Presentation (i pdf-format)

Thank you for the opportunity to open this seminar on global energy foresights.

The energy situation today and in the future differs from country to country and changes over time.

Energy foresights are therefore important to better understand our diverse energy future. I am pleased to shed some light on the Norwegian energy scene seen in a national and international context.

Energy Production and Total Consumption, 2003

I would like to start with briefly highlighting our national energy context. The energy sector is Norway’s largest industry by value creation, and has been a key driving force in Norwegian economic development for several decades.

This sector and the revenues it generates have helped to ensure industrial growth, employment and development of the overall national infrastructure and welfare systems at a pace and scope which would otherwise have been impossible.

Norway is a net exporter of energy. Energy production equals more than 12 times the domestic consumption.

In 2003, more than 90 percent of the production of oil and gas were exported. Electricity accounts for about 50 percent of final consumption and practically all electricity is based on hydropower.

Production and Net Export of Liquids 2003

Exports are important for our petroleum production. As you can see from the left hand chart, Norway’s production of crude oil and liquids were 3,41 million barrels/day on average in 2002 which made Norwegian oil production the 6th largest producer and 3rd largest exporter globally, as shown in the right hand chart.

Norwegian Natural Gas Exports 2003

The Norwegian market share of Western European gas consumption is about 14 per cent. In Germany Norwegian gas accounts for 20% of imports, in France 30% of the gas consumption. We expect Great Britain to increase its share significantly during the coming decade.

The Long Term scenario

Perspectives on future production output on the NCS can be illustrated as in this slide which shows a possible Long Term development scenario for oil and gas production combined.

The realization of the Long Term scenario (the black stippled curve on the top) means oil production for 50 years and production of natural gas for much longer if we are successful in our efforts.

The Long Term scenario will depend on increased efforts within several areas. The Government is dedicated to achieve this scenario and has over the last two years provided access to large areas for exploration in both mature and frontier areas.

Technology will play a vital role in realizing the long term development scenario. This is also related to the possibilities for producing with less CO2 emissions.

Sources of national CO2 Emissions by Sector

Let me first deal with our situation regarding CO2 emissions. As is shown in the slide, oil and gas operations represent almost 1/3 of our national CO2 emissions.

World Energy-Related CO2 Emissions

Let me now turn briefly to our global energy future and its environmental dimension. According to the International Energy Agency, (IEA), the rise in CO2 emissions from energy use will in the next 3 decades increase by 70 % above year 2000 levels as can be seen from the green line on the slide.

The major increase driving this development is the surge in CO2 emissions in developing countries, as shown in the red line. More than 1.7 billion people do not have access to basic energy services in this part of the world.

The demand for affordable energy to fuel economic growth and prosperity in less developed countries will sustain a continued dependence on fossil fuels in the foreseeable future and is the primary reason for the emission scenario shown in this slide to come true.

According to most recent forecasts world fossil fuel supply is expected to increase to 90 % of global energy supply towards 2030.

Carbon Sequestration and Hydrogen

Decarbonization of fossil fuels to electricity and hydrogen is more and more seen as a vital route towards a fully sustainable energy supply, largely dependent on fossil fuels.

CO2 released from fossil hydrogen production need to be handled, preferably geologically, as seen in the slide, to avoid the carbon to emit to the air.

At the same time there are important technologies widely worked with in connection with hydrogen production and infrastructure development that will play an important role in fostering the next generation carbon capture technologies.

The Sleipner CO2 Injection

New viable options to control CO2 emissions from fossil fuels will be critically needed to ensure that our global energy future develops in a sustainable manner.

Capture and geological storage of CO2 can in the short to medium term play a part in sequestering already concentrated CO2 streams, such as from production of natural gas, coal, ammonia and hydrogen plants.

In the longer run, CO2 storage could have the potential to provide a main stream route to achieve deep reductions in greenhouse gases. CO2 injection is today proven technologically, as in the Utsira formation in the Sleipner field in the Norwegian sector of the North Sea, where the injection takes place 1000 meters under the sea bed in the saline aquifer layer above the Sleipner gas reservoir about 1 million tons of CO2 is injected annually.

A major project has been the well known Saline Aquifer CO2 Storage program (SACS) for monitoring the Sleipner injection. Research and new light house projects that verify CO2 sequestration as a safe and variable technology is fundamental for further development and acceptance. Also in the Snøhvit field in the Barents Sea in the northern part of the Norwegian Continental Shelf CO2 will be injected in the field.

EOR and the Norwegian Resource Base

From a national point of view, the use of CO2 to get out more oil can be very important in the future.

As is represented by the green segment of the figure, most of the oil resources on the Norwegian Continental Shelf are not recoverable with today’s technology. Enhanced oil recovery based on new technologies will be an important way to exploit more of this part. This could include CO2 injection.

CO2 for EOR has so far been difficult to realize on the NCS (due to technical immaturity, excessive cost related to the accessibility of CO2 and lack of suitable infrastructure).

I will take an initiative to discuss the CO2 storage and EOR possibilities with other colleagues.

Policy for Realization of Gas-Fired Power Plants

Let me turn to our domestic electricity issues and to CO2. There is a need to strengthen the secure of supply in the Norwegian energy market. The high dependence on hydro power makes the Norwegian energy consumption more vulnerable to shortfalls in precipitation than the other countries.

