2
3
CONTENTS
4
6
9
12
16
20
22
28
31
34
38
Learning difficulties
Multi-thinking
Lessons on the job
Pressure to succeed
6
Selling science studies
All calmed down
Preserving the past – and facing the future?
Vital but deadly
Determined to learn from history
Lower gas prices open window for improving oil recovery
12
Rock shots
16
31
Powerful forces
To say that events in recent months have affected the
petroleum sector is an understatement, to put it mildly.
The industry has never before been subject to such a critical gaze.
We have been given sharp reminders of how vulnerable human society can be when natural forces are
unleashed – in the Gulf of Mexico and in Iceland. Two
very different events, of course, but with the common
denominator that they have brought whole communities
to a standstill. Fishermen have lost earnings, while many
travellers were stranded by volcanic ash.
At the same time, it is important to remember that the
biggest tragedy remains the 11 lives lost in a dramatic
manner on the Deepwater Horizon rig.
Time will reveal the extent of environmental damage in
and around the Gulf and how long it takes to repair. In the
meantime, the whole petroleum industry has a big job to
do in restoring its battered reputation. It will be interesting to see how deeply this has sunk in, and how much it is
reflected at the ONS conference in Stavanger at the end of
August.
The Gulf incident also evokes unhappy memories of
the biggest accident in Norwegian oil history, when 123
human lives were lost. I still remember the big impression
this event made on me, even though I was a student without a thought of one day working in this sector.
I fully support Magne Ognedal, director-general of the
Petroleum Safety Authority Norway, when he underlines
the importance of learning from such incidents – and
doing everything we can to avoid a repetition.
The accident off the US coast has had a big impact on
work to which the NPD has contributed.
Like much else in society, the petroleum sector involves
risk. Since it is required to deal with such powerful natural
forces, the industry must demonstrate that it is capable of
operating safely in providing the world with its daily supplies of necessary energy.
Proposals for a new management plan for the Barents
Sea and the waters off Lofoten have been submitted, and
the public consultation process is taking place during a
steady flow of bad news from the Gulf. Fortunately, signals
now suggest that the well has been brought under control
for the moment.
Many new groups – and the general public – have
become involved in the debate and have formed fairly
strong views in many cases.
Since future oil and gas resources look like being more
difficult to access, increased knowledge and expertise will
be essential.
So I cannot emphasise enough my support for the
many good initiatives and measures being taken to
awaken and strengthen an interest in the sciences among
young Norwegians – as well as those a bit older who want
to extend their expertise.
Positive signals indicate that the proportion of women
studying sciences in Norway is rising. Although the share
of females in the petroleum sector is generally low,
women account for almost 40 per cent of NPD personnel
from these disciplines.
The most important consideration, of course, is that
enough youngsters – regardless of gender – opt for science studies and provide the leading-edge expertise
Norway needs to meet tomorrow’s challenges. The industry needs the best students more than ever. i
Bente Nyland
director general
4
Some observers claim petroleum-related research in
Norway is lagging behind, and too few young Norwegians
are learning enough about the sciences. But that picture
may be overly black-and-white.
Bjørn Rasen and Emile Ashley (photo)
petroleum research and a greater number of
M ore
clever science students are crucial if Norway is to
maintain its oil and gas position, commentators say.
A new technology strategy developed by the
government-appointed OG21 programme (www.
og21.org) notes that the position on the NCS has
“changed radically since 2000”. Prior to that year,
progress was largely financed by major development projects.
This is no longer the case, however, and OG21
has called for the government to spend a minimum
of NOK 600-800 million per year on research and
technology development. That is above the amount
allocated in the current year’s national budget.
Ove Tobias Gudmestad in the department
P rofessor
of mechanical and structural engineering and
materials science at the University of Stavanger (UiS)
wants Norway to take the action needed to safeguard oil and gas expertise at the highest level.
He finds it worrying that such great emphasis is
generally given at interviews with young job-seekers
to everyone absolutely having great “team-player”
qualities. His question is whether “playing yoga and
dancing golf” should rank more highly than leadingedge specialist expertise.
Viewed from that perspective, and backed with
the knowledge of which graduates land what jobs,
Prof Gudmestad asks whether Norwegian students
get too little reward for hard work.
The challenges facing the oil and gas industry
call for more clever students, he notes. “The level
of ambition must be higher than just completing a
course. Grades have to count for more.”
He feels that the emphasis by companies on
everyone having team skills reflects a misunder-
standing. A team should have room for individuals
who are clever at what they do – and mostly that.
The UiS offers international courses on petroleum
engineering and offshore technology, each with 20
places per year. Prof Gudmestad reports that they
get about 800 applicants annually, and feels that 160
of these were well-qualified in 2009.
He regrets that some of the cleverest finish after
three years because they get a good job offer. “They
have problems getting back in to take an MSc when
that has to be combined with work. A general problem in Norway that too few people take a PhD. Only
one in 50 doctoral students here is Norwegian.”
While Prof Gudmestad knows of a number of
employees who want to study for an MSc, he sees
insufficient evidence that the companies they work
for consider this important.
exceptions naturally exist, includT heinggratifying
in the professor’s own field. We meet some
of them in this issue, along with an enthusiast who
promotes science studies to young people.
We also visit a fabricator who builds tomorrow’s
subsea solutions, and talk with the minister responsible for building Norway’s expertise.
E x p e r t i se
Learning difficulties
5
6
Multithinking
■
It is possible to have two ideas
in your head simultaneously, maintains Tora Aasland. She believes the
Norwegian government has made a
“massive” contribution to the technology and petroleum sectors and will
continue to do so – while also backing the alternatives.
■
As minister of research and higher
education, she feels that five years
of conscious commitment to science
subjects in the education system
have now started to bear fruit. The
quality of trainee teachers is rising
and pupils are being given strong
encouragement in the sciences.
Bjørn Rasen and Bård Gudim (photos)
C
onditions on the NCS have
changed greatly over the
past decade. Not only have
oil and gas prices become
very volatile, but discoveries are also smaller – making them
more demanding and expensive to
develop.
While major developments could
earlier bear the cost of technological
progress, the picture today is different. Smaller discoveries and projects
demand other ways of financing technical advances.
The OG21 programme was established by the Ministry of Petroleum and
Energy in 2001 to develop a national
technology strategy and to serve as an
advisor to government and the industry.
In its strategy, the programme recommends a minimum of NOK 600-800
million in annual official funding of
petroleum-related research.
It also calls for clearer signals that
Norway will continue to provide the
industry with incentives and to facilitate research projects.
Allocated
The government has (almost) met its commitment, while
industry is lagging behind, maintains Tora Aasland, minister
of research and higher education. Three per cent of GDP
is the overall goal for research spending.
About NOK 400 million was allocated
for oil and gas research in this year’s
national planning budget, in addition
to NOK 800 million for wider energy
research.
According to Ms Aasland, the government “contributes to stable petroleum research while simultaneously
supporting work in other energy areas.
That relates to the climate compromise.”
The minister is referring here to the
decision by the Storting (parliament)
that Norway’s annual greenhouse gas
emissions are to be reduced by 25 per
cent or 15-17 million tonnes up to 2020.
“The present government has made
a massive commitment to research –
also in the petroleum sector,” she continues. “Since we took office in 2005,
spending here has risen by NOK 8 billion. So the criticism from the industry
is unreasonable.”
She points to the division of labour
between government and industry, as
specified in the latest White Paper concerning the commitment to research.
Spending is set at three per cent of
gross domestic product – although no
date has been specified for its achievement – with the public purse contributing one per cent and the industry two.
“During our term of office, we’ve
come close to one per cent,” Ms
Aasland comments. “We’re putting our
own house in order and encouraging
industry to put up its own share.
“The companies are lagging a bit
behind, at 0.75 per cent instead of the
intended two per cent. The figures we
have also indicate that they should follow up better.”
Impressed
That said, the minister is impressed
over the progress made by the petroleum sector since Norway first discovered
oil more than 40 years ago.
“What’s happened so far is nothing
short of fabulous. But we must now
also use our research funds to develop
alternative energy forms such as offshore wind turbines, where we’ve seen
exciting technological progress.
“We’re drawing on the industry’s
research base to learn how installations
offshore behave in rough conditions.
And then it’s a matter of operating such
units and bringing the energy ashore.”
She emphasises that petroleum is
not the only important research field
for safeguarding Norway’s energy
future. “A lot of other work contributes
to the overall picture, including pure
science at universities and institutes.”
In response to the industry’s calls for
a bigger commitment from the government, she says that its policy remains
unchanged. Good conditions will be
secured for petroleum research, and
weight will be given to making the sector more environment-friendly.
“The government’s vision in this area
is to integrate Norway’s role as a petroleum producer with the ambition of
being a world leader in environmental
protection and technology.”
Ms Aasland is confident that the
petroleum industry will succeed in taking the necessary leaps, given
the foundation
which has been
laid.
After an era
of big concrete
platforms and
the infrastructure needed
early in
Norway’s oil
age, the new
technology
looks different
thanks to
a
research and the
E x p e r t i se
The interview:
7
8
9
“I believe in integrated thinking, in
taking a social perspective. Looking
beyond the technological sphere
is important for future research –
including work in the petroleum
sector. It’s enough to mention the
full-scale [carbon capture] plant at
Mongstad in this context.”
Campaigns to attract the best students to teaching have been a success.
The standing of this profession is on the rise, claims Tora Aasland.
Confronting the paradox of increased
production and reduced emissions, Ms
Aasland confesses to being a technological optimist. “I believe we can have
two ideas in our heads simultaneously.
“We must constantly improve production technology while finding alternatives. I’m impressed by the industry’s
own way of tackling financial and technical challenges. It’s cut costs through a
number of initiatives, while staying on
the offensive.”
She believes that OG21’s national
technology strategy has been a success,
and points out that the model has
been copied by both energy and
climate sectors.
The government is planning to maintain the strategy in the oil and
gas sector, but with an increased
Astri Sivertsen and Monica Larsen (photos)
a
Recruitment
A new educational White Paper focuses
special attention on recruitment to science subjects, she notes. “Our plan is to
restructure teacher training into a twotrack approach.
“We want a special course for those
who want to teach at secondary level.
They’ll have stronger qualifications than
primary teachers, not least for maths
and sciences. The goal is to avoid young
people dropping science studies after
16.”
