How Norway can grow its oil industry and reduce emissions
Oil-rich Norway has long heralded its big green revolution, pumping in funds to run the country on renewable energy. But that doesn’t mean it’s going to give up its oil potential, with several new fossil fuel projects in the works. Although Norwegian oil major Equinor is developing several low-carbon oil operations, it appears that Norway may have to shut down production from some of its old oil and gas fields if it hopes to meet its climate targets of by 2030. The only alternative would be to integrate carbon capture and storage (CCS) technology on a large scale on its offshore platforms or to electrify operations to reduce associated emissions.
Norway aims to cut its greenhouse gas emissions by 55% by 2030, compared to 1990 levels. That’s a big ask for the 13e largest oil producing country in the world. While Norway’s domestic energy comes from renewables, its offshore oil industry accounts for around a quarter of the country’s emissions. While many of these platforms could be powered by electricity rather than natural gas, Norwegian Climate Minister Espen Barth Eide Explain“An alternative would be a phasing out of old fields rather than re-equipping them (these) with electricity.
However, the Norwegian government recently said it plans to “expand, not phase out” oil operations. Norwegian Prime Minister Jonas Gahr Støre declared last year, “If we said overnight that we were closing production on the Norwegian plateau, I believe that would put a stop to an industrial transition necessary to succeed in the dynamic towards net zero… We so we’re about to grow and transit, not close.”
Norway must now decide whether to electrify operations and use renewable energy, such as wind, to power them or limit the production of certain operations. But with plans to develop 30GW of offshore wind power by 2040, it certainly has the potential to combine fossil fuels and renewables to reduce carbon emissions. Norway also hopes to expand its solar capacity by building floating solar power plants on hydroelectric reservoirs.
Based on news that Norway’s gas exports hit record highs in July, it doesn’t seem likely that the country will scale back its fossil fuel operations anytime soon. Exports of Norwegian natural gas reached $13.26 billion in value in July, as gas demand and prices have increased dramatically due to ongoing sanctions on Russian supplies. These revenues were about four times higher than in July 2021. Statistics Norway suggested that “high gas prices are the main reason for the exceptionally high value of exports”, rather than a dramatic increase in the quantities of ‘export.
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Norway believes that the increase in European demand for Norwegian gas will continue, as it expects sanctions against Russian energy to be further extended. It also helps that the The EU has included natural gas in its green transition planhoping to increase the use of natural gas while reducing the demand for oil and coal, as the region develops its long-term renewable energy capacity.
In addition to increasing its natural gas exports, recent oil discoveries highlight the potential for longevity in Norway’s crude oil operations. Norwegian company Aker BP announced this month the discovery of more oil and gas in the wild well of the Skarv field in the Norwegian Sea. This was the company’s first well drilled under the production license.
Data from the Norwegian Petroleum Directorate (NPD) suggests that the discovery could total between 1.7 and 5.7 million standard cubic meters of recoverable oil equivalent. Akar BP made a separate gas discovery near the Skarv field last month. The company aims to increase production in the offshore field until 2040, after obtaining approval from the Norwegian government in March to increase gas production in line with global demand.
As Norway seeks to boost oil and gas production while switching to renewable energy and reducing carbon, the country is looking for new, innovative ways to make production greener. Akar is now recycle 98% of the three decommissioned oil rigs, totaling 40,000 tons. Much of the steel can be used in the construction of other oil rigs or for industrial purposes, such as offshore wind turbines. This may just be the start of a huge recycling effort across the North Sea as Norway seeks to make its oil operations more environmentally friendly.
Despite significant challenges facing the Norwegian government and oil companies on its way to net zero carbon emissions, the country is likely to continue its oil and gas operations as long as global demand remains high. However, by pumping funds into CCS technology, oil rig electrification and large-scale renewable energy projects, Norway could have it all.
By Felicity Bradstock for Oilprice.com
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