Viewed in this light the Government presented a White Paper to Parliament on security of electricity supply last year. An action list with ten policy measures was presented.

One main element in the energy policy presented is to create sufficient conditions to realize gas fired power plants with carbon capture and storage. The aim is to contribute to more cost effective solutions, which may lead to an earlier realization of full scale carbon free gas fired power plants.

The main strategy to realize gas fired power plants with CCS is consisting of various measures.

Increased Efforts to Develop Carbon Capture Technologies

This year the Norwegian Government follows up the strategy by proposing the establishment of a fund of $ 290 millions, of which about $ 12 million will be spent each year. The fund is to be administered by a governmental innovation unit. The unit aims to support pilot projects.

The innovation centre will prepare a technology program on environmentally friendly gas technologies. Based on the recommendations of the Norwegian hydrogen commission, which I will come back to, hydrogen will be considered to be a part of the technology program.

Increased Renewable Energy Production

The ambitious policy to provide for increased renewable energy production and energy efficient solutions is another main effort aiming to strengthen the energy supply.

Enova SF is a public enterprise owned by the Ministry. Through projects supported by Enova, the Government wishes to arrange for a more resilient energy supply and more flexibility in energy consumption.

Enova is the operator of several programs pursuing the goals of transforming the energy market. Enova’s objectives, adopted by the Norwegian Parliament in the spring of 2000, are:

1. To limit energy use considerably more than if developments were allowed to continue unchecked
2. To increase annual use of water-based central heating based on new renewable energy sources, heat pumps and waste heat of 4 TWh by the year 2010
3. To install wind power capacity of 3 TWh by the year 2010.

The Norwegian Hydrogen Commission

In Norway there is large political, industrial and scientific interest in hydrogen as an energy carrier. In June 2003 the Norwegian Government appointed a National Hydrogen Commission to work out a broad research, development and demonstration programme covering production, storage, distribution and use of hydrogen.

The Commission shall address the use of hydrogen both in the transport sector and in stationary applications. Transport stands out as the sector which will probably first be relevant for more extensive use of hydrogen in Norway.

The Norwegian Hydrogen Commission (2)

The Commission shall also propose national targets and necessary measures for developing hydrogen as an energy carrier and an instrument for national added value as well as for cleaner environment. The Commission will present its work to the Minister of Petroleum and Energy and the Minister of Transport and Communication by 1 June 2004.

Oil and Gas Innovation inNorway

Let me return to oil and gas R & D and how the government could contribute to and encourage further technology development.

The job to develop new and cost efficient technology in order to fulfill the goals we have set for exploiting our petroleum resources rests primarily with the oil and gas industry.

The resource potential of the NCS will not be fully utilized without the Government pursuing an active policy to continue developing the Norwegian petroleum sector.

Important tools in this respect are the Research Council of Norway, including the Demo 2000 program. The Research Council plays an important role in the process of organizing a coordinated R&D commitment from the energy industry in joint efforts with the supply industry and the research community.

In order to further strengthen our industrial and technological leadership the Ministry of Petroleum and Energy in 2000 established OG 21, Oil and Gas in the 21st Century, as a permanent national strategy initiative including the oil companies, contractors and the research community.

OG 21 Priorities & Technology Target Areas

The OG 21 national strategy has identified 5 main priority areas;

1. environment
2. increased recovery
3. deep water
4. small fields
5. gas value chain.

In order to sufficiently implement the strategy more specific Technology Target Areas were derived from these main priorities, as can be seen in the right hand boxes.

Carbon Sequestration Leadership Forum

International Collaboration will be important to deal with the overall environmental challenges facing our common energy future.

Norway participate together with 14 other countries and the EU Commission in the US initiated Carbon Sequestration Leadership Forum, CSLF, established in Washington DC in June last year to support the large scale development and use of this technology.

The CSLF members share a reliance on fossil energy sources either as energy consumers or producers, and would greatly benefit from carbon sequestration in ensuring that long term fossil based energy developments take place in a sustainable fashion.

The CSLF mark an important shift of interest towards this technology from pure science based collaboration to a concerted action among energy governments. The CSLF has taken on a significant progress since its inauguration in 2003 and has a potential to play an important role in shaping our common energy future in the right direction.

The US initiators have taken an important initiative. I understand that Barbara McKee from US Department of Energy who heads the Secretariat of CSLF will share with us the perspectives on coal later today. I look forward to take part in the future efforts of CSLF.

Let me at this juncture also briefly mention IEA's Zero Emission Technology Initiative, ZETs.

With its launch in New Orleans in 2001 ZETs has been an important frontrunner in ensuring international research and technology collaboration in support of a decarbonized fossil fuel supply.

IEA is through ZETs charged with an important mission to mobilize global support to ongoing technology collaboration in this field.

IPHE

Let me also mention that Norway together with 13 other countries and the EU-commission also is a signatory to the International Partnership of the Hydrogen Economy, IPHE, launched by US in November 2003 in Washington DC.

IPHE has much of a similar mission as CSLF in the hydrogen field, and we are committed to take part in this partnership in the same fashion as for CSLF.

Conclusions

To conclude, I would like to reiterate that;

- New technological solutions are required to meet the overall challenges of our long term energy future

and

- international partnerships are important components to supplement our national efforts towards a sustainable long term energy future

I thank you for your attention, and wish you a successful continuation of the seminar.