Sustainable petroleum activities in the Arctic

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Dear audience,

It is a great pleasure for me to welcoming you to my home-town today! I have been looking forward to this, and I am pleased to see so many of you here for this event.

My expectation is that today’s program and discussions will render relevant and rewarding dialogues and in-sight on sustainable petroleum activities in the High North.

A priority task for me as a minister is to broaden the knowledge base and perspectives on energy realities in the public arena and debate.

My message is basic and clear: The world needs more energy. Why? Eradicating poverty is the greatest global challenge facing the world today and is an indispensable requirement for sustainable development and fighting climate change. 

• Today, more than 1.3 billion people live without access to modern energy services today.
• Three billion people live on less than 2.50 USD a day.
• The global population will increase by 2 billion people by 2050. 

Access to affordable, modern energy is a prerequisite for economic growth and social prosperity.

Norway’s history as a host nation for oil and gas activities is considered a success story. Many would say that this is due to luck, since Mother Nature has been so kind to us and given us large resources: We have large oil and gas resources, ample supplies of water for production of hydro power, as well as potential for development of other kinds of renewable energy.

But our success as a petroleum nation has mainly come as a result of the way we have managed our petroleum resources.

Norway was a developed, mature industrial nation when we first discovered oil on the day before Christmas eve in 1969. We had foresighted politicians, who decades ago laid the foundations for our present petroleum policy. There has been a high degree of political consensus over time to ensure sound management of our petroleum resources, and stable and predictable investment conditions.

We decided early to invite the international petroleum industry. At the same time, we started to build our own knowledge and competence. A strong national oil industry has developed over the years.

We are also aware of our responsibility to contribute to the global energy supply in a sustainable manner. We will meet this responsibility.

Oil and gas from the Norwegian Continental Shelf have for decades represented a noticeable contribution to meeting the world’s energy needs.

To obtain this, we need to maintain a stable level of activity. Our strategy includes efforts to be carried forward on four areas in parallel:  

1. The recovery rate from fields in production shall be increased further
2. Discoveries that are profitable shall be developed
3. Active and thorough exploration in areas open for petroleum activities on the Norwegian Continental Shelf shall be continued – an example is the recently discovered Johan Sverdrup field
4. New areas shall be opened for petroleum activities

At the same time, we must work hard, every day, to avoid accidents and do our best to help mitigate climate change.

Petroleum activity in the Arctic is nothing new. The first onshore well was sunk in the Mackenzie River valley almost one hundred years ago. Since then, more than 400 Arctic oil and gas fields have been discovered. However, their development has been slow – chiefly because of the high cost of operating in the Arctic.

In our national debate, this long story is little known. People seem to think drilling in cold, dark areas is something new. And that oil activities beyond the Arctic Circle is a completely different business than further south. Around this table, we know it’s not like that. I hope that this meeting will bring new insight in this respect.

Demand for reliable energy supplies and the expected oil and gas resources available are major driving forces behind the growing political and industrial interest for the Arctic oceans. More advanced technologies and higher oil prices are other. The easy oil is gone.

There is no doubt that the importance of the Arctic is growing. I will share with you where we are in our waters.

In Norway the first well in the Barents Sea was drilled more than 30 years ago. The first discovery was made soon after this part of the Continental Shelf became available for petroleum activities. Over the years, more areas where made available. However, we needed to enter a new millennium before the first development could start.

During the last decade, we have been on a very positive trend. Through a thorough process, involving all stakeholders, we established broad consensus about establishing the Barents Sea as a petroleum province.

In the planning process, important elements like integrated management plans are introduced. Impact assessments are carried out. We need to base ourselves on the best available knowledge in evaluating future petroleum activities. It has never been our policy to open all areas on the Continental Shelf at once – we have applied a step-wise approach. 

The slide shows the status for the areas in our north. 

• The green area is available for petroleum activities
• The yellow areas have special arrangements.
• Opening processes are ongoing in the South-Eastern Barents Sea and around the island of Jan Mayen.
• The North-Eastern Norwegian Sea is in a phase of knowledge collection.

We have good progress in our ongoing opening processes. My plan is to submit a proposal on opening of these areas for petroleum activities to our Parliament in the spring of 2013.

