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Big effects likely from North Sea oil activity

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Opening areas off northern Norway’s Lofoten and Vesterålen islands to petroleum operations could have major spin-offs both locally and nationally, according to the KonKraft collaboration.

A report for the Norwegian government finds that some 1,000-2,000 jobs might be created locally and regionally.  But this and other effects depend on political decisions due in the near future.  This study is one of three submitted to Terje Riis-Johansen, the minister of petroleum and energy, at the Top Executive Forum, which conclude a series commissioned by the government.
“Forecasts indicate that Norwegian petroleum production will fall markedly over the next decade,” says Per Terje Vold, chief executive of the Norwegian Oil Industry Association (OLF).  “Access to new and attractive exploration acreage would slow this decline, sustain government revenues to the benefit of the community, keep 250,000 people in work and open opportunities for 1,000-2,000 new jobs.”

Ranked
The most interesting northern exploration areas on the Norwegian continental shelf (NCS) are ranked in the KonKraft report on oil and gas activities in the far north.  Earlier estimates from KonKraft indicate that these areas may contain 3.4 billion barrels of oil equivalent (boe), or about five times the size of a field like Norne in the Norwegian Sea.  The report’s evaluation of potential spin-offs on land is based on various estimated field sizes and developments which correspond to just over two billion boe.

For the biggest fields, subsea development with wellstreams piped directly to land are seen as a good option and the one which would provide the largest number of local jobs. Offshore solutions could be the most relevant for smaller discoveries.
Assuming the development of fields which provide just over two billion boe, 1,000-2,000 local jobs could be created along with the generation of environment investments.  The petroleum industry’s presence in the areas concerned would also have positive consequences for tourism, population development and emergency oil spill response.  Terms and arguments used in the Norwegian environmental debate are also addressed by the report in order to strengthen the factual base.
“It’s a crucial requirement that the discussion on maintaining Norway’s welfare state builds on accurate information,” says Mr Vold.

Emissions
The KonKraft report on the petroleum industry and climate issues provides an overview of measures initiated to reduce carbon emissions and their effect.  During the 1994-2007 period, the industry cut its emissions by 40 million tonnes of carbon dioxide, with an average annual reduction of 4.5 million tonnes.  Carbon capture and storage (CCS) from natural gas produced on the Snøhvit field and plans to supply power to Gjøa and Valhall from land will avoid annual emissions of 1.3 million tonnes by 2010.  A further 40 measures identified by the petroleum industry will reduce carbon emission by 800 000 tonnes per annum. These are due to be implemented by 2013.

The report underlines the importance of continuing work on CCS. The bulk of the remaining measures in the petroleum industry are relatively expensive. Which measures should be implemented in the future must be assessed from a unified national perspective with the emphasis on cost-efficiency.  In this context, one solution could be to dedicate carbon tax paid by the petroleum sector – currently about NOK 2 billion per annum – for also funding socio-economically good emission-reducing measures by other industries.  The success of Norway’s recently-created nitrogen oxide fund is an example of the way a cross-industry solution can function well.

Spin-offs
The third of the KonKraft reports addresses the economic consequences of petroleum activities. It covers the Norwegian gas business, activities associated with gas exports, operations on land, and gas consumption in Norway.  The country’s petroleum sector currently has just under 150 000 direct employees, and is accordingly regarded as the most significant industry for jobs in mainland Norway.

Further information from
Lars Arne Ryssdal, Director industry policy and environment, OLF, phone +47 993 75 443
Sigbjørn Aanes, Communications manager, phone, +47 928 87 886

KonKraft in brief
KonKraft is a collaboration arena for the Norwegian Oil Industry Association (OLF), the Federation of Norwegian Industries, the Norwegian Shipowners Association and the Norwegian Confederation of Trade Unions (LO).  Work on its seven reports was initiated by former petroleum and energy minister Odd Roger Enoksen. They have been prepared by players in the petroleum industry.

The seven projects are:
Energy nation Norway (published in May 2008)
Production development on the NCS (published in December 2008)
Structural changes in the petroleum industry (xxx)
Internationalisation (published in August 2008)
The petroleum industry and climate issues (published March 2009)
Oil and gas activities in the far north (published March 2009)
Spin-offs from the petroleum activity (published March 2009)

www.olf.no

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