Ms Aasland is convinced that the
standing of the teaching profession will
continue to rise. Her ministry has run
campaigns to attract more of the best
students to become teachers or to recommend others to do so.
“We’ve noted that the number of
young men interested in teaching has
increased. That could – I’m almost sorry
to say – help to boost pay and status.”
Stricter entry requirements for
teacher training courses introduced a
few years ago have not had a negative
effect on numbers. The total of “wellqualified” students increased by 20 per
cent in 2009, and that trend looks like
continuing in 2010.
Ms Aasland believes that all this is
the result of a conscious policy, and says
the government recognises its responsibility for building up good highereducation communities.
“Our aim isn’t only to acquire technological know-how, but also to develop
people with knowledge and expertise,”
she emphasises. i
E x p e r t i se
Paradox
commitment to the environment.
Ms Aasland says that the government has made a strong commitment
to science education, but expresses
regret over the outcome of the oil
industry downturn a decade ago.
“Statistics Norway signalled that the
petroleum sector’s need for scientists
would not be that great. I think that had
a very negative effect, and we lost a lot
of recruitment.
“I’m convinced we’re going to need
a lot of people with scientific expertise,
whether in geology or petroleum technology, for the foreseeable future.”
But she denies that this identification of the petroleum industry’s needs
has been somewhat overshadowed at
government level by the emphasis on
environmental protection and technology.
“We’re genuinely committed to science education. We have a new strategy
in this area, and have run a number of
campaigns to get more boys and girls
interested.
“But, again, other areas of society
also need scientific expertise. In any
event, I believe an early commitment is
important and I’d like us to start motivating and inspiring at nursery school
level.”
Neither the science centres nor the
many private initiatives in Norway to
encourage an interest in science will
be rendered superfluous by the new
strategy, says Ms Aasland. She believes
the private efforts provide “an excellent
supplement”.
Family, work and finance often block
ambitions for continued education by
adult workers. But some get the chance
to study through schemes provided by
their employer.
Work for all. Birgitte Torp is more than halfway
through her studies, but Adrian at four months
has only just got started.
a
industry’s ability to overcome the challenges.
“This is about innovative thinking
and change,” Ms Aasland notes. “Our
view in the government is that Norway
needs to secure both greater utilisation
and cleaner production of its resources.
Should accidents occur, we’ll also be
among the best at dealing with them.
“I believe in integrated thinking, in
taking a social perspective. Looking
beyond the technological sphere is
important for future research – including work in the petroleum sector. It’s
enough to mention the full-scale [carbon capture] plant at Mongstad in this
context.”
Lessons on
the job
10
is hoping to complete an MSc at the
University of Stavanger (UiS) in 2012 –
seven years after landing her first job
with technology company Aibel.
“When you’re good at figures, you can
come up with the right answers,” Ms Torp
observes. “I like that.”
She appears to bear a powerful engineering gene. Her mother is a bio-engineer and her father a civil engineer, and
the latter was responsible for encouraging a childhood interest in mathematics.
As soon as she had graduated in 2005,
Ms Torp wanted to continue studying
and had just started work on an MSc
when the Aibel job came up.
The university’s attendance requirements prevented her from continuing
the course. When Aibel three years later
offered her 50 per cent study leave on
full pay, she jumped at the chance.
“It’s a fantastic offer, of course, and
makes it possible for somebody who’s
started a family to continue studying.”
“This could be the future, after all, so
it’s very all right to get into it and be
involved in something new.”
Arctic
Olav Rudi Moi (33) and Bjørn SerckHanssen (43) are hard at work in a
lecture hall at the UiS as they near the
end of a one-year course on Arctic and
environmental technology.
Both are engineers and have management jobs at contractor Acergy,
which is one of the initiators of the
new study leave concept.
Mr Moi has been with the company
for eight years, while his colleague will
soon have been there for 14. They have
three and two children respectively.
“I’d felt that further studies would
pay off, but it’s not so easy to pop off
to a university in another town when
you’ve got a family and small children,”
says Mr Serck-Hanssen.
Mr Moi wanted to take a PhD after
completing his MSc, but put such
ambitions aside as the years passed
and his family grew. “Then this chance
came up, and I felt it wouldn’t be
repeated.”
Acergy has about 400 employees
on land in Norway, including 150
engineers. A dearth of offshore orders
meant that 80 people had to be made
redundant in late 2009.
But the company has been concerned to take care of its expertise
while it waits for the level of activity on
the NCS to recover.
It established an offer to study
Arctic technology as a one-year supplementary module for people who
already had an engineering MSc, and
11 of its personnel took this up.
Acergy cooperated with a
number of institutions, including
the UiS, the International Research
Institute of Stavanger (Iris) and
Norway’s Employment and Welfare
Administration (NAV).
Those of its personnel involved in
the course have leave of absence on
full pay for its duration, with the company paying all the associated costs.
Mr Serck-Hanssen finds the combination of Arctic and environmental
technology highly interesting. It is also
an advantage that the course has been
tailored for contractors rather than
operators.
“This could be the future, after all,
so it’s very all right to get into it and
be involved in something new,” he
observes.
As part of the course, he is writing
a dissertation on hyperbaric evacuation in the far north – how to deal with
divers in an Arctic emergency far from
existing infrastructure.
This work also involves looking at
problems such as icing which relate
to the pressurised lifeboats used by
divers.
Mr Moi’s dissertation is on pipeline
landfalls in the far north, including
challenges related to erosion and
the like. He has been assisted by a
sub-contractor with relevant experience.
Edge
The two mature students are convinced that their new knowledge
will give both them personally and
their company an edge in competing
for future assignments at home and
abroad.
“Acergy sees the benefit of educating us about the Arctic, of course,”
says Mr Serck-Hanssen. “That’s why it’s
made the commitment and got this
course off the ground.
“The company’s given us a fantastic
opportunity, and I feel privileged to be
taking part.
“I could easily have spent another
year here, if that had been possible,”
agrees Mr Moi.
Asked what it is like to be students
again, he says there were quite a lot of
lectures and classes before Christmas
but they have more time for private
study now.
“And it’s good to escape the big
worries about projects which you’ve
got to get finished on time.”
“It’s been just like being on holiday
for me,” observes Mr Serck-Hanssen.
“I’ve no job responsibilities, and I’m
only responsible for myself. It’s been
great.”
Back to school. Olav Rudi Moi (left) and Bjørn Serck-Hanssen
are preparing for future assignments in the far north.
Process
When she graduated, Ms Torp wanted
to work for a contractor rather than an
oil company and chose Aibel because
it allowed her to take part in the whole
process from pre-studies to finished
design.
“Many students I’ve talked to are
very interested in joining an operator,” she observes. “If they do, though,
they’ll usually be set to check what
others have done.
“My recommendation would be to
start in a company like Aibel, where
you get to do something, create something, and learn much better.”
She is not worried about the future
for the oil industry, and expects to
continue working on steel structures
at Aibel when she has completed her
course – hopefully with more emphasis on calculations than design.
“I’ll take it as it comes,” she declares.
“I enjoy what I do a lot, and we don’t
know what the market will be like
10-20 years from now.”
Including maternity leave, Ms Torp
expects to need about four years to
complete her part-time course rather
than the standard period of three
years.
She gets up with her children at
05.30 every day, and starts studying as
soon as the oldest is securely placed at
the nursery. Once the children are in
bed around 19.00-20.00, a second bout
usually lasts until midnight.
Husband Stian stopped working
as a lorry driver in November, and has
had normal working
hours since then. That
makes it easier to juggle
all the jobs which must
be done.
“If I’d been just as
disciplined the first time
I studied, I’d have had
a lot of free time,” she
laughs. “It’s busy, but I
think it works fine. It’s
all a question of
attitude.” i
E x p e r t i se
B
irgitte Torp has settled down
at her terraced house in
Sandnes for the morning’s
work session. Three-year-old
Alexander is in nursery school until 15.00,
while four-month-old Adrian focuses on
the rattles suspended over his carrycot.
That leaves their 26-year-old mother
free to study offshore structures, getting
to grips with numbers and problemsolving.
Already a structural engineer, she
11
13
P r ess u r e to s u ccee d
The whole oil world is watching intently to see if Aker Solutions has found the
secret to moving compressors from platform deck to seabed safely, reliably
and economically.
Bente Bergøy Miljeteig and Emile Ashley (photos)
I
f the pilot installation works
as it should, this technology
could help to improved recovery from gas fields worldwide,”
says Svein Oskar Nuland.
“That’s why the expectations
are huge.”
He is chief executive of the Aker
Solutions yard at Egersund south of
Stavanger, where the world’s first
subsea compressor is currently being
assembled and tested.
Towards the end of this year, it
will be disassembled and shipped to
Aukra local authority further north for
underwater trials in a test basin.
Aukra is where gas from Ormen
Lange in the Norwegian Sea comes
ashore, and this field could be a location for the pilot compressor as one of
four such units in a train.
Pressure in Ormen Lange is declining, and will need external support
from around 2015. Operator Shell and
the other licensees are due to decide
in 2012 whether to opt for subsea
compression.
The alternative would be a traditional solution with the compressors
placed on a surface installation out on
the field.
Shop
But Egersund is where things are currently happening, with modules and
advanced electrical components lined
up in the new test shop for subsea
equipment.
Additional sections of the compressor are due to arrive from subcontractors all over Europe at this
facility, where neither welding nor
sandblasting takes place.
The shop is used only for fine
mechanical work because of the
extreme cleanliness standards
involved, explains fabrication and
assembly manager Idar Sønstabø.
Avoiding any contamination of
seal surfaces is vitally important if the
device is to withstand high pressures
in deep water.
Shell and Statoil awarded the contract for the compressor pilot to Aker
Solutions in 2006, sparking extensive
work to specify requirements, qualify
technology and produce parts.
“To a great extent, this involves
extending what the oil industry has
been doing for 20 years – putting
known technology together in a new
way,” explains Mr Nuland.
“Nevertheless, the solution is
new. We’re creating a prototype, and
it’s taken a long time to mature the
project.”
Qualified
The Egersund yard is well qualified to
take on such groundbreaking work,
since it has been supplying subsea
installations to the oil industry from
the mid-1990s.
