Arctic drilling dispute heats up

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As top government officials and business leaders huddled in southern Norway this week to discuss energy and environmental issues, oil and gas exploration plans continue to swirl around Norway’s northern areas. The government’s willingness to consider exploration in colder, deeper and more remote waters than ever before is fueling more debate over the risks of spills and concern for sheer human safety.

Statoil has struck even more oil off Norway, with the help of the "Aker Barents" drilling rig. PHOTO: Aker

Statoil has struck a lot of oil off Norway, and drilling rigs like the “Aker Barents” are likely to be busy in the years ahead as well. PHOTO: Aker

Reports have confirmed that exploration in, for example, the Barents Sea is far more challenging than in any other environment because of extremely harsh weather conditions, and an oil spill would pose major environmental challenges. Resolution of a boundary dispute between Russia and Norway two years ago has nonetheless opened up a rush of interest from many of the world’s major oil companies. The Arctic region is assumed to hold about 30 percent of the world’s uncovered gas resources and 13 percent of uncovered oil resources, according to newspaper Dagens Næringsliv (DN).

In the past few weeks alone, Norway’s own Statoil, for example, has announced plans to drill deeper and farther north in the Norwegian Sea than it ever has, as it builds out the gas field Aasta Hansteen, around 300 kilometers west of Bodø. With a price tag of around NOK 55 billion, it took time for Statoil and its partners to agree on a plan but they handed one over to the oil ministry on Tuesday. It was immediately met with opposition from environmentalists.

Norway's Oil & Energy Minister Ola Borten Moe (far right) signing Norway's first deal to explore for oil outside Norway's boundaries, with his Icelandic counterparts Dr. Guðni A. Jóhannesson and Steingrímur J. Sigfússon. PHOTO: OED/Håkon Smith-Isaksen

Norway’s Oil & Energy Minister Ola Borten Moe (far right) signing Norway’s first deal to explore for oil outside Norway’s boundaries, with his Icelandic counterparts Dr. Guðni A. Jóhannesson and Steingrímur J. Sigfússon. PHOTO: OED/Håkon Smith-Isaksen

Oil and Energy Minister Ola Borten Moe of the Center Party, meanwhile, has been enthusiastically promoting more exploration all along Norway’s continental shelf and now is keen to venture onto Iceland’s as well. Last week, he and his Icelandic counterparts struck an historic deal in which the Norwegian state itself will drill for oil outside its own borders. State-owned Petoro, which holds Norway’s director ownership of oil fields, has been granted 25 percent of the first of two exploration licenses on Iceland’s continental shelf, in an area between Iceland and the island of Jan Mayen. Moe also wants to open up waters around Jan Mayen to exploration.

“The world needs Norway’s oil,” claims Kristin Skogen Lund, head of the Norwegian employers’ organization NHO, which was holding its annual conference in Oslo this week and highlighting energy and environmental issues. She hails Moe’s enthusiastic (some say “aggressive”) approach to oil exploration, and told newspaper Dagsavisen this week that Norway has “clean” petroleum operations and resources that are in demand globally.

While Lund was praising Moe, however, Silje Lundberg of the environmental group Natur og Ungdom was grilling him at their own annual meeting in Fredrikstad earlier this week. To them, Moe is the “arch enemy” and the young environmentalists are particularly opposed to any plans for drilling around the scenic areas of Lofoten, Vesterålen and Senja. Moe recently announced that he favours exploration there, but will recommend postponement of any drilling out of consideration to the enormous fishing industry in the area. The oil industry itself recently proposed a new cooperation with the fishing industry, which is worried that an oil spill and even seismic exploration will ruin their fishing grounds, but it was rather firmly rejected.

Huge risks
The risks of exploration in the deep, cold and remote waters of the Arctic are indeed formidable, as a series of articles in DN the past few months has pointed out. The Arctic region and Barents Sea consist of numerous basins, some of which have experienced oil and gas exploration for many years, while others have so far remained untouched. The oil ministry is currently working on impact assessment and geological mapping related to petroleum activity in specified areas in the southeastern Barents Sea, Norway’s new territory bordering Russia, as well as for the waters around the island of Jan Mayen. The ministry is working towards presenting the question of opening up these areas to the Norwegian Parliament later this year.

