Rethinking exploration in Norway
Are we exploring enough on the Norwegian continental shelf? In Finansavisen’s “Economy News” on March 7 2025, geologist and CEO Sidsel Lindsø joined former Equinor exploration chief Tim Dodson to discuss risk aversion, untapped potential, and the future of exploration on the Norwegian Continental Shelf. Their message: It's not about drilling more – it's about drilling smarter.
We have transcribed and translated the interview for our English speaking readers below:
Marius Lorentzen (ML): It’s been a rough day for oil on the stock exchange, and we’re staying with that topic for a bit. In a world where Russian gas is, at least for now, partly out of play, Europe is under serious energy pressure, and heavily reliant on gas imports from the US, the Middle East, North Africa, and not least, Norway: are we actually exploring enough? Should climate policy step aside for preparedness and national security, as the leader of ‘Unge Høyre’ (Norwegian Young Conservatives) has suggested this week – and should that also apply to the Norwegian shelf?
To discuss this – and whether oil companies are playing it a bit too safe – I’m joined by Sidsel Lindsø, founder and CEO of the geoscience consultancy ExploCrowd. Welcome back. And Tim Dodson, well known as Equinor’s former head of exploration, currently a board member at both NEO and Sval Energi, as well as a consultant and advisor. Welcome!
Tim Dodson (TD): Thank you.
ML: What exactly is your criticism here? Is it that investors are too cautious, and oil companies too timid to take real risks, Sidsel?
Sidsel Lindsø (SL): You and I have touched on this before, when you asked me whether exploration was at an all-time high, right? And back then I held back a little and answered that we probably weren’t quite there, because the results weren’t what we had hoped for. The reason is that oil prices are relatively low, and costs have been rising quite significantly lately. That leads to a focus on near-infrastructure exploration. And while that makes sense, it’s a very short-term perspective for Norway Inc. as a nation.
It’s understandable to do that in order to keep infrastructure alive while we still can, but what’s missing is the framework that allows companies to take the kind of risk it actually requires to go further out and systematically search for the bigger discoveries. The ones that can lead to the next major development.
ML: So, [meaning] the next Sverdrup, the next Castberg. Tim, say a bit more about that – because for investors, near-field exploration is attractive. You drill a little, and then within three to five years, production starts and the money flows in. That’s not the case if you find a Sverdrup, a Castberg – or drill a dry well like Korpfjell in the Barents Sea. Then it’s years of waiting, and the costs pile up.
TD: That’s true. But the point we’re raising isn’t about choosing one over the other. If you look at the number of exploration wells being drilled, the overall activity level is actually decent. It’s just that the vast majority of it is near-field exploration. Only occasionally do we see companies drill for bigger targets, the kind that involve more exploration risk. The kind of risk that has been taken with Sverdrup and Castberg.
ML: But where exactly are things being held back? Equinor says, “We’ll drill 20 to 30 wells, and we’ll do that every single year, for a long, long time.” Is the issue more about how those wells are distributed? Is it the exploration managers who are being too cautious – or is someone above them saying, “You’re not allowed to go for the bolder wells”?
SL: It’s all three. If we start with the competence of the exploration teams, we’ve seen an erosion of that over the past ten years. And that’s also been driven by politics. In 2020, exploration was practically declared over, and public bodies – like the Petroleum Directorate – changed names and became the Norwegian Offshore Directorate. Ptil (Petroleum Safety Authority Norway) became Havtil (Norwegian Ocean Industry Authority). So there’s been quite a political pressure, and naturally there’s investor pressure as well. The consequence is that many companies have taken exploration off the agenda altogether and placed it under production. And when you move your development unit – the people generating ideas – into operations, it has consequences. So this is driven by both the market and politics. And the reason we’re raising our voices now is that if we keep going like this, we won’t be able to maintain activity much beyond 2028. And that has consequences.
ML: [Tim,] your former employer has gone out and said they’ll maintain production of 1.2 million barrels a day through 2035. I’ve asked your old colleague, Equinor’s Norway chief Kjetil Hove, about this – because if you look at the charts, it’s clear they need more discoveries to live up to that promise. But is Equinor the problem, because they’re so big? Or is it the smaller players, who focus too much on short-term gain?