These include deliveries to the
Kristin, Trym, Lavrans, Morvin and Vilje
fields, while work on a subsea facility
with eight templates for Goliat in the
Barents Sea is now in full swing.
Aker Solutions had not only experience but also access to the right
people for doing a good job. About
70 group employees are working in
Egersund to ready the pilot.
“We’re not using any contract
personnel on this particular project,”
explains Mr Sønstabø. “That’s not
If the Ormen Lange subsea compressor pilot functions as
intended, this technology could boost recovery from gas fields
worldwide, say Svein Oskar Nuland (left) and Idar Sønstabø. The
former is head of the Aker Solutions yard in Egersund and the latter
manages fabrication and assembly there.
least because we want to build up our
own expertise with subsea compression.”
He says that putting a good project
team together was not particularly
difficult, since most of the necessary
expertise was already available inhouse.
“Generally speaking, we don’t have
problems recruiting able specialists in
the current state of the market,” adds
Mr Nuland. “Science students rank us
as one of the most attractive employers in Norway.”
He believes newly graduated
Norwegian engineers want to join
Aker Solutions because it offers the
country’s largest and most interesting
engineering workplace.
“We pursue technology development every single day,” he adds, noting that 80 of the group’s engineers
work in Egersund. “They’re given
big challenges, and can apply what
they’ve learnt.”
But it remains important to be visible to the problem-solvers of tomorrow. So the yard is in regular contact
with students in the region taking
courses relevant for its business.
They get offers to participate in
student events, for instance, and
many get summer jobs as well
as opportunities
to write degree
dissertations
in close cooperation with the
group.
Keeping
good people
is as important
a
E x p e r t i se
12
14
Supplier
Aker Solutions is a supplier of engineering services, fabrication, technology products, maintenance, specialist
services and total deliveries for the oil
and gas industry in 30 countries.
Half of its 22 000 employees at
31 December 2009 were in Norway.
But competition over the most prestigious contracts is very tough and international, even on the NCS.
With a growing number of players
from low-cost countries in Asia
entering the market, technology
and technological progress continue
to give Norway’s oil industry an
edge.
And Mr Nuland emphasises that
research into and development of
new high-tech products are precisely
what the country needs to maintain its
competitiveness both nationally and
internationally.
“We’re a pioneer in oil recovery, for
instance, but that calls for long-term,
purposeful R&D programmes such as
Demo 2000 if we’re going to stay competitive.”
Noting that Demo 2000 is the
government’s programme for projectoriented technology development
in the petroleum sector, Mr Nuland
stresses the importance of a long-term
approach.
But he is a little frustrated that the
authorities appear to have reduced the
research priority given to petroleum in
favour of renewable energy in recent
years.
“Oil and gas will play a key role
for many decades to come,” he
points out. “So it’s important that the
authorities continue to make a contribution.”
The Ormen Lange compressor is an
example of a project which received
financial backing from Demo 2000 in
2001, helping to realise this technology in pilot form at Egersund a decade
later. i
The Ormen Lange pilot
will measure 35 by 6.5 by
13 metres and weigh 1 100
tonnes when complete.
Components for the subsea compressor produced in various part of
Europe are now being assembled and tested in Egersund.
E x p e r t i se
as recruiting them, and the Egersund
facility has a good record here. Mr
Nuland talks proudly about a solid and
stable workforce.
He adds that the yard has a strong
corporate culture, with a sickness
absence of just 4.5 per cent in 2009 as
against the national average of 7.5 per
cent for the industry.
“We want our people to thrive, face
new challenges and develop personally so that we can be prepared for
new market requirements and changing demands for expertise.”
Mr Nuland himself is a good example of the Egersund yard’s workforce
stability, having been there since 1985.
He became its chief executive in 2008.
He reports that the group facilitates
continued education by employees as
far as practicable, with personnel
taking technical college or higher
education courses part time every
year.
Workers are also shown trust in
their daily jobs. A high level of activity
in 2009, for instance, meant roughly
1 500 contract personnel were brought
in and many shopfloor employees
gained more responsibility and supervisory roles in the projects.
“We also encourage our people to
travel,” says Mr Nuland. “Personnel
from here are currently following
up development projects such as
Kashagan in Kazakhstan and Sakhalin
in Russia.”
15
16
17
Selling science studies
Norway could be short of 20 000 engineers by 2025, and
Camilla Nereid says action must be taken to prevent this.
As head of the government’s Renate centre, she wants to
see more women in engineering.
Tonje Pedersen and Ole Morten Melgård (photos)
committed to sport. If I can’t make it there, I
want to do something in the nutrition field.”
Like many other female students in
Norway’s colleges of further education, however, she has chosen additional science studies
even if she does not intend to use the knowledge later.
“I’ve always been good at these subjects,”
she explains. “They provide extra study credits,
and I’m keeping all my options open.”
Model
A attractive, amusing engineering student or a
vigorous role model who has recently landed a
job while still recalling student life might help
to tempt girls to this subject, says Ms Nereid.
Since taking charge of the Renate centre a
Students from Byåsen college of further education visit the Renate centre in Trondheim to take
the test which suggests a possible career in the
sciences. Maria Klevjer (foreground) and Suzana
Zoric (left) concentrate on the questions with
guidance from Hanna Sæther.
E x p e r t i se
T
eachers could show us how we test
chemicals used in makeup, rather
than talking about structures and
boring buildings,” says Marie Klevjer.
“I think girls would like that – more about
makeup and looks,” adds the 17-year-old,
who has just done a test at the Norwegian
University of Science and Technology (NTNU)
in Trondheim.
Created by the Renate centre, this programme seeks to provide guidance on career
choice by suggesting an appropriate scientific
or technological profession for those who take
it.
“It seems I should be a science teacher,” says
a rather surprised Ms Klevjer. “That’s not on the
cards, through. I play handball and am totally
18
Dominate
Figures from the Norwegian
Universities and Colleges Admission
Service (Nucas) for the spring of 2010
show that young men still dominate
applications for science and technology courses.
In most engineering subjects, less
than 10 per cent of applicants are
female. Some receive no applications
from women at all, and many have
only one. The position is worst in computing and information technology.
“The gender balance in these disciplines is extremely lopsided,” says
Ms Nereid. “It goes without saying
that it’s no fun being the only female
among 25 students.
“What we end up with is a job
market divided along gender lines,
with women in low-status professions
which have the lowest incomes.
“Unfortunately, girls make stereotyped choices and that’s what we
have to change to avoid the distor-
tions. Employers will otherwise only
be able to recruit from half the population.”
Interesting instruments in the NTNU
lab may tempt students from Byåsen
college of further education to opt for
science studies.
Test
The students from Byåsen college of
further education at the NTNU for the
careers test include Lorentz Fjøsne.
Born into a family of doctors, she has
always known that medicine would be
her choice.
“I like science subjects a lot,” she
affirms. “There’s only one answer to
everything, and you get it either right
or wrong. I find physics and maths
easy, once you’ve learnt the formulae.”
She believes that young women
abandon science after further education because they prefer to take arts
and ethical subjects, and probably
because many are not aware of where
it can lead.
A number of science and technology courses are losing applicants,
including male ones. No less than 66
per cent of such subjects have less
than one applicant per place.
At the same time, only 25 per cent
of further education students choose
in-depth physics. Ms Nereid points
out that those who drop these subjects at this stage lose the chance to
apply for a science courses later.
The low level of applications means
that any qualified student, regardless
of grades, finds a place. That in turn
boosts the drop-out rate.
Motivation
Three students from the NTNU and
Sør-Trøndelag University College have
turned up to talk about the ENT3R
mentoring programme.
Their contacts with further education students have shown that motivation helps, explains Axel Holene,
who is taking an MSc in industrial
chemistry.
“I wish something like this had
existed when I was at further education college,” he says. “When I’m in
the classroom with the students, I feel
they’re interested.
“I talk about student life and about
maths. With a subject like that, the
opportunities are boundless. That’s
Camilla Nereid, head of the Renate
centre in Trondheim, hopes to recruit
Suzana Zoric (left) and Marie Klevjer to
science studies.
Projects with
appeal
why I’m in the mentoring programme. I
try to explain what the students can go
on to do.”
Børge Solli Andreassen is also committed to boosting interest in science.
“Maths isn’t just equations, and physics is
not limited to formulae. That’s my focus
as a mentor.”
Vilde Salberg is one of the further
education students who has participated
in ENT3R, and explains that they were
divided into three groups to receive
maths help from the NTNU mentors.
“It was inspiring,” the 17-year-old
declares. “It’s not that easy to sit at home
alone and work. Our parents can’t help
us any more when we get to this level,
and the mentors were really good.
“This programme meant that I continued with science studies after the first
year. I’d probably have dropped them
otherwise.”
Asked what she wants to do, Ms
Salberg says she aims to travel abroad.
“I chose science in order to keep all my
options open, but I’m not sure whether
I’ll be using them in future.”
Important
These youngsters are perhaps unaware
of how important it is that they continue
to study science, but they may reflect a
little on the issue over the coming year.
Now is the time for the universities
and industry to snap them up – before
they get to filling up their course applications.
The Renate centre has recently taken
the initiative to establish a national
agency for role models in the form of
young scientists and technologists working in industry.
This Alpha organisation will be up and
running in 2010, and starting to offer its
services to schools next year. Ms Nereid
hopes that companies nationwide will
support it.
“We need 1 000 people from industry,” she explains. “They must be young
and in their first job after graduating,
so that student life is still fresh in their
memories.
“And they must arouse interest
among youngsters. This calls for a
national effort. We want to achieve a
recruitment effect through personal contact between young people.”
Where companies are concerned, this
is a matter of enhancing recruitment
to their own sector by presenting their
employees as role models.
Each of the latter must undertake
to participate in at least two school
visits per year. Ms Nereid also wants
them to host class visits to their company.
“The oil industry is among the ones
we want to have with us,” she notes.
“This sector represented the dream job
for many years.
“With the focus on new energy
sources, we see declining interest in
hydropower and oil. Our hope is that the
industry itself can help to boost recruitment. i
The Renate centre is the Ministry of Education
and Research’s national resource for recruitment to science studies, and forms part of the
government’s strategy for these subjects in
2010-14.
Serving as a resource centre for everyone
working on recruitment, it acts as a link
between school and work and has developed
three projects to boost interest among
youngsters.
