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Sunday, April 14, 2024

Parties unite over rig power plans

Norway’s opposition parties have banded together to demand that oil companies power the entire Utsira High oil field by electricity from the shore, not just the Johan Sverdrup field as planned. The parties, fearing that the government would give in to Statoil’s claims that full electrification is too expensive, argued it was the only way Norway could come close to meeting its emissions reduction targets by 2020.

Johan Sverdrup is among the largest oil fields on the Norwegian shelf, according to Statoil, and will at its peak contribute 25 percent of the production from the entire Norwegian Continental Shelf. IMAGE: Statoil
Johan Sverdrup is among the largest oil fields on the Norwegian shelf according to Statoil, and will at its peak contribute 25 percent of the production from the entire Norwegian Continental Shelf. In February Statoil agreed to run electricity to the field from the shore, but the opposition parties said on Friday the government must require all fields within Utsira High to be powered by cleaner, shore-based electricity. IMAGE: Statoil

The Labour, Liberal, Christian Democrat, Socialist Left, Center and Greens parties formed a parliamentary majority calling on oil companies to lay power cables to the entire Utsira High area, from the first day. “We have agreed to ask the government to require the establishment of a solution for power from land for the whole Utsira area’s power needs,” said Labour’s energy spokesman, Terje Aasland. The move would provide cleaner energy generated by Norway’s hydro-electric power schemes, reported Norwegian Broadcasting (NRK).

Delighted environmental organizations were calling the united opposition’s move an “historic victory” and claiming that powerful state-owned oil company Statoil had been firmly “put in its place.” It was time, the politicians and climate activists said, that important decisions regarding the climate and the environment be made in the Parliament, not by Statoil and the Oil Ministry.

Statoil’s Johan Sverdrup field, within Utsira High, is already in the initial construction phase. The opposition’s demands included setting requirements in the Sverdrup field license conditions for an area-wide electricity solution, which would also include the soon to be commenced Gina Krogh, Edvard Grieg and Ivar Aasen fields. The parties also want cables to connect the installations laid as part of the Sverdrup start-up phase. Looking forward, the opposition argued these measures should also form the foundation for the development of further oil activities in the southern part of Utsira High.

Aasland said it was now up to the Conservative-led government to come back to Parliament with a clear timeframe to get the electrification work underway. “We are very keen to follow up on the climate agreement’s commitments on emissions reductions by 2020, and are confident this entails no risk of delays with the project,” he said.

Government inaction
A report by the Environment Directorate (Miljødirektoratet) earlier this year found that the electrification of the entire Utsira High field was the key to meeting Norway’s emissions reduction target. Norway’s climate agreement aims for a two-thirds cut in emissions nationally by 2020.

However, Statoil’s proposal in February was to only connect the John Sverdrup field to shore-based power. Power generation plans for the other fields had not been revealed, but NRK reported it was likely they would at least initially be powered by dirtier gas turbines. Oil rig electrification would provide an estimated emissions cut of between 600,000 to 800,000 tonnes of CO2.

“When the oil and energy minister has not taken steps to reach Norway’s climate goals, then Parliament must do it,” said the Socialist Party’s Heikki Holmås. “Climate change already affects every human being on the earth, and so it’s vital that we in Norway prevent large new emissions increases.”

The opposition’s statements are somewhat ironic, given the criticism the Labour, Socialist Left and Center parties received themselves for failing to make any real headway on emissions reductions when they were in government until last September, including the failed Mongstad carbon capture plant plans. As newspaper Dagens Næringsliv (DN) pointed out in a lengthy article last weekend, electrification of new installations on the Norwegian continental shelf has been endlessly discussed by politicians since the 1990s. In 2011 it became a requirement for oil companies simply to consider shore-based power for new fields and major renovations.

Costs versus benefits
The parliamentary committee on energy and environment held a closed hearing on Monday, aimed at getting more insight into the figures and costs which aren’t published by the ministry or oil companies. Critics of oil field electrification have argued the measure makes projects much more expensive, with little impact on global climate change. Those in favour say electrification can cut CO2 emissions by 4.6 million tonnes a year.

A new oil rush is coming, reported DN in its in-depth investigation published on Saturday. The four new oil fields to be opened in Utsira High over the next five years are expected to account for 30 percent of Norway’s oil production by 2025, generating revenues worth NOK several hundred billion. In the past 20 years, new technologies have extended the lifespans of several fields, production has increased, and greenhouse gas emissions generated from the offshore sector have increased from less than 8 million tonnes a year in 1990 to more than 14 million tonnes currently. There have never been so many oil and gas fields operating in Norway as in 2013.

DN reported that field electrification never took off, initially because power demand on the shelf was expected to drop away after the year 2000, then because an expensive electricity deficit was predicted, then EU emissions trading schemes were expected to make electrification extremely expensive. All the predictions turned out to be wrong.

British Petroleum’s (BP) Valhall oil field has been successfully fully powered by electricity. It lies 100 kilometres further offshore that Utsira, and cost NOK 1.8 billion (USD 30.3 million) to power. Statoil estimated it would cost NOK 12 to 16 billion to run electricity to Utsira. BP reported shore-based power had not been a huge investment but had significantly reduced operational and maintenance costs, increased gas sales, reduced the number of staff needed on the platform, and improved regularity. The platform’s emissions dropped by 250 tonnes of NOx and 300,000 tonnes of CO2 a year, roughly the same amount as 100,000 cars.

Norway's parliamentary opposition parties banded together on Friday to demand the government and oil companies implement full electrification of installations in the Utsira High field. PHOTO:
Norway’s parliamentary opposition parties banded together on Friday to demand the government and oil companies implement full electrification of installations in the Utsira High field. PHOTO:

Time to act
The Liberals said it was time to make tough decisions on Utsira, while the Christian Democrats said the opposition parties’ demands on full electrification were an environmental milestone. It’s the first time the two parties, which generally support the coalition, have gone against the Conservatives and Progress Party on environment issues. The Greens said electrification would only solve the production side of the emissions issue, while 95 percent of emissions came from the use of oil.

The Progress Party’s Oskar Grimstad said running full shore-based power to Utsira would be too expensive compared to the economic advantages, and the government needed to look elsewhere to reach its emissions reduction targets. “There are a number of emissions from both cars and industry,” he told NRK. “We must go in and look at these.”

Grimstad reminded the Liberals and Christian Democrats that their support agreement with the coalition meant the parties were obligated to consult each other before joining any majority that would have significant budgetary implications. NRK reported later that the government parties were caught unaware of the opposition’s unified stance on the electrification issue, and that it was “untidy” for them to have bypassed discussion in open committee. Woodgate



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