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Lofoten: newly discovered resources in rough waters

The Norwegian Petroleum Directorate believes that close to 20% of the Norwegian Continental Shelf’s remaining undiscovered petroleum resources in the Norwegian Sea could lie hidden under the waters off the Lofoten and Vesterålen islands. The oil industry is anxiously awaiting...

The Norwegian Continental Shelf is characterized by fewer and smaller discoveries. Much of the countries oil and gas production comes from discoveries made in the first 20 years between 1969 and 1989, according to the Norwegian Petroleum Directorate (NPD) 2009 Resources Report. Resource growth from discoveries in the last decade has been low and will provide only a small contribution to future production.

Still, the NPD believes large discoveries can be made in areas of the shelf that have not been extensively explored. The area offshore Lofoten and Vesterålen represent one of the most promising remaining unexplored areas offshore Norway. The two groups of islands lay offshore northwest Norway in the Norwegian Sea in the Nordland VII and Troms II regions, located between the cities Bodø and Tromsø.

The Lofoten and Vesterålen area is estimated to contain 1.4 billion barrels of oil equivalents in Nordland VII and Troms II, based on the NPD’s resource reports in 2003. If the more promising Nordland VI region is taken into account, the figure could reach 2.3 billion, according to industry organisation KonKraft. The NPD will come up with more up-to-date resource figures in connection in connection with the revision of the comprehensive management plan for the Barents Sea and the waters off Lofoten in 2010.

If the Lofoten and Vesterålen area is opened, it would be the first new acreage made available for petroleum activity since 1994. But that is the subject of current political debate. The area is prized for its pristine nature and bountiful fishing industry. The sea areas off Lofoten and Vesterålen are the largest spawning sites for North Atlantic cod. Environmentalists are worried that an oil spill here – should these areas be declared open for oil production – could prove fatal for a whole year’s generation of cod.

The re-elected centre-left government’s new policy platform states that it has decided not to open up for petroleum activities in the waters off Lofoten and Vesterålen during this parliamentary term, but will consider carrying out an environmental impact assessment for petroleum activities in Nordland VI, Nordland VII and Troms II in connection with the review of the integrated management plan for the Barents Sea–Lofoten area in 2010.

Nusfjord in Lofoten is Norway’s oldest and best preserved fishing village.
© Terje Rakke/Nordic Life/Nordland Reiseliv


Plans Moving Forward

The oil industry has made some ground in getting the area possibly opened. Norway’s parliament has allocated a total of NOK 400 million for the mapping of potential petroleum deposits in the area. The NPD has conducted seismic acquisition during three seasons, 2007, 2008 and 2009. A total of 805 square kilometres of 3D were acquired by end June, concluding the authorities’ seismic activities in Nordland VII and Troms II. The NPD compensated approximately 120 fishermen who normally fish in these waters during the summer.

In addition, the Norwegian Oil Industry Association has interpreted the lowered support for the Socialist Left and Liberals in the 2009 Norwegian election – which both wanted to protect these waters from oil drilling – as proof that the country is politically one step closer to opening the area. Both lost support in Lofoten, Vesterålen and the rest of northern Norway.

“Ms Halvorsen (leader of the Socialist Left party) said that a strong Socialist Left would be signal from the voters,” said Per Terje Vold, Chief Executive of the Norwegian Oil Industry Association. “The electorate has now spoken, and wants to keep the door to the future open.”

“It’s crucial that we get this plan in place in 2010, so that the country can continue to benefit from the revenues generated by the oil sector,” he added.

The petroleum industry is the largest industry in Norway. It contributes more than one quarter of Norway’s gross domestic product, more than one third of the Norwegian government’s income and stands for about half the value of stocks on the Oslo Stock Exchange.

A development here could help counter expected drops in petroleum production in the coming years and provide additional employment to the Lofoten region. The NPD has forecast that petroleum production on the shelf could start to decline after 2020.

Fugro-Geoteam completed a seismic survey offshore Lofoten for the Norwegian Petroleum Directorate in 2009 using seismic vessel Geo Pacific. © Fugro

Subsea Development

Statoil wants to develop eventual finds here with small facilities on the seabed, which it promises would not hinder fishing. It has done so already on the Snøhvit field in the Barents Sea where there are no offshore installations visible on the surface and all seabed structures can be trawled over.

In a public meeting in Svolvær in June 2009, Helge Lund, Statoil Chief Executive, reminded the local audience of the positive spin-offs which the Snøhvit development had given to Hammerfest and that Lofoten could offer similar opportunities.

Assuming that discoveries are made, the petroleum sector could lay the basis for the creation of 200-450 lasting jobs in Vesterålen and 150-900 jobs in Lofoten, according to the KonKraft 6 report.

The NPD expects the results of this summer’s seismic acquisition will be submitted to the Norwegian Ministry of Petroleum and Energy during the spring of 2010. A revised management plan for the Barents Sea and the areas off Lofoten and Vesterålen will be presented to Parliament during 2010. If politicians approve an opening of the area, production from any new finds made here between 2015 and 2017 could be producing by the late 2020s, according to the NPD.

“Waters off Lofoten, Vesterålen and the Barents Sea are believed to contain large amounts of oil and gas yet to be discovered,” said Øyvind Eriksen, Aker Chief Executive, in an editorial published in Norwegian daily Aftenposten in September. “A clarification of whether the areas open for petroleum activities is important for our own and the industry’s long-term planning and development in Norway.”