TD: I don’t want to point fingers at any one company – I believe this is an industry-wide issue. The production ambitions you mentioned, whether it’s Equinor, Vår Energi, or Aker BP – I think everyone understands that it will take a lot of near-infrastructure discoveries to maintain or reach those targets, given the scale we’re talking about.
And yes, the larger discoveries, like Sverdrup or Castberg, take more time to develop, but that’s where the real volume potential lies. If we think back to the 2000s, no one believed Johan Sverdrup existed on the Norwegian continental shelf. No one believed in Johan Castberg either. But they were there. And if you ask me, I still believe there’s room for big finds that could support standalone developments. Maybe not another Johan Sverdrup with 3 billion barrels recoverable, but a Castberg-sized discovery with 600–700 million? That would do the trick.
ML: Walk us through that a bit – because Sidsel mentioned a ten-year decline. And if you go ten years back, you’re right in the middle of the downturn that followed the 2014 oil price collapse. In 2015 and 2016, we saw layoffs across the board – from operators, including Equinor, and throughout the supply chain. Did that start a gradual erosion of capacity even before the pandemic came along and made it worse?
TD: The pandemic definitely made it worse. Almost every company shifted strategies in response, right? To the green wave, the energy transition, and everything that came with it. And I think there’s a real scepticism out there about how much undiscovered potential is actually left on the Norwegian continental shelf.
Also, we should remember that between 2000 and 2010, not much really happened. It wasn’t until we found Sverdrup, then Castberg and a few others – that exploration got a new lease on life. But that momentum quickly faded again, especially after 2014. Our point isn’t that exploration isn’t happening – it’s that we need to explore differently if we want to unlock the full potential of the Norwegian continental shelf.
ML: We're now entering a period where all the projects under the petroleum tax package are nearing completion – or at least, the yards are starting to report less activity once projects like Yggdrasil, Valhall, and Fenris wrap up. Won’t Kjetil Hove, Karl-Johnny Hersvik, Nick Walker – all the heads of these major companies in Norway – won’t they need a plan for what to do next? Because otherwise, they know perfectly well that their production will start to decline rapidly, and they'll struggle to maintain output. This can’t be news to them, can it?
TD: I think we’re seeing signs that the companies you mention, and others, are becoming more willing to take exploration risk. One of the key challenges right now, and something we raised in our op-ed, is how licences are structured on the Norwegian continental shelf. Typically, you don’t have more than four participants, and the operator often holds 30 to 40 percent. That creates significant financial exposure for a single exploration well. So what we’re suggesting is a sort of joint effort – where you perhaps form a larger group, ideally with the state participating directly through Petoro. By spreading the risk, no single party is overexposed financially on each well.
ML: So Petoro would take a larger equity share – meaning the state assumes more risk, but also stands to gain more if it pays off?
TD: Yes, as part of a strategic drilling program, with a consistent ownership structure.
ML: So Petoro should take a larger stake then?
SL: As part of a broader strategic initiative, yes. I also believe there's significant untapped potential on the Norwegian continental shelf, but we need to test some key geological hypotheses systematically. Right now, we have 23 companies active on the shelf, many of which aren't really exploring. So, what we’re seeing is a bit of trial and error, drilling here and there. But if we coordinated a structured effort, took a few wells that are low-risk but knowledge-rich, those wells would provide insight that supports broader hypotheses. The industry needs to do that now to ensure we use the existing infrastructure wisely. On top of that, Europe is in a position where it needs as much energy from Norway as we can possibly deliver.
ML: Especially when it comes to piped gas, we know it beats the Americans, the Qataris, and the Russians on price. But as we’ve discussed before, Olav Antonio Blaich –Aker BP’s exploration chief – recently made a bit of a comeback, at least for Aker BP’s part in the southwestern Barents Sea. Equinor and Vår Energi are running major campaigns there. So over the coming years, aren’t we basically talking about a collective effort here?
SL: It’s definitely a joint effort in the western Barents Sea, but if you look at the license awards in this round of APA allocations [in January], there was one license awarded. That was probably a joint effort, but it has likely ended now.
