Norway Ready to Go to Gates of Hell for Oil

Norway Oil

Having explored the majority of its Norwegian shelf, Norway is looking to other more remote regions in order to remain a major player in the oil industry, which has largely paid for the welfare nation's lifestyle.

One area they're looking toward is a volcanic island in the Arctic with the strange name of Jan Mayen, which was at one time supposedly called the 'Gates of Hell,' based on the possibly true legend of being discovered by Brendan, and Irish monk, who when seeing the vulanic activity thought he had literally discovered the Gates of Hell.

Norway will find it hard to finance its welfare state if oil production continues to fall as it has recently, with estimates in this year alone dropping by 9.7 percent, according to the Petroleum Directorate. Oil and gas accounts for about 25 percent of the economic output of Norway at this time.

The first step will be to drill a shallow well outside of Jan Mayen to make an assessment on the geological structures in the area. Oil drilling in the region won't begin until about 2020.

Norway Oil

Bids for Oil Exploration off Norway Coastline Soar

The Norwegian government says the number of oil companies bidding for exploration licenses off its coastlines has surged to a record 46 in the country's latest licensing round. That's over double the last bidding round in 2005 when 19 companies participated.

With a number of its North Sea fields aging, Norway is hoping that new offshore oil deposits will be found by directing exploration north of the current fields. New licenses for blocks are being offered in the Barents Sea and Norwegian Sea.

"It is positive that this many companies want to aim towards new opportunities in the Barents Sea and the Norwegian Sea," said Oil Minister Terje Riis-Johansen. "Petroleum activities that are undertaken in accordance with important environmental and fisheries concerns can make a significant impact on employment, industrial development and value creation in the northern areas."

Now that oil production has started to drop in the Scandinavian country, Norway has opened bids up to smaller oil companies to generate more interest. Larger companies have generally started to stay away from the declining area as production has dropped from over 3 million barrels a day in 2000 to 2.2 million barrels a day.

The renewed interest in the area comes from higher crude prices.

Bids on the new blocks will be awarded sometime early or mid-2009.