Equinor Announces Major Overhaul of Norwegian Continental Shelf Operations to Cut Costs

Equinor is implementing sweeping changes to its operations on the Norwegian Continental Shelf (NCS) aimed at significantly reducing costs and improving profitability, particularly as the region transitions to developing smaller, more marginal deposits. The overhaul, described as the biggest organizational change since 2007, includes sending 1,200 managers to a training camp and streamlining work processes across the company.

The Need for Change

Kjetil Hove, Equinor’s Executive Vice President for Exploration & Production Norway, emphasized the need for these changes as the NCS matures. “The Norwegian continental shelf is mature,” Hove stated. “We go from large discoveries and development projects to more marginal and smaller deposits. With the increase in costs we have seen in recent years, there will be challenges in achieving profitability in the projects if we do nothing.”

According to Equinor data, subsea costs have increased by 90 percent between 2019 and 2024, while engineer hours per tonne delivered have risen by 140 percent and operating costs have increased by 60 percent.

Key Objectives and Strategies

Equinor aims to sustain production in Norway at approximately 1.2 million barrels of oil equivalent per day (MMboe/d) through 2035. To achieve this, the company is focusing on three key areas:

• Increased Exploration: Drilling 100-150 wells annually on the NCS.
• Faster Production: Reducing the time from discovery to production from ten years to between two and three years.
• Cost Reduction: Significantly lowering the cost level through simplification, standardization, and industrialization.

The company plans to develop 75 subsea projects in the next decade, leveraging seabed developments for quicker expansion and connection to existing infrastructure. Equinor’s goals include a 50 percent reduction in the time from discovery to development and a 30-40 percent cost cut per well drilled.

Organizational and Process Changes

The changes extend beyond organizational restructuring to encompass a fundamental shift in how Equinor operates. Over 70 different work processes are being revised to create a common prioritization process across the entire business on the Norwegian Continental Shelf. Key changes include:

• Reduced Meetings: A 50 percent reduction in the number of meetings.
• Industry Standards: Adopting industry standards for equipment rather than relying on tailored solutions.
• Manager Training: Training 1,200 managers, followed by training for 7,000 employees, on modern working methods.

“The costs on the shelf must reach down,” Hove said. “It doesn’t happen by doing more of the old. We need to move away from tailoring and onto off-the-shelf goods. Using industry standards means that we can buy in large quantities and achieve economies of scale, and not redo things from project to project.”

A “Bigger Cake” for All

Hove believes these changes will unlock more opportunities on the NCS. “Then we will build a bigger cake on the Norwegian continental shelf, in that we will be able to bring to life far more opportunities than we would have done without these changes. A bigger cake will signify more to everyone, both society, us as an operator and all our suppliers.”

Equinor expects these long-term collaborations to support its goal of sustaining its Norwegian production at about 1.2 MMboe/d through 2035, requiring annual investments of NOK 60 billion to NOK 70 billion (approximately US$5.96 billion to US$6.95 billion).