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Energy in the high north – addressing the arctic challenge

The frigid waters of the Barents Sea teem with a treasure trove of natural resources. Rich stocks of cod, herring and capelin feast in the ocean’s chilly depths. Cold-water coral reefs, hotbeds of marine biodiversity, scatter the ocean’s floor, offering...

But the Barents Sea is home to another kind of treasure – as much as 25% of the world’s remaining oil and gas resources are thought to be hidden here and under the Arctic Ocean. With the International Energy Agency predicting an increase in global energy demand by 53% by the year 2030, the pressure on the High North is immense. Global climate change and the melting of the polar ice cap will also contribute to the increased pressure to develop Arctic resources. In the face of this demand, the Norwegian Government has set the highest standards for developing arctic petroleum resources, including the strongest possible protection for the region’s biological resources.

“The High North will always be important to Norway because we are the steward of large sea areas that include some of the richest fishing grounds on earth,” says Jonas Gahr Støre, Norwegian Minister of Foreign Affairs, in a key speech in Helsinki last summer on opportunities and challenges in the Norwegian Arctic regions, dubbed “the High North” by the Government. “The same goes for petroleum. Oil and gas production in the cold waters of the Barents Sea poses huge environmental and safety challenges. We take a systematic and methodological approach to opening new areas for petroleum activities and awarding exploration and production licenses on the basis of clear rules.”

Among those rules is a requirement that there be zero discharge to the sea for all petroleum activities, and that vulnerable areas of the marine environment be kept off-limits to petroleum production. The Government, through the auspices of agencies such as Bergen’s Institute of Marine Research and the Geological Survey of Norway, along with private companies such as Akvaplan-Niva and Eni Norge are investing heavily in research programmes to map and understand the Barents Sea environment to improve safeguards for the region.

The expertise that Norwegian companies build as they respond to Government requirements puts the country’s industries in a unique leadership position, enabling them to export these skills to other nations facing the same climate and environmental challenges.

Norway’s petroleum industry has pioneered new approaches to oil and gas development to protect the fragile environment of the Barents Sea.
© Trym Ivar Bergsmo / StatoilHydro

Clean Energy is Green Energy

Global climate change is an integral part of the Norwegian Government’s High North protection plan, Støre says. “On the one hand, we seek to produce more of the fossil fuels that the world needs,” he notes in his Helsinki speech. “On the other hand, we seek to be among the most advanced and committed countries when it comes to reducing the environmental impacts of energy production and use…Our vision is to move towards de-carbonization through CO2 capture and storage that enables continued use of fossil fuels without damage to the atmosphere.”

One expression of that commitment can be seen in Snøhvit, StatoilHydro’s NOK 58 billion gas project located 140 km north of Hammerfest, in northern Norway. Carbon dioxide dissolved in Snøhvit’s natural gas is being extracted and reinjected into a subsea formation underneath the gas-bearing field. All told, when Snøhvit’s Melkøya processing plant is operating at full capacity, some 700,000 tonnes of CO2 per year will be reinjected into the subsea formation, making the project Norway’s second largest full-scale carbon capture and storage effort.

“By reinjecting CO2 beneath the seabed we strongly reduce greenhouse gas emissions at Melkøya. We will achieve an environmental benefit while we develop our expertise on carbon injection which may be useful in other areas,” said Edvin Ytredal, senior vice president for Snøhvit operations, in an announcement in April 2008, when the carbon storage programme was begun.

Eventually the entire Snøhvit facility could include CO2 capture and storage, if Norwegian environmental groups such as Bellona have their way. The Norwegian Pollution Control Authority would like StatoilHydro to develop an overall CO2 plan for the facility, a move that Norwegian environmental groups fully support.

New Challenges, New Technologies

With environmental protection a

Snøhvit, 143 km north of Hammerfest, is the first offshore development in the Barents Sea. The Snøhvit project has no surface installations, and involves bringing natural gas to land for liquefaction and export to Europe and the United States.
© StatoilHydro

s the prerequisite for any petroleum-related projects in Norwegian waters, the Government’s policy has fuelled an explosion of new strategies and technologies that preserve the environment while allowing for oil and gas extraction. This technology boom spans the range from companies directly involved in oil and gas production, such as StatoilHydro, the state-owned oil company, and Aker Solutions, a contractor and supplier of systems and equipment, to companies that play a supporting role, such as DNV, an independent foundation that aids companies in managing risk, and Multiconsult/Norplan, which helps in managing complex offshore and onshore projects.