Let me give you an update on all the activities in the opened area.

The optimism regarding our High North today is based on the actual discoveries, development projects and exploration activity in the Barents Sea. Fifteen years ago, this area seemed to be without any future.

Today, however, we see 

• The Snøhvit gas field, which started production in 2007;
• The Goliat oil field is under development;
• Skrugard and Havis - the two recent discoveries of oil even further to the north - large enough to sustain a stand alone development
• Many exploration wells are planned in the next three years;
• Many blocks are already awarded, and there is great industry interest in more acreage in our High North.

Today, I am announcing the twenty-second licensing round. Out of the 86 blocks announced,  81 are located north of the Arctic Circle, and 72 of those are located in the Barents Sea; shown in pink on the map. This underlines the fact that Norway as a petroleum nation is moving north and that the industry is doing the same.

I am confident that the round will result in awards of many exciting new blocks. Like in all previous licensing rounds, I look forward to receiving high quality applications from experienced companies.

In summary, it has taken more than three decades to establish Arctic Norway as the fully-fledged petroleum province it is today. Thirty years since we started going north, we have finally passed the starting line and are speeding up! A significant part of our energy future will be in the Arctic.

As Minister, my wish is obviously that such ripple effects shall materialise in other regions of our High North as well. As part of building a prosperous Arctic future, this is in my view what we all should want for the Arctic at large, not least to the benefit of the population in the area. This requires a clear in-sight and prudent political decisions both for the short term and for the long term.

Such decisions must be based on facts, knowledge and experience. And they must be taken with due consideration of the potential future effects of petroleum activities on the environment and other users of the sea.

Therefore, petroleum activities in the Arctic are demanding; commercially, environmentally, technically and climatically. Handling of these challenges requires knowledge, creativity and innovative skills from the petroleum industry at large. As always, I trust that these challenges can be met. Therefore, they will not stand in the way of growing oil and gas activities in the north.

At the same time, challenges are different within the Arctic. One big difference is the Gulf Stream – making our High North ice free.

In order to plan for, and carry this out in a responsible manner we need that industries, politicians, governments and consumers together have the capability, flexibility, attitudes, skills and creativity to address the challenges, and implement “yesable” solutions. 

As for the rest of our petroleum activities on the Norwegian continental shelf, the activities in the Arctic are of course based on the highest standards of health, safety and environment. It is the common responsibility of each of the Arctic coastal states and the petroleum industry to implement and apply such standards.

To succeed, dialogue between our countries is very important. The same goes for sharing of experience, transferring of knowledge and discussing lessons learned. Such dialogue is important on the political level, as here today, and even more important between our experts and industry.  This is important in itself and it is necessary for maintaining a license to operate. Therefore, I look forward to continuing todays dialogue.

To ensure that petroleum activities in the Arctic also benefit societies, we are occupied with ensuring local and regional ripple effects of the petroleum activities. In our experience, such ripple effects are obtained through three parallel actions: 

• Continued exploration for and development and production of oil and gas fields
• The availability of competent labour – not least from the region itself
• Making local and regional businesses qualified  to be suppliers to the petroleum activities

We must always strive to improve local value creation from offshore activities – not least through a continuous gaining of new knowledge, which again is dependent on the sharing of experience.

To ensure the prudent exploitation of our oil and gas resources in the Arctic, we must further develop and ensure the use of new, cutting-edge technology in order to protect the environment.

The role of the petroleum industry in this process is also extremely important. It is a matter of responsibility – a responsibility that the industry is fully aware of and is implementing every day.

Close cooperation and interaction with the scientific community are essential elements if we are to achieve our overarching goals for the High North. I have therefore decided to establish a research and competence center, focusing on challenges related to petroleum activities in Arctic environments. The center will be based in the north of Norway and collaborate with leading research communities in Norway and abroad. My ambition is that the center will be up and running next summer.

This center will help us develop technical solutions, build competence and strengthen the presence of petroleum research environments in the northern parts of the country.

So, in conclusion: The purpose of today’s Roundtable is to highlight the magnitude of experience and knowledge gathered in this room – from the close to one hundred years of oil and gas activities in the Arctic. I look forward to listening to and discuss the presentations, evaluations and plans from the delegates and from the industry.

Thank you for your attention!