The careers test help pupils to understand
what they can use science subjects for by suggesting which profession might suit them.
University students work through the
national ENT3R programme as mentors and
help young people in secondary school and
further education colleges with maths. At the
same time, they talk about student life and
the opportunities offered by the sciences.
The Alpha project involves a collaboration
between schools and industry in which recent
company recruits to present themselves, their
educational choices and their profession.
E x p e r t i se
in 2008, she and her colleagues have
hatched a number of ideas like these
for recruiting young women to science and technology subjects.
“We face big challenges both in
recruiting to and the drop-out rate
from these studies,” she says. “Many
students choose sciences in further
education but don’t continue with
them.
“That’s a huge problem. Part of
the reason is that young people don’t
know what opportunities are available, and what they can actually use
these subjects for.”
In her view, the key to recruitment work could be to make use of
students as mentors and youthful
employees as role models.
“Allowing youngsters to meet scientists close to their own age who’re
proud of and pleased with their
choice could strengthen their personal knowledge base when choosing
careers.”
19
20
All calmed down
Seismic surveying by the NPD off northern Norway in 2007-09 stirred
up a few storms. But exploration director Sissel Eriksen does not feel
she personally had such a hard time of it.
Bente Bergøy Miljeteig and Emile Ashley (photo)
M
s Eriksen has been with the NPD for a long
time, starting with a summer job during
university and joining permanently as a
newly graduated geologist in 1987.
“It was largely chance which brought
me here,” she admits. “I wasn’t very decided at 23 about
what I wanted to do. But I’ve stayed because this is a great
place to be, with many opportunities and professional
challenges.”
She has worked in all parts of the organisation on
everything from production to development solutions.
That includes the job of project coordinator on the
Åsgard plan for development and operation (PDO) in the
Norwegian Sea.
Her main involvement since 2000 has been exploration, and she took over responsibility for this area in the
spring of 2007 – just a few weeks before the NPD’s first
seismic survey season.
Only some two-dimensional data were gathered that
summer, which Ms Eriksen describes as a cautious start.
The bulk of the surveying took place in 2008-09.
The NPD was asked by the Storting (parliament) to
shoot both two- and three-dimensional surveys in the
Nordland VII and Troms II areas of the NCS, which remain
closed to petroleum operations.
Presented on 16 April, the survey report will form part
of the input when the politicians decide whether the sea
areas off Lofoten and Vesterålen should be opened for
drilling.
“We’ve done what was asked of us, namely to map and
value the petroleum potential,” Ms Eriksen says pragmatically. “It’s up to the Storting to decide the way ahead.”
She makes it clear that the NPD takes no view or position on what should be done in these waters, and that it
does not give the politicians advice before they possibly
request it.
The seismic survey assignment was extremely
demanding, and she admits to being almost “down for
the count” at times. “But I enjoy it when a lot’s happening. A bit of pressure is good. I don’t feel I had such a hard
time of it.”
A lot of people in the NPD have been involved in the
work, and Ms Eriksen talks of a good and close working
environment where people are confident in each other.
She says her job is fun.
She likes nature and the outdoor life, and reports covering many kilometres on her cross-country skis last win-
ter. The energy generated has been
useful.
Surveying Nordland VII and Troms
II is by far the biggest assignment
pursued by the NPD. Because these
waters hold some of Norway’s richest
fisheries, the work also came in for
strong criticism from environmental
and fishing organisations.
“The survey dates were chosen
on the advice of the Directorate of
Fisheries, the Norwegian Institute
of Marine Research and the fishing
organisations,” Ms Eriksen explains.
“It’s been important for us to conduct the work in such a way that the
fishing industry suffers the minimum
possible disruption.”
Finding good solutions here was
the biggest challenge, in fact. One
was a compensation deal which kept
124 fishing vessels out of the way of
the survey ships last year.
While it was no fun that some
Norwegians were angry with the NPD,
Ms Eriksen says she understands that
people are committed and concerned
about the future.
“I’m personally a bit surprised at
the way the issue has been presented
in the media. Many have clearly
failed to understand our role, and
I feel the journalists could have
checked their facts a little
more carefully.”
She describes the
surveys as successful in
technical terms, with the
necessary data gathered
and well processed. They
help to enhance understanding of the geology
in complex areas.
Many people have
been expectantly awaiting the NPD’s report,
which concludes in part
that oil and gas resources off Lofoten, Vesterålen and Senja are
rather smaller than earlier thought.
“The total estimate is actually not
very different from before, but we
can say more about where petroleum
is likely to be found,” Ms Eriksen
explains.
Summing up, she says that
Nordland VI looks like the most
prospective area for hydrocarbons,
and probably contains as much oil
and gas as Nordland VII and Troms II
combined. The two Nordland areas
are most likely to yield oil, while gas
should dominate in Troms II.
The report puts recoverable petroleum resources at 202 million standard cubic metres of oil equivalent
(scm oe) or 1 300 million barrels.
But these estimates are very uncertain. Wells must be drilled to secure
more reliable information.
The decision to open these areas
for petroleum activities rests with the
politicians. Fifteen years have passed
since they last opened a new part
of the NCS, and the industry wants
action.
Ms Eriksen points out that
Norwegian offshore production is in
decline, and no large discoveries are
being made in the areas currently
open. Access to new acreage will be
crucial.
“One consequence of not opening
new areas could be that future petroleum production falls more quickly
than it might otherwise have done,”
she notes.
“It takes time to build up expertise,
and the industry needs a steady flow
of assignments,” she adds, and says
that opening new acreage, holding
licensing rounds and pursuing exploration are also time-consuming.
“Taking a step-by-step approach is
important. The Norwegian model has
been a success, it’s proved to be effective and economically beneficial, and
will continue to be so in new areas.”
A number of exploration wells
NPD profile:
Exploration director Sissel Eriksen says she finds her job fun,
even though seismic surveying off northern Norway sparked much
controversy at times.
21
have been drilled on the NCS in recent
years, and a solid proportion have
yielded discoveries. Of the 65 spudded in 2009, for instance, 28 proved
oil or gas.
Thanks to the awards in predefined
areas (APA) scheme, many of these
finds are located close to existing discoveries, fields or infrastructure.
Ms Eriksen says that the APA covers
mature parts of the NCS, with known
geology and proximity to infrastructure. “Exploring near producing fields
is important for phasing in small
deposits.”
But exploration is also being pursued in immature areas, where little is
known about the sub-surface and the
chances of making big discoveries are
best.
“We’d like to have known more
about what’s concealed beneath the
seabed in the western Barents Sea, for
instance, where large areas remain to
be investigated,” Ms Eriksen notes.
A number of production licences
were awarded in 2009 under the 20th
licensing round in little-explored acreage off Salten in Nordland county,
which has aroused expectations.
The sub-surface there contains
extensive volcanic basalt layers which
are difficult to penetrate with seismic
signals, but technology is constantly
improving in this field as well.
Ms Eriksen pays close attention to
where the companies are drilling and
what they find in the way of oil and
gas on the NCS, and is particularly
concerned with the “key” wells.
“These are ones which could have
a big impact, regardless of whether
they yield discoveries,” she explains.
“But every well is important in the
sense that it provides new information.”
Each well represents a piece in the
jigsaw puzzle, she says – and that puzzle is far from complete. i
22
S
taged on the Valhall field
in the North Sea, this event
took place against the backdrop of Norway’s 2009 cultural heritage year and the
40th anniversary of its first commercial
oil discovery.
The museum was commissioned
in 2005 to develop a plan by the
Ministry of Petroleum and Energy, the
NPD and the Norwegian Oil Industry
Association (OLF).
It has produced a 250-page book
which describes developments on the
NCS and list the offshore installations
with national conservation value in an
order of priority.
These assessments have been
made by the industry itself, the government agencies involved with the
petroleum sector and the Directorate
for Cultural Heritage.
“Oil has been the biggest kick in
400 million years of Norwegian history,” Jørn Holme, director-general
for cultural heritage, commented at
the presentation. Mr Kåss added that
the installations on the NCS are “the
Viking ships of our time”.
Melancholy
Preserving oil sector assets in the form
of knowledge and physical objects
is naturally right and proper. But an
industrial heritage plan of this kind
nevertheless has a melancholy flavour.
By its nature backward-looking and
conservationist, it contrasts sharply
with the risk-taking, innovative and
aggressive thinking and practice
which have characterised Norway’s oil
sector for more than 40 years.
The plan deals with what has been
done, and ushers the past discreetly
into history’s annals. Ekofisk and Frigg
23
are already museum pieces, with
Statfjord next on the list.
So this assessment also provides
a feeling that the most important
chapter in Norwegian history is about
to close. The impression is that we are
preparing to shut down and pack up.
In part, the industrial heritage plan
addresses why things turned out the
way they did. Its conclusions also go
some way towards answering a much
more important question – what are
we going to live off tomorrow?
Now that our petroleum wealth
is being continuously converted into
financial assets, the priorities set,
questions posed and assessments
made in the plan become all the more
important.
Oil has transformed us from one
of the poorest countries in Europe to
one of the richest in the world. So it is
paradoxical that our huge petroleum
“We thereby face a
double paradox, since a
denial of the petroleum
business undermines
the basis for human
existence.”
revenues represent riches we are keen
to spend and benefit from, but not
entirely willing to acknowledge or
appreciate the origins of.
The petroleum sector has become
like the tobacco industry. Fewer and
fewer young Norwegians want to
educate themselves to work in a business which has been stigmatised and
a
An industrial heritage plan for the petroleum sector was
presented by the Norwegian Petroleum Museum on 3 March
to deputy petroleum and energy minister Robin Martin Kåss.
This essay is by Norwegian novelist Sigmund Jensen, who lives in Randaberg outside Stavanger and published his
latest book in 2008. The drawings have been created by pupils in class 5C at Madlavoll primary school in Stavanger.
Preserving the past – and
facing the future?
24
25
“This is not an ‘industrial heritage’ for us in Rogaland.
It is personal memories, part of our lives and history.
Our fathers were involved in it, after all.”
accorded a substantial share of the
blame for the climate crisis.
On the other hand, the oil industry
forms the basis for a great deal of
other activity. Fossil fuels still meet
80-90 per cent of the world’s energy
needs. We thereby face a double paradox, since a denial of the petroleum
business undermines the basis for
human existence.
