ANNUAL REPORT 2011 - DONG Energy

or fremlie
og gas
BusIness AND STRATEGY
Udvikling af fremtidens
fleksible energisystem
Growth in the production and sourcing of oil and gas
DONG Energy is producing increasing volumes of oil and gas to help meet
the increasing demand for energy
In the years to come, DONG Energy will focus on increasing
its production of oil and gas to help maintain security
of supply and the Group’s earnings. This will be done via
investments in exploration and production (E&P) of oil and
gas from its own fields, for example in the North Sea. The
Group’s equity production of gas will continue to be an important
source of its gas sales. The proportion of oil in the
portfolio will be increased in order to reduce the oil price
risk in DONG Energy’s gas purchase contracts and to ensure
high value creation.
The Group has strong capabilities in oil and gas exploration
and production. The objective is to make use of this
expertise to achieve solid growth in the production of oil
and gas and also safeguard continuous replenishment of
reserves, partly via exploration.
DONG Energy will also secure the supply of gas to the
Group’s markets in Northern Europe by means of a diversified
gas supply strategy, which, besides increasing equity
production, will be based on contracts with other producers
of natural gas, including LNG (liquefied natural gas).
infrastructure and production
DONG Energy has built up an E&P company that has a
strong position in Denmark, Norway and the promising
West of Shetland area in the UK. The total reserves amount
to more than 17 times the annual production (R/P ratio) in
2011, which secures production for many years to come and
shows that, in recent years, DONG Energy has built up a robust
E&P business that has strong capabilities in this field.
In Denmark, E&P has developed its production around
the Siri platform, where major repair work is underway to
extend its life to 2020 and maybe beyond. Furthermore,
E&P has made new attractive finds on the Danish shelf that
can contribute to an extension of security of supply and
value creation from the Danish shelf in the years to come.
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manaGEmEnt’s rEviEw – DONG ENERGY GROUP ANNUAL ANNUAL REPORT REPORT 2011 2011
In Norway, E&P has gained a position among the Top 10
companies, partly based on its position in the large Ormen
Lange gas field. E&P has also contributed to the development
of a model for commercial development of and production
from small, but attractive, fields such as Oselvar
and Trym.
In the area between the Shetland Islands and the Faroe
Islands, DONG Energy has made a number of finds of both
oil and gas. Advanced exploration technology and in-depth
knowledge of precisely the type of subterranean structure
that exists in the West of Shetland area have resulted in
seven out of nine exploration wells being successful. Together
with the French oil company Total, E&P has contributed
to a solution to the challenge in the area in terms of
the lack of infrastructure, as the companies are establishing
a pipeline system in connection with the development
of the Laggan-Tormore gas fields that will create a link
from production in the area to the UK market. DONG Energy
has a 20% stake in Laggan-Tormore.
Diversified gas supply strategy
Until 2006, the gas portfolio consisted primarily of longterm
contracts with Dansk Undergrunds Consortium
(DUC). The portfolio has since become more diversified
with a continued rise in equity production of gas, purchases
from other producers in the North Sea and purchases
on gas hubs. Diversification was increased further
in 2011 via DONG Energy’s co-ownership of the new LNG
terminal Gate in Rotterdam, which became operational in
September 2011, plus new long-term gas purchase contracts.
Diversification is also a key word in the sale of gas,
which now covers DONG Energy’s entire market territory.
A breakdown of gas production and gas sales in 2011 is
shown in a graph on page 25.