Our Arctic Neighbors: Lofoten debate still raging in Norway

New reports from government agencies add fuel to the fire of arguments over opening sensitive Arctic offshore area to drilling

Sarah Hurst

For Petroleum News

The Norwegian Petroleum Directorate has published its conclusions about the petroleum resources in the Lofoten, Vesteralen and Senja offshore Arctic areas, which are currently closed to development because of their value as a fishery. Seismic surveys conducted by the NPD in the summers of 2007, 2008 and 2009 provided new knowledge about the geology of the complex areas, the NPD said in a release April 16.

The sector known as Nordland VI appears to be the most prospective area for petroleum resources, according to the NPD. Nordland VII and Troms II have a total expected resource estimate that is about the same as what is expected in Nordland VI. The resource estimate for oil is larger than for gas in Nordland VI and VII, the NPD continued. In Troms II, gas appears to be the most likely possibility.

“The continental shelf and the declivity off the coast of Nordland and Troms counties is made up of varied and complex geology,” the NPD said. “A total of 50 prospects have been mapped in Nordland VI, VII and Troms II. The NPD has estimated the recoverable resources based on an analysis of play models.”

The petroleum resources are expected to amount to 7.1 billion standard cubic feet of oil equivalents, or about 1.3 billion barrels, according to the NPD. The range of uncertainty in this resource estimate is expected to lie between 2.7 billion and 13.1 billion standard cubic feet of oil equivalents. The figures refer to recoverable oil and gas. According to a Reuters report, a previous estimate of the resources was about 2 billion barrels.

“Taking its basis from the updated resource scenario, the NPD has conducted an economic valuation of the petroleum resources based on a number of technical and financial assumptions,” the release said. The expected future net value of the resources is estimated at about $84.5 billion.

“There is uncertainty associated with the estimate for the undiscovered resources,” the NPD said. “However, this uncertainty can be reduced over time, e.g. through staged exploration including the drilling of exploration wells.”

One day before the NPD announced its conclusions, Norway’s Environment Ministry published a report about management of the same Arctic offshore areas.

“The probability of accidents related to ship traffic or petroleum activities in Lofoten and the Barents Sea is considered to be low, but the environmental and social consequences of such incidents can be significant,” the ministry said in a statement about the report.

The Norwegian government is due to make a decision about whether to open the area for drilling by the end of this year.