Not long ago we were talking about the industry's sunset," NPD chief Bente Nyland told a news conference. "Things have changed fast... there is now enormous optimism."

http://www.reuters.com/article/2013/01/11/norway-oil-outlook-idUSL5E9CB3YX20130111

[Follow The Money]

1. oil should be bringing in huge revenue

I don't understand why production would be falling, rising costs would be offset by huge profits.

Does anyone understand this?

[OnlinePoker]

2. Norway's oil is from the North Sea

If one field becomes depleted, it takes time and a lot of money to discover a new field and bring it into production. This is really deep water drilling with all the inherent risks. I've sailed in the North Sea in January and let me tell you, that is some nasty water to do anything in, let alone try and keep an oil rig stable for drilling.