How Norway Can Expand Its Oil Industry And Reduce Emissions

How Norway Can Expand Its Oil Industry And Reduce Emissionsby Felicity Bradstock*

Norway is aiming to cut its emissions by 55 percent from 1990 levels by the end of the decade, an ambitious target for the world’s 13th largest oil-producing nation

  • Norway’s Climate Minister believes that the country must either electrify operations at old oil and gas wells or else shut them down if that emissions target is to be met.
  • Ultimately, a combination of carbon capture, electrification of operations, and recycling of old platforms may mean that Norway can expand its fossil fuel industry and reduce emissions.

Oil-rich Norway has long been heralding its big green revolution, pumping funds into making the country run on renewables. But this doesn’t mean it will be giving up on its oil potential, with several new fossil fuel projects in the pipeline.  Although Norwegian oil major Equinor is developing several low-carbon oil operations, it seems that Norway may have to halt production at some of its older oil and gas fields early if it hopes to achieve its climate goals by 2030. The only alternative would be to incorporate large-scale carbon capture and storage (CCS) technology across its offshore platforms or to electrify operations to reduce associated emissions.

Norway is aiming to cut its greenhouse gas emissions by 55 percent by 2030, from 1990 levels. This is a big ask for the 13th biggest oil-producing country in the world. While Norway’s domestic energy is sourced from renewables, its offshore oil industry accounts for around a quarter of the country’s emissions. While many of these platforms could be powered by electricity instead of natural gas, Norway’s Climate Minister Espen Barth Eide explained, “an alternative would be an early phase-out of old fields rather than retrofitting (those) with electricity. 

However, the Norwegian government just recently stated it planned to “develop, not to phase out” oil operations. Norwegian Prime Minister Jonas Gahr Støre stated last year, "If we were to say from one day to the other that we close down production from the Norwegian shelf, I believe that would put a stop to an industrial transition that is needed to succeed in the momentum towards net zero . . . So we are about to develop and transit, not close down." 

Now Norway must decide whether to electrify operations and use renewables, such as wind, to power them or to curb production from certain operations. But with plans to develop 30 GW of offshore wind power by 2040, it certainly has the potential to blend fossil fuel and renewable energy operations to reduce carbon emissions. Norway also hopes to develop its solar capacity by constructing floating solar power plants on hydropower reservoirs. 

Based on the announcement that Norway’s gas exports reached record highs in July, it does not seem likely that the country will curb its fossil fuel operations any time soon. Exports of Norwegian natural gas hit $13.26 billion in value in July, as both demand and prices for gas increased dramatically due to ongoing sanctions on Russian supplies. These revenues were around four times higher than in July 2021. Norway's statistics office suggested that “High gas prices are the main reason for the exceptionally high export value,” rather than a dramatic boost in export quantities.

Norway believes the increased European demand for Norwegian gas will continue as it expects sanctions on Russian energy to be extended further. It also helps that the E.U. included natural gas in its green transition plan, with the expectation of increasing natural gas use while curbing oil and coal demand, as the region develops its long-term renewable energy capacity. 

In addition to increasing its natural gas exports, recent oil discoveries are highlighting the potential for the longevity of Norway’s crude operations. Norwegian company Aker BP announced this month the discovery of more oil and gas in the wildcat well in the Skarv field of the Norwegian Sea. This was the company’s first drilled well in the production license. 

Data from the Norwegian Petroleum Directorate (NPD) suggests that the discovery could total between 1.7 and 5.7 million standard cubic meters of recoverable oil equivalent. Akar BP made a separate gas discovery close to the Skarv field last month. The firm is aiming to boost production in the offshore field until 2040, having been granted approval by the Norwegian government in March to increase gas production in line with global demand. 

As Norway looks to boost oil and gas production while also transitioning to renewables and cutting carbon, the country is looking for innovative new ways to make production greener. Akar is now recycling 98 percent of three decommissioned oil platforms, totaling 40,000 tonnes. Much of the steel can be used in the construction of other oil platforms or for industrial purposes, such as offshore wind turbines. This may just be the beginning of a huge recycling effort across the North Sea as Norway seeks to make its oil operations more environmentally friendly. 

Despite the significant challenges facing Norway’s government and oil firms on the road to achieving net-zero carbon emissions, the country is likely to continue its oil and gas operations so long as global demand remains high. However, by pumping funds into CCS technology, the electrification of oil platforms, and widescale renewable energy projects, Norway may be able to have it all.

*Felicity Bradstock is a freelance writer specialising in Energy and Finance. She has a Master’s in International Development from the University of Birmingham, UK.

(oilprice.com, August 21, 2022)

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