Environmental organizations were quick to protest, as has the Norwegian government’s former partner, but Prime Minister Erna Solberg hopes she’s now settled just how far north oil exploration and production can be allowed. As long as oil prices remain low, however, the bigger question is whether oil companies will even be interested in more expensive and risky projects in the Arctic.
Current market chaos in the oil industry has dampened interest in Arctic exploration considerably. After last month’s oil price collapse, the value of Norway’s oil has fallen even further, down to less that USD 20 a barrel at some points this week. Oil companies would need at least triple that, if not more, in order for Arctic oil and gas fields to be profitable.
Solberg’s government nonetheless forged ahead with its proposal for the framework needed for at least the next five years. “We have settled on a solid compromise,” Solberg said at a press conference Friday after her so-called “management plan” for Norwegian seas was sent to Parliament for consideration.
It involves moving the current northern border for petroleum activity in the Barents Sea slightly south of the existing imaginary line known as the iskant (ice edge), but conveniently encompassing areas where the government already has doled out licenses. “None of the exploration licenses already issued will be affected,” Solberg assured oil companies who bid for them. She also stressed that the new “ice edge zone” will barely affect Norway’s areas of the Barents that already are open for drilling and production.
Solberg, her new Oil & Energy Minister Tina Bru from Solberg’s own Conservative Party and her Climate- and Environment Minister Sveinung Rotevatn of the Liberal Party all claimed the new ice edge proposal also addresses environmental concerns. “The management plan we’re presenting today takes care of the environment at the same time it allows for fishing, shipping, petroleum projects and other important businesses,” Solberg stated. “It lays the foundation for comprehensive management of Norwegian ocean areas and a sustainable ocean economy.”
Small partners claim victory
The “solid compromise” to which she referred was hammered out between her Conservatives and their remaining small partners in her minortity government, the Liberals and Christian Democrats. Both smaller parties and environmental advocates had pushed hard to move the ice edge much farther south, in line with the recommendations of all the environmental, wildlife, climate and oceanography experts consulted. They wanted the ice edge zone to encompass an area defined as where there was only a 0.5 percent probability that ice would physically be present in the month of April. The current zone involves a 30 percent probability, meaning that it would have allowed much more oil activity if allowed to stand.
The government settled on an area where ice will now likely be present 15 percent of the days in April, the month in which ice extends farthest south. In practice, that means the new “ice edge” will be moved south, but not by much, and will closely follow the existing edge.
Both Rotevatn and Christian Democrats’ leader Kjell Ingolf Ropstad nonetheless insisted they could claim victory, if only by warding off a government proposal to move the ice edge farther north and thus open up even more of the Arctic to the oil industry. “The northern Barents is biologically the richest and most productive area of the Arctic,” Rotevatn said. “Climate change makes the ice edge zone and species found there more vulnerable to things like an oil spill. With a border at 15 percent of ice frequency, we take better care of the environment and reduce the risk of damaging sensitive nature.”
Oil Minister Bru, meanwhile, claimed the proposal also “assures the oil and gas business of stability and predictability,” while Ropstad was relieved that a “dynamic” definition of the ice edge (which could move it farther and farther north as ice melts, thereby compounding climate change) was rejected. That’s the definition sought by the Progress Party, which withdrew from the government in January and has threatened to topple Solberg’s government if the ice edge wasn’t moved farther north. They now claim they’re willing to negotiate, but haven’t backed down on their threat.
Oil industry appeased
In trying to please the oil industry and preserve the jobs it creates, however, Progress is widely viewed as making empty threats. Oil companies are expected to be satisfied with the government’s compromise, not least because several Arctic exploration projects so far have not resulted in enough oil or gas to make them attractive. Few if any companies appear keen on developing expensive and risky oil fields even farther north in the Arctic, at least now. Demand for oil and gas is also now viewed as unlikely to reach pre-Corona levels, because of huge supplies, economic turbulence and climate concerns that already were cutting consumption even before the Corona virus emerged.
The battle over the ice edge now heads for Parliament, where organizations like WWF, Greenpeace and Friends of the Earth are likely to lobby hard to move the ice edge farther south. Greenpeace was already claiming on Friday that “the interests of the oil industry have once again been put before the scientific advice. The state’s own environmental experts have warned against oil drilling in these areas. The credibility of the government and the Parliament is now at stake.”
WWF was also disappointed, claiming the government had shown a lack of confidence in the recommendations of its own professional experts, while Friends of the Earth also blasted how the government defied expert advice. The Supreme Court has also agreed to hear a lawsuit called The People vs Arctic Oil, which argues that Norwegian petroleum activity in the Arctic violates Norwegian constitutional guarantees to a safe and healthy environment. Still others argue that allowing risky and expensive oil drilling farther north in the Barents can ultimately cost the state, instead of generating new oil revenues, if oil and gas aren’t found.
With Progress mightily opposed to moving the ice edge south, the government would need support from the Labour Party, which hasn’t committed itself but claims it will lean in favour of the environment. The Center Party hasn’t committed itself either, while the Socialist Left and Greens parties want to move the ice zone as far south as possible.