Improving
In many areas, oil is the most responsible and environmentally aware of
all our industries. Steadily improving
technology also ensures that it is now
moving from the visible to the invisible.
Subsea production will be the new
standard within a few years, allowing people to sit in a control room in
Stavanger or Houston and operate
everything remotely. BP is already
there with its Valhall redevelopment.
This is paralleled by the adoption of ever better maintenance-free
equipment with a strong material
structure and high corrosion resist-
ance, plus new sensors and control
systems.
Combined with built-in monitoring and self-repair facilities, these
advances boost operational reliability
and environmental safety.
Few people are really aware of
the fantastic strides made by the
Norwegian industry, from an association with rust, mud and roughnecks
to top-quality technology which sells
worldwide.
Four decades ago, 1969 was also
the year Neil Armstrong first set foot
on the Moon and uttered the famous
words: “That's one small step for man,
one giant leap for mankind”.
The space industry subsequently
supplied a whole world with newly
developed technology. Today, the
petroleum sector is the prime mover
and agenda-setter for advanced solutions – and may also be the key to
another “giant leap”.
Boldness
But how did things turn out the way
they have? How did we get here?
Those questions have many answers,
and none are straightforward. Godgiven gifts form one element, but
were combined with political boldness, favourable timing and hard
work.
Stavanger, the city which has
become our “oil capital”, has always
been closely tied to the sea. We residents are the heirs of herring, sailing
ships, sardines and shipbuilding.
During the second half of the 19th
century, our merchant fleet was the
nation’s second-largest after Arendal.
And the city accounted for a third of
the exports which made Norway the
world’s canned food capital around
1900.
Just like the oil business today,
canning at the time employed
roughly one in five Siddis – as locals
are known from a corruption of the
English word "citizen".
Roughly half of all Norwegian herring catches during the 1940s and
1950s also came from Rogaland, the
county in which Stavanger is the principal centre.
But the herring disappeared
in the late 1950s, and the canning
sector went into decline. Although
Stavanger had shipbuilding and a
major printing industry by national
standards, it was one of the poorest
cities in the nation.
That was when Lady Luck dished
up a slice of what was quite simply
– and incredible – historical good fortune. By the time the first commercial
discovery was made, most of the oil
companies had given up on the NCS.
It was a stroke of luck that the oil
was there – and that we found it. The
rest of the story is less about chance
and more a matter of American
expertise, energetic individuals, farsighted politicians, pioneering divers
and ordinary workers.
You can say what you like about
Americans, but we Norwegians owe
them a boundless debt of gratitude
for our prosperity.
Principle
But some steps had been taken
before that first commercial find. We
can thank economist David Ricardo
for the theory of economic rent,
which justice minister Hans Castorp
applied in 1909 to frame our first
concession laws and establish the
principle that hydropower belongs to
the state.
Politician, civil servant and international law specialist Jens Evensen,
who also served as our only law of
the sea minister, did a major job in
securing us a huge continental shelf.
When Ekofisk was found, the economic rent principle and the concession (or licensing) laws found a new
application. Thanks largely to the
foundation laid by Mr Evensen, our
petroleum regime meant that 78 per
cent of pre-tax oil company profits
ended up in the government’s coffers.
The first chief executive of Statoil
took the same line. Under Arve
Johnsen’s leadership, the state oil
company began to build up its
technological expertise and Mr
Evensen’s principles were extended
to Norwegian ownership of pipelines.
Maintaining that the Statpipe gas
trunkline was the most important
development in Statoil’s first 15 years,
Mr Johnsen was farsighted enough
to regard national control of the company as a question of technological
power.
That found particular expression in a deal with Mobil in 1974.
Statoil secured a 50 per cent share of
Statfjord while the US major became
operator in exchange for training the
Norwegian company’s own personnel.
With a blocking majority in the
licence, Statoil could thereby check
that Mobil fulfilled its training commitments. However, several years
passed before Statoil took control
from the start. Gullfaks came on
stream in 1986 as the first wholly
Norwegian offshore development.
Mr Johnsen’s successor, Harald
Norvik, presented a vision in 1990
of making Statoil an international
energy giant.
Fortunate
Stavanger and Rogaland were unusually fortunate with their timing, when
visionary politicians and industrialists
were seeking new forms of livelihood
after the decline of canning.
The political mood accepted a
type of quick and decisive action
which bypassed formal channels and
bureaucratic form-filling.
Had the discoveries been made
10-15 years earlier, too, many believe
that the heavyweight political agencies would have been located in Oslo.
Politically, particular contributions to making Stavanger the oil
capital came from shipowner Torolf
Smedvig, finance minister and later
City Court judge Andreas Cappelen,
city manager Konrad B Knutsen, and
Conservative mayor Arne Rettedal.
When the Americans needed a
base for their land operations, it was
provided. So were the homes and
schools they called for. Stavanger’s
politicians fulfilled every request
“But an industrial heritage plan of this kind nevertheless has
a melancholy flavour. By its nature backward-looking and
conservationist, it contrasts sharply with the risk-taking, innovative and aggressive thinking and practice which have
characterised Norway’s oil sector for more than 40 years.”
a
26
without getting bogged down in
formalities. These would have to sort
themselves out later.
Unthinkable today, such singleminded and undemocratic decisiveness ensured that Stavanger had been
established as the base city before
a drop of oil had been found on the
NCS.
Official recognition of this status
was accorded by the Storting (parliament) in 1972, when it decided that
both Statoil and the NPD should be
located in Stavanger. That followed
intensive lobbying for a number of
years.
Character
When explanations of our local oil
adventure are sought, many people
call attention to the character of
the Jæren farming region south of
Stavanger and Rogaland in general.
People here have enterprise in their
blood, combined with strong social
capital, creative networks, a practical approach to problem-solving and
access to plenty of risk capital.
Would things have been different if
another city had become the oil capital at that time? Foreign minister Jonas
Gahr Støre touched on that question
this winter.
“Rogaland always pulls through,”
he commented during a visit to the
long-established Rosenberg engineering company, when asked why
the local Iris institute received less
research money than its Sintef rival in
Trondheim.
The minister may be right at that.
Perhaps he recalled that Norway was
united into a single realm here, at
the battle of Hafrsfjord in 872. Maybe
he was thinking of Eirik Raude from
Jæren, founder of the first Norse settlement in Greenland, or his son Leiv
Eiriksson, who discovered America.
He might also have recalled the
region’s long-standing role as a base
for discoveries, colonisation, trade,
emigration, hard work and innovation.
Or he may have said it just to flatter
the locals into shutting up and stop
fussing about more money.
But an apologetic approach is less
typical of the Siddis than it was before.
Where one of them might have said
before “I’m from Stavanger. Do you
mind?”, he or she is now more likely to
27
proclaim: “I’m from Stavanger. What of
it?”.
That is not quite as arrogant as it
sounds, but expresses a greater selfconsciousness and self-confidence.
Stavanger people know what we have
contributed and what we are worth.
Prosperity
But we also remember where we have
come from. We remember the flare
stack at the Shell refinery which lit
up the night sky over Tananger, an
Olympic flame signifying prosperity.
As long as it burnt, there were jobs to
be had.
Our memories include the sound of
helicopters carrying our parents and
grandparents to and from the offshore
colonies on the NCS, the supply ships
waiting on weather in the harbour and
the supertankers built at Rosenberg.
And we recall the accidents, the
tragedies, the pioneering divers –
everyone who gave their lives for our
prosperity – as well as the offshore
skyscrapers. These colossal Condeep
platforms dwarf the Eiffel Tower and
rank as the biggest structures ever
moved by humans.
All these things clearly had an
effect on us. We became preoccupied
by the dollar exchange rate, the oil
price and North Sea weather conditions.
This is not an "industrial heritage"
for us in Rogaland. It is personal memories, part of our lives and history. Our
fathers were involved in it, after all.
That made us proud. We knew history
was being written.
Oil has changed us in Rogaland, for
good and ill. The old puritan city is no
more. We can see what internationalisation, and particularly the influx
of Americans, Britons and French, has
given us.
Over the past 40 years, the
Stavanger region has had Norway’s
highest growth in real pay and the
biggest increase in new millionaires.
Foundation
That has provided a foundation for a
new industry in the shape of financial
institutions which also rank among
the world leaders and which have
moved into the old canneries. The
circle has been closed. Is this how we
are going to live in future, as rentiers,
investors and asset managers?
The rate of new oil discoveries has
been declining globally since 1964,
and the world consumed more oil
than was found for the first time in
1981.
Heidrun is a misleading name for
an oil field, since it comes from the
mythical goat whose inexhaustible
udder supplied the dead Norse warriors in Valhalla with their daily mead.
But the NCS reached its peak for
both oil and employment in 2001,
when average daily output was 3.1
million barrels. Fourteen per cent
of the remaining reserves were produced in 2005 alone. And the rate of
production has halved since then.
A Saudi Arabian proverb says “My
father rode a camel, I drive a car, my
son flies a jet and his son will ride a
camel”. The truth in that is something
we Norwegians must start to accept.
We still hear about big discoveries,
to be sure, but the Dagny field – to
name one example – is nevertheless
no larger than 1.5 days of global output.
The oil age is starting to ebb out,
with the International Energy Agency
(IEA) expecting production to peak
around 2020. The crucial question for
Norway, and for the Stavanger region
in particular, is then: can this era be
the springboard for something new
and, if so, what?
Leader
According to its strategic industry
plan, the Stavanger region is to be an
international leader for energy, the
environment and alternative energy.
By 2020, it will be a metropolis with
the greatest competitiveness and
ability to add value in Norway.
But this presupposes that we
copy ourselves, and are not already
overfed. It also requires the basic
qualities of us Rogalanders – the
farmer’s patient toil and the fisherman’s aggressive attitude to risk – to
be reactivated.
Nor must we turn the oil business
into industrial heritage, but apply all
its accumulated knowledge, experience, networks, innovative ability
and creativeness to exploring new
areas.
We must also manage to make
the energy sector attractive again
for talented Norwegians and foreigners. And we need to achieve a
synthesis between existing high-end
oil solutions, new system expertise,
and advanced materials technology,
nanotechnology, biotechnology and
information and communications
technology.
That represents a extremely
exciting thought, which a number
of bright sparks have fortunately
already begun to think.
