Norway seeks new reserves, worries conservationists

Jun 17, 2006, 3:59 GMT

Oslo - As the world's seemingly insatiable thirst for oil and gas continue to grow and known reserves in the North Sea are dropping, the search for new reserves has homed in on the Arctic waters off northern Norway.

Seeking to balance energy and environmental needs, Norwegian politicians are torn between the need to allow oil companies to drill for oil and gas in the Arctic sea areas, and the request to conserve important fish breeding grounds and coastal areas.

Environmental groups including Friends of the Earth Norway are campaigning to protect the Barents Sea which is home to rich fish stocks, large colonies of seabirds and mammals including seals, whales, and polar bears.

'It is the last remaining wilderness in Europe, with little impact from man,' said Bard Lahn, head of Friends of the Earth Norway that is opposed to any drilling.

'We do not want any oil or gas activity in the Barents Sea. First of all, Norway needs to become less dependent on oil and gas,' Lahn said.

Friends of the Earth Norway and environmental foundation Bellona say the Barents Sea is vulnerable, and warn that oil spills and contamination from chemicals could affect spawning fish. That, in turn, could jeopardize the livelihoods for fishermen as well as jobs in the fish and fish-farming industry, and the tourist sector.

Biological recovery after an oil spill or discharge of chemicals is known to take longer in cold Arctic waters.

The Norwegian coalition government, voted into office late last year, recently presented a management plan aimed at striking a balance between the conflicting interests.

The plan, due to run up to 2010, was the outcome of tough talks between Prime Minister Jens Stoltenberg's Labour Party regarded as more favourable to opening up the pristine sea areas, and the more reluctant Centre Party and Socialist Left Party.

With elections looming in a little over three years, new lineups could come into to play. However, the opposition has also been divided over how to tap into the oil and gas wealth believed to be waiting in the far north.

For the time being, the oil and gas exploration in a 50-kilometre wide zone from the coast will generally be put on hold.

Nonetheless, Unni Berge, oil issues advisor for the environmental group Bellona, argues that the plan does not go far enough.

Bellona has adopted a two-pronged approach, she said. While trying to block exploration in general, Bellona is also pushing for tougher controls and zero emissions of carbon dioxide once production or exploration licences have been approved.

Opposition to exploration of the scenic areas near Lofoten and the surrounding archipelago in northern Norway has so far resulted in a halt on exploration.

Since 1995, Norway has produced some 3 million barrels of oil per day. During 2006, the Petroleum and Energy Ministry estimate the average production of Norwegian crude oil and natural gas liquids (NGL) will be up to 2.8 million barrels per day, but climb to 3 million barrels in 2007.

Sales of gas were estimated to reach 87 billion square cubic metres in 2006, and increase during the coming years to 120 billion square cubic metres in 2010.

Contributing to that increase is production from the Ormen Lange and Snohvit gas fields operated by Norway's main energy companies Norsk Hydro and Statoil.

Energy sector visitors have recently been streaming to the world's northernmost city, Hammerfest, where Statoil is completing a facility for liquified natural gas (LNG) from Snohvit.

A 145-kilometre-long pipeline will transport gas tapped from wells some 250 to 345 metres underneath the Barents Sea to a special refrigeration facility where the gas is cooled to -163 degrees Celsius, making it easier to transport by ship. Special LNG ships are expected to take the gas to Spain and the United States.

'The investments total some 58.3 billion kroner (9.6 billion dollars),' Statoil spokesman Sverre Kojedal said, adding the Snohvit field was due to go online in the summer of 2007.

The field is expected to produce gas for 25 to 30 years.

Both Statoil and rival Norsk Hydro hope to be selected as partners when Russia decides to start offshore production from the rich Stockman field, way east of Snohvit in the Barents Sea.

Norsk Hydro is completing a 1,200-kilometre-long gas pipeline that stretches from Nyhamna on the Norwegian west coast to Easington in Britain.

The European commissioner for enterprise and industry, Guenther Verheugen, recently visited Hammerfest and urged Oslo to work together 'closely' with Russia in the Barents Sea, noting that close cooperation was a means of averting potential conflicts over energy.