Norway’s oil majors as well as the country’s government and oil regulator hope to get every last drop of oil out of the North Sea before global demand eventually wanes. Continuing with its plan to run low-carbon oil operations worldwide for decades to come, while also focusing on developing its clean energy sector, Norway is making more oil discoveries and expects to maintain, or even increase, output so long as demand remains high. In December last year, Equinor announced it would be drilling around 25 exploration wells in Norwegian waters throughout 2022, in a bid to find more oil. The oil major intends to continue drilling for crude in Europe’s biggest oil and gas producing country, as other companies transition away from fossil fuels.
Jez Averty, Equinor’s senior vice president for subsurface stated of the major’s strategy, “Our plan, basically, is to make sure that the Norwegian continental shelf has the last drops, the last molecules, the last barrels to survive in that competition.”
Despite the potential for Norway to be a leader in the move away from oil and gas, thanks to its existing oil wealth and early adoption of renewable energy technologies, the government continues to back fossil fuels. It is one of the European countries, along with Russia, that has supported the rest of the continent by supplying natural gas during a time of severe shortages. In addition, it sees LNG as the low-carbon fossil fuel needed to meet global energy demand until alternatives are more widely available.
Equinor believes it can help bridge the gap until enough renewable energy output is available by producing low-carbon oil. It hopes to achieve this by incorporating carbon capture and storage technologies into its projects as well as through the electrification of platforms from onshore hydropower. In addition, Equinor has already moved away from more carbon-intensive ventures, shifting operations to parts of the world where it can create and build new low-carbon markets.
The new Labour Party-led coalition government hopes to decrease net carbon emissions by 55 percent by 2030, from 1990 levels. Yet it has made its stance on oil and gas clear, backing long-term production. This is not surprising considering the petroleum sector continues to contribute around 40 percent of the country’s exports and 14 percent of its GDP. The government does intend to raise carbon taxes on the oil industry in order to counteract emissions, increasing the rate to $230 per tonne. Related: 5 Energy Dividend Stocks To Consider In 2022
This January, Equinor announced its first oil discovery of the new year along with partner Wellesley. Preliminary studies suggest a potential 33 million barrels of recoverable oil equivalent in the Troll and Farm area of the Toppand prospect. The firm has made several discoveries in this region in recent years, suggesting that mature areas have the potential to be rejuvenated thanks to modern exploration technologies.
Geir Sortveit, senior vice president for exploration and production west operations at Equinor, stated, “We are pleased to see that our success in the Troll- and Fram area continues. We also regard this discovery to be commercially viable and will consider tying it to the Troll B or Troll C platform.” Further, “Such discoveries close to existing infrastructure are characterized by high profitability, a short payback period and low CO2 emissions,” he explained.
Norway’s oil regulator, the Norwegian Petroleum Directorate (NPD), plans to support the ongoing development of the sector by encouraging the greater use of data across operations. As a data manager, it believes using data will help add value to the sector. The NPD intends to gain a better understanding of what is most important for oil companies looking forward and then collect the relevant data. Compiling data sets from across the sector could help streamline future energy projects. The regulator is planning to hold a workshop with representatives from across the oil industry on January 21, 2022, including service providers, academia, and related parties, to begin the process.
May Karin Mannes, the NPD’s Director for shelf analyses and data management explains, “having the right data available at the right time and in the right format can have a huge impact for the future of the Norwegian shelf.”
Oil firms, the Norwegian government, and the country’s oil regulator appear to be working hand-in-hand in an effort to prolong the shelf-life of Norway’s crude, while at the same time adding greater value to the sector and reducing carbon emissions – the triple whammy. Despite criticism over its long-term oil strategy, if Norway is successful in its aims, it could establish a flourishing green energy sector from its oil revenues and taxes while continuing to meet the global oil demand with low-carbon options.
By Felicity Bradstock for Oilprice.com
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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. More