Sooner or later, the oil wells will
run dry. In a longer perspective,
hydrocarbons must give way to wind
and tide turbines, wave energy, biofuels, hydrogen, thorium, solar power
and possible energy forms we cannot
imagine today.
Some of the world’s richest thorium deposits are to be found on
the great Hardangervidda plateau in
south-central Norway, which could
meet global energy needs for an estimated 10 000 years.
The Earth’s atmosphere absorbs
some 3.85 million trillion joules every
year. One watt equals one joule, and
an exajoule is one trillion joules. The
Hiroshima bomb released 60 billion
watts.
Global energy consumption in
2008 was 474 exajoules. This means
that, if we can find sensible and efficient ways of harnessing its output,
the Sun could meet all our annual
energy needs in just one hour.
So what is the problem? “The
answer is blowing in the wind.”
People in Rogaland know that the
herring (read prosperity) may disappear, but that it always returns. The
question is only in what form. i
“The circle has been
closed. Is this how
we are going to live
in future, as rentiers, investors and
asset managers?”
28
29
Eldbjørg Vaage Melberg
T
he Eyjafjallajökull eruption in
Iceland (right) raised awareness
of volcanic activity, which intensified when its ash clouds crippled
European air traffic and affected
thousands of travellers.
At any given time, however, at least one
volcano is erupting somewhere on the
Earth.
Machine
Nils Rune Sandstå, NPD geologist and
expert in vulcanism, describes the planet as
a big machine powered by its own internal
energy.
The temperature at the core is an ultrahot 6-7 000°C, which propagates outwards
to the mantel located just beneath the
outer crust.
At its surface, the Earth comprises roughly 20 crustal plates which constantly move
in relation to each other and give rise to
earthquakes and volcanic eruptions at their
edges.
This process is known as plate tectonics.
When plates move apart, new seabed crust
is formed between them while they push
against other plates somewhere else.
Oceanic plates are denser than continental plates, and when plates collide the
former are thrust under the latter in a process called subduction.
Knowledge of plate tectonics is relatively
recent, Mr Sandstå notes. It was not until
the 1960s that scientists had assembled
enough data to be able to confirm how the
process works.
Virtually all of Europe lies on the Eurasian
plate, part of which borders the North
American plate. The boundary between
them runs down the middle of Iceland.
This means that the island lies astride a
massive mid-oceanic ridge, with a central
rift which widens by two-three centimetres
per year. The gap is filled with upwelling
lava.
Heat flows cause partial melting of mantel rocks to create magma and local pressure reductions. Temperatures stay more or
less constant.
The molten magma rises because its
density is lower than the surrounding mantel rocks, accumulates in chambers and
erupts when the overlying crust can no
longer withstand the pressure.
Generally speaking, the first stage of a
volcanic eruption is explosive, blasting out
ash as well as lava which hardens on contact with the air.
Once the pressure in the magma chamber eases, Mr Sandstå explains, a less explosive phase is initiated as the lava flows out
more smoothly.
Vital but
deadly
Without volcanoes, the Earth would
be a lifeless ball of ice. Their eruptions
release energy from the planet’s interior and are important for the natural
carbon dioxide content of the atmosphere – but can also be disastrous.
Photo: Scanpix
Types
Two different types of volcano – fissure and central – are found in
Iceland, which experiences an eruption every five years on average.
In the first of these, lava flows out
through cracks in the Earth’s crust.
The best-known Icelandic fissure volcano is Lakagigar, which erupted massively in 1783.
Emerging from a 27-kilometrelong rift, the lava covered an area of
535 square kilometres. A fifth of the
island’s population died, mostly from
the toxins released or from hunger.
This mortality was caused by lava
and fumes covering grazing land and
poisoning everything that grew. Most
of Iceland’s livestock was killed by the
Lakagigar eruption.
Eyjafjallajökull is an example of
a central volcano, where red-hot
magma is supplied by a more stable
system of vents from the Earth’s mantel or crust.
The island of Surtsey was created
off Iceland in 1963 from an eruption
of the Vestmannaeyar central volcano.
Other well-known examples in this category are Katla and Hekla.
Ice
Mr Sandstå explains that a special feature of Eyjafjallajökull is its thick covering of ice and snow. The eruption which
lasted from April to the end of May this
year was accordingly sub-glacial.
The huge clouds of ash which rose
many kilometres above the volcano
were caused by meltwater flowing
into the crater and rapidly cooling the
magma.
That in turn caused fragmentation
and glass formation in the crater. The
pressure reduction freed dissolved
gases which, combined with the meltwater, led to explosive discharges of
ash which spread over much of
Europe.
Some observers now fear that Katla
will also begin to move. According to
Mr Sandstå, this volcano erupts every
40-80 years. The last time was in 1918,
so it is on overtime statistically.
Also covered by a glacier 600
metres thick, Katla has a bigger magma
chamber than Eyjafjallajökull. The two
volcanoes are very close, about 20 kilometres apart.
Katla is constantly monitored. An
eruption could create huge new ash
clouds. Bogs in western Norway contain
a layer of ash – the Vedde – discharged
by the volcano 12 000 years ago.
a
30
31
Determined to learn
from history
Hot spot
The least hazardous type of volcano is known
as a hot spot, with the Hawaiian islands as an
example. It involves a fixed column of heat rising from the Earth’s interior.
As the crustal plates move, the hot spot
remains static and lengthy eruptions can
thereby create new volcanoes. The Hawaiian
chain is a linear series of volcanic islands.
Sooner or later, these will start to sink
because the density of their lava-based rocks
is greater than the seabed crust. But the time
frame is millions of years, Mr Sandstå adds.
In addition to forming part of the MidAtlantic Ridge, Iceland sits on top of a hot spot.
That results in great volcanic activity, which in
turn is why the island exists at all.
Dangerous
The most dramatic and dangerous volcanic
eruptions occur in a subduction zone, where
an oceanic plate is being driven under a continental plate.
Liberation of water-bearing fluids from the
descending plate reduces the melting point
of the overlying rocks, and magma chambers
form.
Under these geological conditions, the
magma is highly viscous. Eruptions from such
volcanoes are explosive, with fumes, ash and
lava particles being flung as much as 40 kilometres into the air.
Density, heat and gravity create a red-hot
ash cloud known as a pyroclastic flow, which
runs down the mountainside at speeds of up
to 700 kilometres per hour.
An example is Vesuvius in Italy, which
buried the Roman cities of Pompeii and
Herculaneum in AD 79 with the death of every
living thing.
Crucial
Volcanic eruptions are crucial for life on Earth
because of their important role in maintaining plate tectonics – without which the planet
would have been an iceball.
When two continental plates collide, they
form high mountain chains like the Himalayas.
These in turn influence the climate, and are
accordingly important for a diversified ecosystem with climatic zones and the formation of
rivers and glaciers.
In addition to liberating the Earth’s internal
energy, vulcanism is important in supplying
and recycling the natural carbon content in
the atmosphere.
Eruptions also liberate sulphur, which can
become suspended as small droplets – aerosols – in the upper atmosphere and help to
protect the planetary surface from dangerous
solar radiation.
Nor is it a coincidence that major agricultural regions are found close to active volcanoes,
since the ash particles form good and nutritious soil. i
Notable volcanic eruptions
Vesuvius
This volcano is famous for its AD
79 eruption, one of the first big
natural disasters recorded in human
history. The towns of Pompeii and
Herculaneum and their inhabitants
were buried under ash and lava.
A smoke cloud is thought to have
reached 32 kilometres into the sky.
Mount St Helens
Located in Washington state, Mount
St Helens began spewing lava on 18
May 1980 in the deadliest and most
economically destructive volcanic
eruption in US history.
Fifty-seven people were killed
and 200 homes destroyed along with
47 bridges, 24 kilometres of railway
line and 300 kilometres of road.
The blast blew the top off the
mountain, leaving a crater with a
diameter of about 1.5 kilometres. A
new eruption occurred on 8 March
2005, when smoke and ash ascended
about 11 kilometres.
Etna
Mount Etna stands on Sicily’s eastern
coast, close to the town of Catania
with just over 300 000 inhabitants,
and ranks as one of the world’s most
active volcanoes. However, it is not
regarded as particularly dangerous
because the lava flows much too
slowly to do much damage.
Mauna Loa
This volcano is one of five which
make up the main Hawaiian island,
covering 51 per cent of its area and
rising to a height of 4 170 metres.
Mauna Loa’s most recent eruption
began on 24 March 1984 and lasted
21 days, but its most destructive
episode was in 1950 when the lava
reached a speed of eight kilometres
per hour. Houses, shops and farms
were destroyed.
The neighbouring Kilauea volcano
has been erupting continuously since
January 1983.
The loss of the Alexander L Kielland in 1980 made
a permanent impression on Magne Ognedal. The
head of the Petroleum Safety Authority Norway
(PSA) has been dedicated to preventing another
disaster ever since.
Eldbjørg Vaage Melberg and
Emile Ashley (photo)
Yellowstone
This super-volcano in the US state of
Wyoming last erupted 640 000 years
ago. Its three major eruptions over
the past 2.2 million rank as the largest on Earth during the period.
Over the past century, parts of
the Yellowstone National Park –
which embraces the volcano – have
risen by more than 70 centimetres.
Some experts therefore wonder
whether the magma chamber is
expanding beyond its current dimensions of 50 kilometres in length, 20
in width and 10 in depth.
Lake Nyos
A magma chamber underlying
this 200-metre-deep crater lake in
Cameroun is leaking carbon dioxide
into the water. A carbon cloud of 1.6
million tonnes was released in an
eruption on 21 August 1986, suffocating some 1 700 people and 3 500
domestic animals
Mount Pinatubo
This active volcano in the Philippines
last erupted in 1991, blasting large
volumes of aerosols into the atmosphere. That reduced global temperatures by about 0.5°C. Ash particles
from the huge eruption reached a
height of more than 30 kilometres.
(Source: Wikipedia)
The 30th anniversary of the
Alexander L Kielland accident on 27
March 2010 was marked by a ceremony
at the Broken Link monument to the
disaster outside Stavanger. Magne
Ognedal, director-general of the PSA,
says that this incident set the standard
for safety work on the NCS.
a
32
I
was at home when the news
of the sinking arrived,” Mr
Ognedal recalls. “It was 18.30.