TD: I don’t think this is about a lack of identified opportunities, as we’ve mentioned. We have a license structure that works well for the most part, but we also have a situation where if a company identifies a slightly riskier opportunity with good resource potential – it’s not certain that the other partners will agree to it. Every license requires a majority decision. So it ends up being one here, one there, right? And maybe out of ten opportunities presented across various licenses, you’re lucky if one of them is drilled. What we believe is that all ten should be drilled – and then some. But that would require a different ownership structure and a different decision-making process than we have today.
ML: But we should probably ask Kristin Kragseth, the CEO of Petoro, if she’s willing to take on wells alone, and then sell them and create some business for the company to develop the discoveries afterwards. But Tim, you have the unique insight, having been at the top in Equinor, and now you’re on the boards of Sval and Neo on the UK continental shelf. That brings up a question. Given what’s happened on the UK shelf with asymmetric taxes and constant changes – Neo and Harbour seem to be tearing their hair out over it. Could this, combined with the Ukraine war and Europe’s energy crisis, spark renewed interest, with companies again seeing that Norway might not be such a bad place after all – maybe more capital should be allocated here?
TD: I think that’s already starting to happen. When Harbour got involved in this (…) You know, unfortunately, it’s often the case that companies buy into positions, and it doesn’t necessarily mean more companies [on the shelf]. There are very few new companies entering solely to explore. But I think the conditions are absolutely in place – they’ve long been in place in Norway, even before exploration was allowed. There are hardly any better places to explore, given the schemes in place: access to acreage, tax deductions, and so on. So I don’t think that’s the problem. I think it’s more about what we’ve already mentioned – a bit of uncertainty around the remaining resource potential and the financial exposure related to these higher-risk opportunities.
ML: But to find these big discoveries – of course, you don’t know until you find them – but you do have some assumptions and educated guesses. Are the Norwegian Sea and the Barents Sea basically the areas we’re talking about here?
SL: We also have ideas in the North Sea that haven’t been tested.
ML: So even if you don’t find a new Sverdrup, there are still opportunities for significant discoveries?
Sidsel Lindsø: Those are our ideas. And I know that many of these exploration veterans who’ve been part of this journey are still in the companies – but perhaps they’re not being used in the right way at the moment. If we could bring them forward and work more systematically, it would be interesting to see what that might lead to.
ML: When we look at discoveries – in the 2000s, we had the exploration tax refund scheme. That can’t really be repeated, since the tax system now gives you immediate deductions. But it gave us [companies like] Lundin, right? Which led first to Edvard Grieg, then to Sverdrup – and Equinor came in and developed it. These were explorationists – they had no production, nothing – and we had several companies like that. They're practically gone now. Do we need those kinds of companies back – companies crazy enough to test the unusual prospects – or can the larger players take that role?
SL: For me, it’s really about culture. Building the right culture within a company. And if you can create space for those bright minds to come up with concepts and ideas – and test them – that’s what makes the difference. It does make sense to have diversity across companies, but what we’re really suggesting is more cross-company collaboration. Then we can get the best ideas from the best minds, for the benefit of Norway Inc. and the value creation we need.
TD: There’s no doubt that a certain type of company would help. There are exceptions, of course – like DNO’s recent acquisition of Sval. They’ve been doing some solid exploration in recent years. It’s not like others haven’t done anything – OKEA, OMV, and Inpex have all contributed beyond what Aker BP, Vår Energi and Equinor are doing. So yes, it would help. I just don’t have a lot of faith that brand-new exploration companies will enter the market. But what I would really like to see is for the exploration departments that were shut down to be rebuilt. Equinor, for example, no longer has a dedicated exploration department.
ML: I was just about to say – your former role no longer exists. It’s now under Kjetil Hove, right? Anyway, we’ll see what happens. The oil price is at $70 – if it moves to $80 or $90 maybe more funding will be allocated. We’ll be following what gets discovered in the southwestern Barents Sea. Sidsel Lindsø from Explocrowd, Tim Dodson – thank you both for joining us.
