No. 3, 2012


Oil of Russia magazine talks to Ola Borten Moe, Norways Minister of Petroleum and Energy

Since the first oil discovery on the Norwegian shelf in 1969 a strong national oil industry has developed in the country. The new bright prospects for the country's oil and gas industry and for international investors open first optimistic exploration results at the new Norwegian areas in the Barents Sea.

Q: Mr. Moe, what were the key discoveries on the Norwegian Continental Shelf in 2010-2011? What was their impact on the state of the country's oil industry?

A: 2011 was a very successful exploration year in Norway. Both the largest and the third largest discoveries in the world were made on our continental shelf. The largest was the Johan Sverdrup discovery in the North Sea, in one of the more mature parts of our continental shelf. The other was the Skrugard/Havis discovery in the Barents Sea. This was, on the other hand, in a very frontier part of our shelf. The Skrugard/Havis discoveries combined contain between 400 and 600 million barrels of oil.

Naturally, the effects of these discoveries on the industry have been very positive. We have proven that even the most mature parts of our continental shelf can still contain positive surprises. For the Barents Sea, the new discoveries are very important for the focus on the Norwegian high north. This is an area where the geology is little known and with very limited infrastructure. The Skrugard/Havis discoveries will provide new infrastructure in the area, which will be positive for further exploration. Together with recent gas discoveries such as Total's Norvarg and Lundin's Skalle, they have really established the Barents Sea as an interesting and promising petroleum province in Norway. The industry has confirmed this interest for the high north through their comprehensive nominations for the 22nd Licensing Round.

Q: How would you assess the further prospects of mature Norwegian offshore fields?

A: The rate of recovery in Norwegian oil and gas fields is already high by international standards. Even so, according to current production plans, more than half of the proven oil resources in Norwegian fields will be left behind when production ends. Improving recovery by even just a few percentage points will create enormous value for the Norwegian society. Therefore, increased recovery is a key priority for Norwegian authorities.

Ways of improving recovery from Norwegian fields are many and varied - just like the reservoirs involved. Increased Oil Recovery (IOR) methods include among other well management, improved seismic surveys and injection of water, gas, chemicals or combinations of these.

Offshore subsea compression at Asgard and Ormen Lange's pilot test for subsea compression are two projects that have received international attention; aiming at improving gas recovery significantly.

Q: In 2011 a treaty on the delimitation in the Barents Sea and the Arctic Ocean entered into force. What new opportunities do you see for joint projects of Norwegian and Russian companies?

A: Qualified Russian oil companies have the possibility of becoming licensees on the Norwegian Continental Shelf irrespective of the entry into force of the delimitation agreement.

Statoil and Rosneft recently entered into an agreement whereby Statoil is to carry out joint petroleum activities with Rosneft in the northernmost part of the Russian part of the former disputed area.

The delimitation treaty itself includes provisions relating to oil and gas fields extending across the delimitation line. Such fields are to be exploited jointly as a unit. Whether any unitization will actually take place remains to be seen until exploration drilling is well under way in this region.

Q: How are geological surveys progressing on the Norwegian part of the former "grey zone"?

A: Very well, indeed. The Norwegian Petroleum Directorate started their geological surveys to map the new Norwegian areas in the Barents Sea last summer. Surveys will continue this year and into 2013. In the southern part of these new Norwegian areas, the Norwegian Government has initiated an opening process for petroleum activities aimed at awarding new production licenses. A White Paper to the Norwegian parliament on this issue is planned for the spring of 2013.

Q: Norway's Statoil is a big player in the American shale gas industry. What do you think of the future risks for gas prices coming from shale gas production in Europe and Asia?

A: I believe that natural gas will play an important role in the energy mix in the years to come, and new discoveries and production of unconventional gas may increase availability and security of supply. I also believe in the role of Norway as an important gas supplier for future generations.

Q: As the key player of the offshore oil and gas industry, what lessons did Norway learn from BP's Gulf of Mexico oil spill?

A: The Macondo accident has influenced petroleum activities worldwide. Norway is committed to learning from the accident to avoid similar accidents in the future.

That being said, the investigations into the accident have so far concluded that known factors caused the accident. The risk level on the Norwegian Continental Shelf has not increased because of the Macondo.

On the Norwegian Shelf, stricter requirements to licence groups in deep water and/or high pressure/high temperature have been set to ensure sufficient operational experience. Further actions will be implemented as appropriate.

Q: In May this year the Technology Center Mongstad for testing carbon capture was launched. What is special about this Center? What makes Norway so devoted to the advancement of the CCS technology?

A: The CO2 Technology Center Mongstad is the world's largest and most flexible technology center of its kind. It can test two different technologies on two different exhaust streams. The results from testing at TCM are relevant for both coal and gas fired power plants. The two technologies that will be tested in the first phase are Alstom's Chilled Ammonia Technology and Aker Clean Carbon's Amine Technology. The CO2 Technology Center Mongstad has a capacity of 100 000 tons of captured CO2 per year. Its owners are Gassnova (on behalf of the Norwegian State) (75,12 %), Statoil (20 %), Shell (2.44 %) and the South African company Sasol (2.44 %).

Secure access to affordable and clean energy is a necessity for economic development and a key objective of all nations. No country has the luxury of ignoring their natural resources. Realistically fossil fuels will remain an important part of our energy mix and it is an unavoidable source to lift millions of people out of poverty. This simply means that we must find ways of using our fossil fuels in a sustainable way.

Nature has blessed Norway with an abundance of natural resources. Most of our electricity comes from renewable hydropower. Our long and windy coastline is the source of our next generation of renewable energy - wind power. But, it is the export of vast resources of oil and gas that have been the driver of the Norwegian economy during the last decades. Natural resources will remain important to support Norway's economic development. It is therefore very much in the interest of Norway to help develop technologies that can reconcile continued use of fossil energy with limits on emissions of greenhouse gases.

Q: How large is the share of "green energy" in Norway today? What expectations does the Norwegian Ministry of Petroleum and Energy have for the development of alternative sources?

 A: As mentioned earlier, Norway's production of electricity comes almost exclusively from hydropower. Norway is the sixth largest hydropower generator in the world and the biggest in Europe. The Norwegian hydropower industry is more than a century old.

Hydropower accounts for roughly 96 per cent of the total installed production capacity. The average production capability of Norway's hydropower stations is estimated to be about 126 TWh per year. Annual production varies substantially with precipitation levels.

The share of energy from renewable sources in gross final consumption of energy is today about 61 per cent. Norway's target is 67,5 per cent final gross consumption from renewable energy in 2020. The contribution of renewable electricity production is an important part of this. The Norwegian renewable share is determined through an agreement on electricity certificates market with Sweden. This common market was established on January 1, 2012. Through the green certificate market Norway and Sweden have a common goal of increasing the electricity production from renewable energy sources with 26,4 TWh in 2020.

New electricity production in Norway will mostly be wind and hydropower. Small-scale hydropower has been increasingly developed in recent years. In a long perspective, energy production from off-shore wind power and tidal power might become more important as well.

Finally, the Government Agency Enova is an important instrument in the Governments efforts towards a more environmental friendly use and production of energy, and the development of new renewable energy technologies. Areas of priority for Enova are renewable heating, energy efficiency, energy recovery and the conversion to the use of renewable energy in the industry, in addition to development and demonstration activities of new renewable energy technologies.

Enova holds an important role in the latter part of the innovation chain, in which new energy technologies matures and are introduced to the market, and new energy solutions are employed.        - Vladimir Akramovsky

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