My caller – I don’t remember
who it was – had great difficulty getting across their message,
so it took me a while to grasp what
had happened. It was quite incredible. Nobody had dreamt of such a
scenario.”
He had just been appointed to
head the NPD’s safety division when
the disaster struck, and freely admits
that it had a big impact on him.
“Kielland has meant a lot for me.
My personal experience of the incident is one of the main reasons for
my involvement in government safety
regulation over all these years.
“The driving force for me has
always been that we’re never going
to have anything like that again. I’m
just as disappointed every time I meet
people younger than me who don’t
know about the disaster.”
Mr Ognedal remembers encountering somebody a good deal younger
than him who worked in the industry,
and who wanted to know the reason
for a particular section of the regulations.
Asked if he was familiar with
Alexander L Kielland, the man said he
knew the name as one of Norway’s
four great 19th century authors. Mr
Ognedal was shocked that he had not
heard of the accident.
“My point was that the section he
had queried was among those adopted to prevent such a disaster happening again. It’s important to know the
past in order to help improve petroleum industry safety.”
Mobile
Since Kielland was a mobile unit, the
Norwegian Maritime Directorate was
the responsible regulator. The NPD’s
role was confined to checking the living quarters.
33
A regulatory reform gave the NPD
overall responsibility for offshore
safety in 1985, replacing the plethora
of agencies previously involved in
regulating the industry. They had all
had their defined responsibilities,
including developing regulations.
“The Kielland accident was one
of the reasons for this shake-up,”
explains Mr Ognedal. “What we’d
learnt from that incident was incorporated in the new regulations.
“For us at the NPD, the most important lesson was that we learnt something about risk management. Risk
can be said to comprise two elements
– probability and consequences.
“What happened with the Kielland
was unthinkable – the probability that
it would happen was low, but the consequences were huge.
“In order to be able to manage risk,
a detailed understanding of both elements is required.”
One result of the accident which
has been fundamental for both the
industry and the regulators is the
development of internal control
(management) systems and risk-based
regulations.
Routines
“I talked to all the oil companies about
their internal control routines,” Mr
Ognedal recalls. “Everyone said they
had these. I asked them to list their
routines on no more than two sheets
of paper and send them to me.
“One of the companies took six
years to respond – in acknowledgement that it had no good system to
describe. That’s how it started.”
Before 1985, he explains, Norway
had specification-based regulations
which detailed what the regulator had
to do. These rules were “inherited” by
the NPD after the reform.
A detailed assessment led to the
decision to create a new regulatory
regime. The most important reason
was that experience showed the
existing approach removed some
responsibility from the companies and
encouraged an old-fashioned inspector mentality – with checklists.
Today’s regulations are enforced
by the PSA, which was separated from
the NPD in 2004 to leave the latter in
charge of resource management.
The rules are based on functional
principles, which specify what the
industry must achieve in its safety
efforts, and leave the companies to
come up with good solutions to meet
these goals.
Regulations have to be predictable,
Mr Ognedal notes, and says that this
is achieved by developing guidelines
which also refer to industry standards.
Workers were initially unhappy
with the functional approach, preferring the government to set clear rules
which the companies must observe.
But the unions accepted the
changes in a wait-and-see spirit. A
major survey conducted a few years
ago found that both companies and
employees were generally satisfied
with the concept.
Unions and employers have participated in developing the regulations,
reflecting a desire when the reform
process began to create a proprietary
attitude to the changes.
At the time, the NPD was the only
regulatory agency in Norway to take
this approach. It has naturally been
continued by the PSA. Meetings on
the development of new regulations
have been held every other month in
the Regulatory Forum since 2004.
Setback
“The safety status of the NCS is generally good, and our aim is to maintain and develop this level,” says Mr
Ognedal, but adds that a setback was
experienced in 2009.
“We’ve made progress in reducing
the number of gas leaks over several
years because the industry got to grips
with the problem after both it and the
government became concerned at the
trend.
“However, this positive development has now ceased, and the industry is going to have to do something
about it.”
He maintains that the government’s
most important target is to help ensure
that the petroleum sector is as safe as
possible, and constantly improving.
It is important that the industry
can handle major accident risk in a
good way, so that incidents with a low
probability but big consequences are
avoided.
That calls for active management
involvement every single day. And
everyone should be informed about
major disasters and incidents in the
industry.
“We must learn from national and
international events, and apply that
knowledge to our work in Norway.”
explains Mr Ognedal, who had plenty
to do during the big blowout in the
Gulf of Mexico.
“That’ll boost general awareness
of major accidents and raise the level
of safety on the NCS. The Kielland
incident was unthinkable. Nor had we
expected the gas blowout on Snorre A
in the North Sea or the latest incident
in the US Gulf.
“The companies have everything
that’s needed to drill a well safely. So
it’s hard to comprehend how a blowout can happen.”
Risk in the petroleum industry can
never be reduced to zero. The point is
to keep it under control – at all times. i
Norway’s biggest offshore disaster occurred just before 18.30 on 27 March
1980. The Alexander L Kielland flotel capsized and sank by the Edda platform
on the Ekofisk field in the North Sea, with the loss of 123 lives. Eighty-nine
people survived.
34
Lower gas prices
open window for
improving oil recovery
New sources of supply and reduced demand
have led to a temporary fall in gas prices.
That makes it more profitable to use this
commodity for boosting oil extraction.
35
Petter Osmundsen, professor of petroleum economics,
University of Stavanger
S
ubstantial price differentials between oil and gas
open up periodically, most
recently in the first half of
2010. Increased production
of liquefied natural gas (LNG) and
coal bed methane (CBM), new shale
gas output in the USA and a fall in
demand since the financial crisis have
driven gas prices down.
In the short and medium term,
this means it could be profitable to
increase the scale of natural gas injection in Norwegian fields as pressure
support to improve oil recovery.
That depends on an expectation
that the weakening in gas prices relative to oil will be temporary. This consideration is discussed in more detail
below.
At the same time, the necessary
investment must be made to permit
gas injection in fields where more
crude and natural gas liquids (NGLs)
could be extracted.
In press interviews, Statoil chief
executive Helge Lund has expressed
his confidence in gas over the longer
term and pointed in part to the
growth in Asian demand.
“We believe we can secure higher
gas prices in the future,” he told
Stavanger Aftenblad. “That means
we’ll be holding back a bit on gas
output for a few years.”
Oslo business daily Dagens
Næringsliv reported on 11 February
that, according to its sources, Statoil
has renegotiated long-term gas sales
contracts.
The revised terms include an
acceptance that the contractual
price of gas must be tied to a greater
extent to spot prices, and a reduction
in offtake commitments for the buyers.
Commitment
So Statoil has spare gas and believes
the price will increase in the future.
That argues in favour of an increased
commitment to injection.
However, such projects have lead
times and should fall within the time
frame when gas prices are expected
to be low. And they call for some level
of capital spending and other input
factors.
Gas injection measures must
accordingly be competitive with
other projects. In any event, it would
be true to say that – all other things
being equal – today’s price changes
enhance the profitability of possible
improved oil recovery (IOR) projects
based on natural gas injection.
But nobody in Statoil has said
whether instructions have been
issued to the organisation to increase
efforts being made in the various gas
injection projects already under way
in the group.
However, the view that the gas
price decline will be temporary
has been confirmed by a number
of market players, including David
Lougman, head of Norske Shell.
He told Stavanger Aftenblad on
13 April that prices would eventually rise, in part because gas will be
strengthened as an energy source
if security of supply becomes more
important for its buyers. Gas can
accordingly expand at the expense of
coal and wind power.
Mr Lougman also noted that gas
prices have become more detached
than before from the cost of oil. He
believed that increased gas-to-gas
competition results in a pricing where
the most expensive gas projects –
including Russian developments – set
the standard.
The Cambridge Energy Research
Associates (Cera) consultancy argues
along similar lines in asking if prevailing prices will be high enough to
fund the projects needed to meet gas
demand.
Generally speaking, it makes sense
not only to listen to what the oil companies say but also to look at what
they are actually doing.
The companies on the NCS do
not appear to have panicked and
cut all further investment related to
gas projects. Eni, for instance, has
submitted its plan for development
and operation (PDO) of the Marulk
gas and condensate field in the
Norwegian Sea, with an estimated
price tag of NOK 4 billion.
Change
The change in relative pricing is indicated by Statoil’s interim results for
the fourth quarter of 2009, when the
prices it obtained rose by 17 per cent
from the same period of 2008 for oil
and fell by 48 per cent for gas.
This dramatic shift will be reflected
in short-term dispositions. But excessive emphasis must not be given to
price data for a single quarter.
In 2009 as a whole, for instance,
the relative price of gas strengthened
because it fell by 21 per cent compared with 29 per cent for oil. That
emerges from figures presented by
Statoil when publishing its interim
results.
A large proportion of Norwegian
a
36
37
Sources
Asche, F, P Osmundsen and
R Tveterås (2002), ”European
Market Integration for Gas? –
Volume Flexibility and Political
Risk”, Energy Economics 24, pp
249-265
Cera (2009), European Gas, IHS
Cera European Gas Executive
Roundtable, 2 December 2009
Osmundsen, P, R Skjølingstad
and Ø Håland (2003),
Implisitte opsjoner i gassomsetning (Implicit options in gas
trading), Norsk Økonomisk
Tidsskrift 117, pp 127-147
Figure 1. Gas market trends in 2009. Source: presentation about a strong gas portfolio in a turbulent
market by Rune Bjørnson, executive vice president for natural gas, when Statoil published its results
for the fourth quarter of 2009 on 11 February 2010. Specified data sources are BMWi and Heren.
gas sales are governed by long-term
contacts where prices are tied to such
indices as the oil price, with some time
lag. Cera (2009) estimates this lag for
oil-indexing in Norwegian export contracts at three to six months.
The bulk of the decline in gas prices
occurred from the fourth quarter of
2008 to the second quarter of 2009,
and was modest in the second half of
2009. See figure 1.
Part of the price drop can be
explained by the dynamic elements in
the sales contracts. Oil prices fell sharply in early 2008, leading as usual to a
downward adjustment in contractual
prices for Norwegian gas.
It is also the case that long-term gas
deals are flexible contracts where buyers are able to adjust their offtake – in
some cases, even below the minimum
volume. The buyer must pay for the latter, but delivery can be postponed.
