Norwegian experts call for cost cutting through worker safety on oil rigs

Norwegian oil and gas experts have called for more cost cutting in the offshore drilling industry, which could be achieved through new safety rules and workers' conditions.

The panel of experts concluded that changes in safety rules and workers' conditions in the offshore drilling industry could save up to one trillion Norwegian kroner ($167.5 billion) and allow greater volumes of oil and gas to be produced.

Norway is currently struggling to combat falling output of oil and gas, which has provided the foundations of the domestic economy for many years. Total production in the country fell four per cent in 2010 and a further five per cent in 2011, which makes new discoveries and increasing recovery from existing fields vital.

The panel's leader, Eivind Reiten, told Dow Jones Newswires: "The production on the Norwegian continental shelf is in a heavy fall, and we have serious trouble with the cost curve on the shelf." He added that there was a "grave danger" that vast resources may remain in the ground forever, at a loss to society, because of, "unnecessarily expensive," production.

Offshore oil rig activity has hit all-time highs in Norway, with significant investments being made into the extraction of oil fields in the country's shores. Licensees are planning to spend NOK96.3 billion on the drilling of production and exploration wells in 2013, according to Norway's statistics agency.

However, higher costs mean that this money is not being fully absorbed into the economy, with the cost to drill a production well doubling from 2000 to 2010, with the trend showing no signs of abating, according to Mr Reiten, a former energy minister.

The panel looked to address the issue of expensive drilling costs, suggesting that some of Norway's regulations were unnecessary. Safety guidelines on lighting and noise levels were highlighted as being examples of over-regulation, with the panel proposing that rules be brought more in line with those in the UK.

Posted by Claire Manning