Without question, the most visible Norwegian project is StatoilHydro’s Snøhvit. But one of Snøhvit’s most surprising features is also one that is essentially invisible: Snøhvit is the first-ever oil and gas development in Norwegian waters where there is no surface installation – no platform. Instead, a subsea installation in 300 metres of water is linked to the mainland by a 140 km long multi-phase pipeline – itself a technological wonder. Both the subsea platform and the pipe are specifically designed not to interfere with the important fishing or fisheries habitat in the region.

This subsea approach has continued to serve the petroleum industry well, and has been pursued by a number of firms, including FMC Technologies and Aker Solutions. Now these companies are among the leaders in providing subsea solutions across the globe. At the beginning of 2008, Total awarded FMC Technologies the world’s largest-ever subsea contract for the Pazflor field in

Angola, worth USD 980 million. All told, the company expects to deliver 49 subsea units to the project. And companies such as Nexans Norway AS, which produces optical fibre and copper cables and cabling systems, were able to apply their advanced technology to Snøhvit, producing a 140 km, world-record length of undersea umbilical cable to link Snøhvit’s subsea platform to the land.

Local Spinoffs, Regional Markets

In addition to its international significance in bringing Barents Sea gas to Europe and the United States, Snøhvit has had more local implications: more than NOK 3.5 billion in contracts have been awarded over the course of the project’s construction to companies in northern Norway. The Snøhvit boom encouraged more than 350 firms from Finnmark, Troms and Nordland counties to join forces to create Petroarctic, a trade association for companies supplying the offshore industry, including the rapid development in the Russian Arctic and other areas that can use Norway’s technological expertise in the north.

A number of Norwegian firms have already been at work in the Sakhalin area, including Novenco AS, which supplies heating, ventilation and air conditioning services to the offshore industry, AS Trans Construction, which provides containers, modules and other welded structures for both offshore and onshore projects, and Aker Solutions, which was the main contractor for the gravity base structures for the Sakhalin II project. Closer to home, companies such as Ølen Betong, Norway’s largest supplier of ready-mixed concrete and concrete structures, have opened branches in Murmansk.

Norwegian companies have begun to open branches in Murmansk, Russia.
© Harald Pettersen / StatoilHydro

Drilling Rigs, FPSOs & Safe Seas

Anticipation of future development in the Barents Sea and beyond have led Aker Drilling AS to design its Aker 6-e semi-submersible drilling rig, specifically designed to operate in harsh Arctic conditions. Two of these state-of-the-art rigs, the Aker Spitsbergen and Aker Barents, are scheduled to commence drilling on the Norwegian Continental Shelf in late 2008 and early 2009 respectively.

Another large project coming on line is the Goliat oil field, 85 km northwest of the town of Hammerfest and 50 km southeast of Snøhvit. Eni Norge has been awarded the contract to develop Goliat, and will use an offshore floating processing and storage unit (FPSO) with subsea wells. Sevan Marine and Aker Solutions have been tapped as finalists in the competition to develop a specialized FPSO for Goliat, which a decision due by the end of 2008. Calculations show that Goliat contains approximately 200 million barrels of oil.

In conjunction with the Goliat development, Eni Norge is funding a three-year, NOK 13.8 million project with the Tromsø-based company Akvaplan-niva on Arctic biodiversity. “We seek to increase the understanding of natural conditions and variations, to further improve our environmental management process. Therefore, the knowledge gained through this and other ongoing projects will be valuable for Eni’s current and future activities,” says Eni Norge HSEQ manager Liv Nilsen, in a description of the research.

DNV, the Norwegian based international risk management foundation, is also looking beyond the Barents Sea to what will happen as the Arctic ice cap recedes. The company is boosting its Arctic-related class activities, including improving standards for construction, design, equipment, manning and navigation, along with contingency planning and preparedness. Roughly 1,900 vessels already carry DNV ice class notations. Tor Svensen, COO of DNV Maritime, says the changing face of the Arctic requires all sectors of society to be vigilant against possible risks that could threaten this fragile ecosystem.

“Since the environment in this part of the globe is very vulnerable and both the vessels themselves and the humans operating them experience a high level of stress, we have to reduce risk to a minimum,” Svensen says.