Liberated
This adjustment liberated a larger volume for the spot market, where gas
prices have been substantially lower
than in the long-term oil-indexed contracts.
Given that production was not
curbed (possibly injected), the average
price achieved by Statoil in 2009 can
also be seen in conjunction with this.
Russia’s gas exports were another
important factor last year. Because
the average time lag is longer in the
Russian contracts – put at nine months
in Cera (2009) – the contractual price
for Norwegian gas was significantly
lower during the first half of 2009 than
in the Russian case, where high 2008
oil prices continued to exert an effect.
This led in part to a halving of
Russian gas exports to Germany during
the first half of last year compared with
2008, with a correspondingly high level
of Norwegian sales.
Contractual obligations meant the
buyers had to nominate more Russian
gas towards the end of year – reducing
offtake under the Norwegian contracts
and thereby liberating a larger volume
for the spot market.
Cheaper
Cost efficiencies from improved technology for horizontal multilateral drilling and stimulating/fracturing have
made it cheaper to produce gas from
shale.
Many people claim this will have
negative consequences for the price
of Norwegian gas relative to other
sources. But that view needs a number
of refinements – including a distinction
between short- and long-term effects.
Gas prices have declined for both
immediate and future delivery, which
can be attributed in part to increased
supplies of unconventional sources
such as LNG, CBM and shale gas.
But it also reflects reduced demand
as a result of lower economic growth.
The price of oil and other energy has
fallen, too, and gas pricing follows
alternative sources in most markets.
Many market players have
expressed confidence in a positive
price trend for gas over the longer
term, once energy demand recovers as
the current recession ends. Moreover,
Norwegian gas is significantly cheaper
today than shale gas produced in
Europe.
In the short term, shale gas supplies
have offset the contraction in conventional US gas production and, in combination with lower demand, reduced
the sharp rise in American imports.
At the same time, gas liquefaction
capacity has been built up in many
other countries to meet a forecast rise
in demand. Some of this LNG is now
being diverted to Europe and putting
pressure on pipeline gas prices.
LNG can only be received where a
gasification terminal has been built,
and constraints in the European transport network moderate the price effect
in a number of areas.
The market also manages to dampen the impact of technological shifts
like those currently being witnessed.
Capacity constraints could boost shale
gas production costs, for instance, if
many companies develop resources
simultaneously – as has been seen
with the Canadian oil sand projects.
Part of the cut in shale gas costs
reflects reduced drilling expenses
because fewer conventional gas wells
are being spudded. That could change
if everyone jumps on the bandwagon.
As with other non-renewable
energy sources, production costs and
environmental requirements for shale
gas vary from field to field. The cheapest are developed first.
energy bearers.
But price is not the only consideration for society as a whole. National
security of supply also plays a part.
Europe has had concerns about its
declining gas output and growing
dependence on Russian imports.
With the increased recoverability
of shale gas adding to reserves, and
with LNG available from a number
of sources, this security has substantially improved. That could weaken
the development of competing and
more expensive energy forms such as
nuclear and wind power.
Caution must be exercised when
analysing the gas market in isolation,
as above. This is perhaps the biggest
problem with commentators who suggest a long-term negative effect on
the export price for Norwegian gas.
Customers are not seeking gas as
such, but energy, and a clear price convergence can be seen over time.
Gas competes in many contexts
with coal, oil and other energy sources, and shale gas production could
increase as much at the expense of
these alternatives as of Norwegian gas
output.
That applies particularly in the
longer term, when customers can
make adjustments and adapt to
changes in relative prices. This is the
opposite of the effect observed when
oil and gas prices rose – and demand
for coal was boosted, for instance.
Doomsday prophesies about the
gas market seem to build on a view
that this commodity, which is very
practical for such applications as space
heating, electricity generation and
transport, will be much cheaper than
competing energy bearers in the long
term.
Such an assumption contradicts
elementary commercial principles,
which specify that the cheapest
energy source will normally be chosen
– subject to certain modifications.
If shifting to gas involves conversion costs, the move will not be made
until the price change looks durable.
Temporary price differentials may
arise, but demand changes tend over
time to equalise the prices of different
Joker
Problem
Climate measures are the joker at
the national level. If climate taxes are
pitched correctly over time, so that
they reflect the volume of carbon
dioxide and other emissions, producer
prices for gas will be increased relative
to oil and particularly coal prices.
The big headlines about reduced
recovery costs for shale gas give the
impression that this is a unique event.
But that is not the case.
Improvements in production technology have always been an integral
part of the oil and gas industry, without causing
overly dramatic consequences.
A distinction is made
between
conventional and
unconventional resources, with the
former being commercially recoverable under prevailing prices and technology.
Over time, unconventional resources become conventional through
changes in production methods or
prices. Shale gas is moving into the
conventional category, just like oil
sands.
To put this in a historical context, it
is enough to recall that oil in medium
to large water depths was earlier classified as unconventional.
Value
Statoil prioritises value rather than vol-
ume, said Rune Bjørnson, its executive
vice president for natural gas, when
the group’s accounts for the fourth
quarter of 2009 were presented.
An important question is whether
this represents an adjustment to the
prevailing conditions or a more permanent approach.
A widespread perception is that
Statoil’s gas strategy has so far
involved increasing offtake wherever
possible. That first changed when the
Norwegian government turned down
plans to accelerate gas output from
Troll Phase II.
The companies disagreed there
and then with this decision and others
like it, but have subsequently come
to see that they represented wise
choices.
Oil production from Troll and gas
injection on Statfjord and Oseberg
are key elements here. The petroleum
industry may not always see what is in
its own best interests.
It is easy to be wise after the event,
and this type of decision is not only
complex but also burdened with many
uncertainties.
Nevertheless, the companies could
find it useful to study their own organ-
isational structures, decision-making
systems and incentive mechanisms.
The question then is whether these
aspects might result in excessively
short-term optimisation of fields due
to produce for up to 50 years, and
with an infrastructure usable for even
longer.
Similarly, the industry should seriously evaluate the window it has now
been offered for gas injection and IOR,
and not simply hold passively onto
gas. i
UNCERTAIN PROSPECTS –
see page 39.
38
Rock shots
Uncertain
prospects
Knut Henrik Jakobsson
Basalt fan
The present-day North Atlantic began
to form about 56-55 million years ago
when Scandinavia and Greenland started moving apart. As the Earth’s crust
stretched, the hot mantle came closer
to the surface and led to huge volcanic
eruptions with extensive lava flows.
A number of regions experienced
particularly heavy volcanic activity, including the Faroes – where this
photograph was taken. Thick layers of
solidified lava built up over wide areas.
Surface processes eroded this basalt,
and a landscape with rivers and lakes
formed. Fauna and flora also became
established. Although recurring at long
intervals, the vulcanism was far from
over. New eruptions ejected more lava
to bury the landscape.
Pictured here is a lava flow which has
filled a surface depression – perhaps a
swamp, a river channel or a small lake.
Cooling in this moist setting caused the
lava to contract and fracture, creating
hexagonal basalt columns in the shape
of a fan. Subsequent erosion has pro-
duced this wall along the shoreline at
Kulagjógv on Suduroy island.
Wide sedimentary deposits in today’s
Norwegian Sea were also covered with
solidified basalts, which present an extra
challenge when seeking hydrocarbons
in areas of extensive vulcanism. They
absorb the energy in seismic waves and
mask the underlying rocks. i
Terje Solbakk and Nils Rune Sandstå
(photo)
www.npd.no
39
Most shale gas is found in the USA and has long been produced,
but only in the past five years have drilling advances and markets
allowed wide commercial exploitation. It remains unclear whether
this commodity has any future in Europe
The shales in question have been buried sufficiently deep to generate gas but not enough for it to be squeezed out in large volumes, and
deposits are generally 2 500-3 500 metres down.
A great deal of natural fracturing must have occurred in the shales,
which also need some thin sandstone strata for production to be possible. Output is confined to the best zones in the shale pack, often only
a few tens of metres thick.
The technique employed involves drilling long horizontal wells and
pumping down large volumes of water under high pressure in order to
create more fractures and enlarge the natural ones.
When the well is then opened, gas flows back with a high level of
output for a short time and a subsequent period of more stable but
much lower production.
Wells can produce for many years, although fracturing must be
repeated at regular intervals. Several thousand wells are needed in the
same area to achieve an adequate flow.
The big commitment being made to these reserves in the USA could
make the country self-sufficient in gas, and even allow it to export production in the longer term.
A big investment has been made in shipping liquefied natural gas
(LNG) from Europe, north Africa and the Middle East to the USA. These
resources are now being diverted to the European market, causing
prices there to fall.
Russia’s continued development of its huge gas reserves, with
pipelines to Europe via the Baltic and through the Black Sea, could also
affect European supplies and prices.
A major shale gas study is being pursued by the Gas Shales in Europe
(Gash) consortium, which brings together a number of oil companies,
universities and geological surveys.
Most of the areas with a potential have already been licensed to
various companies. A number of wells have been drilled in such areas as
Skåne in southern Sweden. Reports indicate that the results so far have
not been particularly positive.
Gas-rich shales in Europe lie in populated areas. Environmental
considerations, such as drilling close to water resources, will need to be
taken into account.
Due to run for three years, the Gash study aims to secure a database
for European shale gas and will help to determine whether the continent has a future with this commodity.
Volume 7 - 1
Responsible publisher
Norwegian Petroleum Directorate
P O Box 600
NO-4003 Stavanger
Norway
Telephone: +47 51 87 60 00
Telefax: +47 51 55 15 71
E-mail: [email protected]
Editorial team
Bjørn Rasen, editor
Bente Bergøy Miljeteig, journalist
Eldbjørg Vaage Melberg,
communications advisor
Rolf Wiborg, senior economist
Terje Solbakk, geologist
Rolf E Gooderham - English editor
Production
Arne Bjørøen - graphic production
Printer: Kai Hansen, Stavanger
Paper: Arctic Volume 200/130 g
Print run Norwegian: 7 000
Print run English: 2 000
Layout/design
Janne N’Jai
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October 2010
Norwegian Continental Shelf
on the web: www.npd.no
Front cover
Drawings by 10-year-old pupils at
Madlavoll primary school, Stavanger. See
the full set at www.npd.no.