The Norwegian Continental Shelf in the Context of Climate Change

Ladies and Gentlemen,
It is a pleasure to address this distinguished audience.

Like it or not, but climate change is and will continue to be the number one item on national and international agenda for many years to come. Climate change is the biggest challenge facing the global community. Most people find the evidence presented by IPCC and others overwhelming and credible.

I honestly believe that climate change will change the way we think, the way we behave, the way we produce, the way we do business. I believe the threat of climate change will change the world.

Climate change poses challenges to each one of us. It poses acute challenges to politicians. People – our voters – expect politicians to act now. They even expect results now. The people we represent expect us to take tough decisions. They say carrots are fine, but they also want us to use sticks.  They say they are ready to bear the costs. It’s amazing. Will they say the same when taxes and price of gas have increased? Well, I believe many are serious and committed to make a difference.

Many have lost faith in market mechanisms. They ask us to price transportation so that the environmental costs are covered. More local production might be a result. Unlike Mr. Elkington in SustainAbility Ltd  and his respondents, I believe politicians will regain power provided we are able to prove leadership.

So much for the crystal bowl.

Politicians are challenged today and so are the biggest polluters. The car industry is challenged, the agricultural industry likewise. All major polluters will be challenged, including of course the petroleum industry.

We – the industry, the research institutions and the authorities - will have a common problem if the general population sees the petroleum industry solely as a climate problem – not as part of the solution. My government will strive to give the petroleum industry fair conditions. Our possibility to do so depends on our people’s perception of the industry. That is why I encourage the industry to get engaged – in the environmental debate and with concrete actions.

And many of you do; you show people that you are serious in reducing emissions – that you want to contribute in making it more environmentally friendly to use oil and gas.

Reference was made yesterday to the Indian Minister of environment who basically says that since the West has created the climate mess, and thereby that it is the responsibility of the West to clean up. I agree.

Norway has become very rich due to oil and gas, and has a particular responsibility to contribute to developing technology to

1. make it more environmentally friendly to produce oil and gas
­ the world will be dependent on oil and gas for several decades to come
2. bring us from the fossil age to the renewable age
3. focus on energy efficiency and conservation.

I am enthusiastically engaged in renewables and energy savings, but time only allows me to speak about petroleum.

Due to strong regulations, the Norwegian petroleum sector has very high environmental standards. CO2-emissions per produced oil equivalent on our shelf are 1/3 of global average. Still, the petroleum sector is responsible for 1/4 of Norway’s total CO2-emissions. We will have to search for every possible way to reduce emissions further in order to keep up the legitimacy.

Considering the increased demand for energy and knowing that most of it will come from oil, natural gas and coal, we have no choice but to make it more environmentally friendly to use fossil fuels. Nothing else is sustainable.

Carbon capture and storage can reduce emission with 20-30 % according to IEA’s predictions. The trouble is that we don’t have commercial technology as of now. Technology is in its infancy – there is no market. No full scale industrial CO2 capture is operational yet.

Three CCS projects are currently being planned in Norway. They will be put in operation in the period 2011 to 2014 – a test facility and two full-scale capture plants. The full-scale projects include transportation, injection and permanent storage of CO2 in sub-sea structures.

The Norwegian government is involved in all three projects. When it comes to the test facility, I appreciate the cooperation we have with StatoilHydro – and also with Dong Energy, Shell and Vattenfall. 

We are ready to contribute considerably to enable the realization of these projects. We want cooperation with interested countries, and we have actually discussed strengthened cooperation today with both UK Minister of State for Energy, Malcolm Wicks and EU Commissioner for Energy, Andris Piegbals.

I also believe that Carbon Capture and Storage in a longer perspective can give ample opportunities for business. Norway wants to be in the forefront in developing CCS technology. However, if somebody beats us – it is wonderful! What’s important is to succeed in fighting the climate change. 

Peace price winner Pachauri has told us Norwegians:
“You should not be ashamed to provide the world with oil and gas which will be required for decades to come, but you should use your wealth to develop renewable energy – bio, solar, wind.”

This is exactly what we try to do.

• The petroleum industry is creating great value for the Norwegian society. The key focus of our petroleum policies is to create value from the petroleum resources also in the decades to come.

• Since the early 1970s our production has been growing. Today Norway is the 5th largest oil exporter and the 3rd largest exporter of natural gas

• We expect total production to remain stable over the next ten years. The production mix will, however, change significantly over the period:
- Production of liquids will continue to decline.
- The natural gas export will increase significantly.

From the mid-nineties we have almost tripled our production to nearly 90 billion cubic metres last year. And the gas production is expected to increase by almost 50 % during the next decade. Let me underline that we will continue to be a stable and important exporter of gas to Europe. To the extent that Europe prefers our gas to fossil fuels like coal, the Norwegian gas export can also be said to have a favourable climate effect in Europe.

Some of you keep asking questions about my Troll decision; not to advance the gas production from the field.  This was a decision solely taken to secure the possibility of enabling production of the huge oil reserves in Troll.  By advancing the gas production it is our judgment that we would reduce this opportunity.

And those of you that have followed the development of the Troll field over the years will know that the Norwegian Government from the very beginning has been concerned about the balance between oil and gas production on Troll.

However - we will keep our promises to the Continent in terms of increased gas production from Norway.

New awards from the NCS:

I am pleased to announce that Awards in Predefined Areas for 2007 have been decided by the Cabinet. The offers sent out to the companies today include a total of  52 production licenses.

The new production licenses are distributed  between the North Sea (24) the Norwegian Sea (21) and the Barents Sea (7).

We are pleased that there has been a major interest for this APA-round.

In this licensing round, competition for several of the blocks has been intense. There is a large potential in proving new, smaller resources close to existing infrastructure in the mature areas of the North Sea, the Norwegian Sea and the Barents Sea. This explains the extensive interest for the APA rounds.

Norway has already stated our national policy for the High North – setting the stage for our role in this region of the world and our neighbourhood relationship with Russia.

Three key objectives:

1. Stable presence
2. Broad range of activities
3. Science based decisions

We want to explore the opportunities of the High North. We want to be seen to do it, and we want to know exactly what we are doing – thereby preserving the unique environment there.

In terms of Lofoten and Vesterålen, as many of you are familiar with, further decisions on how to proceed will be made in 2010.

Very briefly at the end:

The petroleum cluster needs good and bright people. Andrew Gould in Schlumberger reminded us that image is important for recruiting the best people. Let me in addition remind all of us that half the world’s population is women.  A study from 2006 shows that only 20 % of the employees in the total Norwegian oil and energy sector are women. Women held only 15 % of executive positions. A good mixture of men and women increases creativity and contributes to a good working environment. There are some smart women out there! We should try to catch more of them – to the benefit of this important industry.

To sum up:
None of us can hide for the environmental debate. As for any other industry – your license to operate rests on your legitimacy.

We are all being challenged. We all need to meet the new challenge with an open mind. We all need to understand that neither industry nor civil society or governments can handle the new challenge unless we realise that we need each other and work together.

This conference fuels my optimism on behalf of the petroleum industry as well as the environment.