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Fish, oil a delicate balance for Norway Governor of northern Tromso County says offshore oil and gas has made the country rich but everything has to relate to fishing Alan Bailey Petroleum News
Oil and gas have transformed Norway from relative poverty to being one of the richest countries in the world, Sven Ludvigsen, governor of Tromso County on the coast of the northern Norwegian Sea, told a meeting of the Alaska World Affairs Council on May 16.
“Norway was the second poorest country in Europe, we are a little richer today,” Ludvigsen said with a chuckle.
Balance with fishing But, with all oil and gas fields lying offshore, the oil and gas industry has had to come to terms with the needs and priorities of the Norwegian fishing industry. In fact fishing forms Norway’s second largest export industry. Worldwide, only China exports more fish than Norway, Ludvigsen said. And, while petroleum is a finite resource, fishing should last forever, he said.
“Everything we are doing in the north of Norway offshore has to relate to the fishery,” Ludvigsen said. “… The oil industry can borrow the water, but they have to give it back as clean as it was when they got it.”
And many new products are starting to come from the marine environment, such as enzymes from cod liver. Future possibilities include glue for closing sutures and new forms of painkillers, all from marine organisms in areas such as the Barents Sea, Ludvigsen said.
“This is the future. These are things we are doing … in the north of Norway,” he said. Moving north But the oil and gas industry has advanced, moving north into the Norwegian and Barents seas and evolving from the use of massive concrete offshore platforms to the production of hydrocarbons from subsea wellheads and the use of floating offshore facilities.
“There is an optimism in the north which we have never had, because of the oil and because we have opened up the border between Norway and Russia,” Ludvigsen said.
More than one-third of the Norwegian petroleum resources are in the high north, Ludvigsen said. And scientists have estimated that one-quarter of the world’s remaining oil and gas are located in the Arctic, in Russia, Norway, Greenland, Canada and Alaska, Ludvigsen said.
“But it is Russia that has much, much more than others,” he said. “… Most of these resources are in Russia.”
But although Russia is “a superpower on energy,” Russia needs western technology and investment. For example, StatoilHydro and Total are involved in the development of the Shtokman field in the Russian Barents Sea.
Imports of natural gas into the United States and the European Union will increase in the coming years, Ludvigsen said. At the same time the economies of India and China will likely continue to expand. Where will the United States and Europe buy the gas, Ludvigsen asked.
“This will make a pressure even on Norway that we should speed up the oil industry in the north,” Ludvigsen said. “This could be a huge conflict in Norway.”
People are concerned about the speed of development because of issues such as the need for technologies suitable for the Arctic environment, he said. There is a built-in conflict between oil and gas development, the fisheries and the environment, he said.
Transportation concerns Questions regarding the future transportation of Russian oil and gas have become another major concern in Norway. Issues relating to the operation of pipelines from Russia across central Europe will eventually cause those pipelines to close, thus driving a need to ship Russian products around the Norwegian coast, Ludvigsen said.
“In a few years as many as 10 huge tankers will be along the coast year round,” Ludvigsen said. “And it is a harsh climate … and there could easily be accidents.”
An accident in the north would destroy the fish resources as well as the environment, he said.
“But the development goes fast,” Ludvigsen said. “… We see that with these enormous resources up in the north we will connect the Russian and the Norwegian activities with pipelines all the way down to Europe.”
Some discussion in Norway revolves around whether the country should allow this to happen and, if it does happen, whether the oil companies should be required to land some of the oil and gas in Norway for processing there, Ludvigsen said.
Currently, Norwegians primarily use hydroelectricity for heating and lighting, he said. And restrictions on further hydropower development in Norway mean that, despite having substantial oil and gas resources, the country imports coal-generated electricity from Europe to meet peak demand.
“The problem in a wealthy Norway is we don’t want to have more hydropower. We don’t want to have windmills. We don’t want to have gas power plants. We don’t want to have a risk from petroleum. But we want to have it warm in the house … and so on. So nowadays we buy dirty energy from Europe,” Ludvigsen said.
Finite resource But Norway also has to come to terms with the finite nature of the oil and gas resources that have made the country wealthy. The government has recently increased the tax on gasoline both to reduce gasoline consumption and to increase government revenues, Ludvigsen said.
In 1999 most of Norway’s wealth consisted of petroleum, but much of that resource will have been exhausted by 2030. At the same time the requirements of programs such as pension entitlements are growing. But by 2030 government investments will have converted the petroleum wealth into financial wealth, Ludvigsen said.
“We think that these petroleum … resources do not belong to me and my generation,” Ludvigsen said. “They belong to the coming generations, too. So, it’s important that we save some of the financial income.”
On the other hand, as anywhere in the world, it is difficult to explain to people that the money shouldn’t all be used at present.
“Everybody wants better roads and a better hospital and better welfare and better everything,” Ludvigsen said. “And if you use all this money … you will destroy the economy with inflation and so on. That’s the problem for the rich. … You always want to have more.”
Climate change Climate change has also become a significant issue.
People can read climate change in the landscape, with receding glaciers and other manifestations. And regardless of the reasons for the changes, this issue has become a challenge for human beings, Ludvigsen said.
“For nature it’s even worse,” he said.
On the other hand, climate change has always been a part of nature — the existence of coal in Spitsbergen, for example, demonstrates that forests existed there at one time. Unfortunately, however, Norway is not prepared for the impacts of current climate change and is seeing more and more climate-related disasters, Ludvigsen said.
However, the melting of Arctic sea ice will likely present new opportunities.
“That fact will open up a dream, the dream that we could sail from the Atlantic to the Pacific through the Bering Strait, to shorten the distance between Rotterdam and Japan, and to shorten the distance between Anchorage and Rotterdam,” Ludvigsen said.
But with those opportunities come concerns about both environmental issues and ownership rights in the Arctic offshore.
U.S. role Norwegians feel that the United States, as a superpower and a major economic force, could play a stronger role in caring about these important Arctic issues, Ludvigsen said.
“We really hope that the United States will have in the future a strong interest in the high north and in the (regional) military activities,” he said.
And, although military activity near Norway is now at much lower levels than during the Cold War, there have been some recent signs of an increasing Russian military presence in the region. Norway does not view this Russian activity as a threat, but more of an indication of a growing Russian interest in the high north, Ludvigsen said.
“With a lot of resources in the Arctic … geopolitics can be a hot issue,” Ludvigsen said. “… We have (had) a conflict with Russia … since 1972 in what we call the grey zone (on the northern border between the two countries).”
Meantime, all of the challenges that northern Norway faces relate in some way to the marine environment and water, Ludvigsen said.
“It’s water, water, water and some ice,” Ludvigsen said. “… What happens when that ice is gone?”
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