Oil Minister Ola Borten Moe, shown here fishing off Lofoten, claims he's listening to the concerns of the fishing industry and environmentalists. They're not so sure. PHOTO: Oil & Energy Ministry

Oil Minister Ola Borten Moe, shown here fishing off Lofoten, claims he’s listening to the concerns of the fishing industry and environmentalists. They’re not so sure. PHOTO: Oil & Energy Ministry

Part of the area is covered in ice year-round, and an oil spill in the Arctic may reach the edge of the ice within a few hours, the government’s own experts said in a report out for evaluation, according to DN. The harsh, cold and dark environment will complicate a clean-up job as Norway does not yet have the proper technology to remove spills from ice or have equipment that would work well under such extreme cold conditions. Environmentalists are fighting hard against opening up the area for these exact reasons.

“Consequences may be serious, especially for the northeast location,” the report reads, according to DN.

The report continues to list potential repercussions of an oil spill, saying 80 percent of such a spill would be impossible to clean up during winter, which is long in this part of the world. Temperatures in the area may drop to below minus-25C, it is icy, dark and far from land. Under optimal conditions during the summer, only a maximum of 40 percent could be cleaned up. Lighting spilled oil on fire may be the best solution, experts say, according to DN.

Another issue involves human safety. If any workers on remote rigs in stormy weather were to become seriously ill or injured, for example, it would take a long time to get them to hospital on the mainland. Rescue helicopters may not be able to reach platforms in some areas of the Barents. Current emergency preparedness simply isn’t good enough to handle emergencies on report oil and gas installations in treacherous waters.

Oil still fuels the welfare state
Oil and gas have been crucial for Norway’s financial growth and in financing the Norwegian welfare state after it was discovered in its waters in the late 1960s. Over more than 40 years, petroleum production on the shelf has added more than NOK 9000 billion to the country’s GDP. Norway is Europe’s largest oil producer, the world’s second-largest natural gas exporter and an important supplier of both oil and natural gas to other European countries.

The oil ministry says there are good chances of discoveries and subsequent production in the southeastern Barents Sea, which will help to maintain Norway’s oil and gas production from about 2030 onwards. Increased activity in the northern area may also produce thousands of new jobs for the region of Finnmark.

“The fact that we now see the possibility of significant, long-term petroleum activity in the Barents Sea can mean great opportunities for Finnmark County and Northern Norway,” Moe says. “Development of new discoveries will create the greatest possible values for society, and can contribute to regional ripple effects.”

“The assessments of environmental consequences show that ordinary petroleum activity will have little impact,” the ministry has reported. “A major, sudden spill may have a negative environmental effect, but the probability of such an incident is very low.”

Numerous consultative bodies involved in the impact assessment process have voiced critical opinions about opening up these areas, such as the Climate and Pollution Agency, the Civil Aviation Authority, the Petroleum Safety Authority, the Norwegian Polar Institute and many other environmental organizations. Most say Norway is not ready yet because of a lack of sufficient and effective equipment, lack of knowledge about the area, poor infrastructure and high risk for disastrous consequences following an oil spill.

Some oil industry players agree, with Total of France declaring that it’s too risky to drill in the Arctic and Petoro’s chief executive Kjell Pedersen saying it will probably take 10 years before any real development takes place around Jan Mayen. Statoil, which has been diversifying for years and recently invested another NOK 3.3 billion in expanding its controversial shale gas operations in the US, is also investing heavily in new technology all the time. It announced last month along with oil services firm Baker Hughes that they think they can revolutionize drilling, making it safer and more cost-effective.

“As an oil man, you have to have faith,” Pedersen, who thinks the seabed around Jan Mayen holds great resources, told DN after the license deal with Iceland was signed. “There are structures that can hold lots of hydrocarbons there. The question is whether eventual discoveries will be big enough.”

Views and News from Norway/Aasa Christine Stoltz and Nina Berglund
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