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Norway’s Oil Dilemma: To Drill or Not to Drill

Long enriched by its offshore oil supplies, Norway is still looking to expand its operations into Arctic waters. Industry researcher Helge Ryggvik explains how the country can still be seen as an environmental pioneer – and why it may struggle to remain one.

Written by Hannah Hoag Published on Read time Approx. 5 minutes
The Ekofisk oil field in the North Sea was discovered in 1969, kicking off Norway's energy boom. CC BY-SA 3.0 Wikimedia/BoH

Ever since Norway discovered oil in the floor of the North Sea in the late 1960s, it has tried to balance its development of oil and natural gas with protection of the environment. In June, Norway’s parliament approved a motion to make the country carbon neutral by 2030, two decades earlier than planned.

But Norway’s status as global environmental leader is slipping. On Yale University’s Environmental Performance Index, Norway ranked 17th out of 180 countries for 2016, excluded from the top 10 group for the first time since 2006. It has also been caught up in debates over its plans to develop oil and gas production in the Lofoten Islands (now off the table) and to open up new concessions in Arctic waters.

To help explain Norway’s complex history with offshore oil production – and its future, Arctic Deeply spoke with Helge Ryggvik, a researcher at the University of Oslo’s Centre for Technology, Innovation and Culture.

Arctic Deeply: When did Norway begin to mature as an oil nation?

Helge Ryggvik: Oil was found in Norway in 1969, just before Christmas, on the southwestern part of the Norwegian continental shelf in the North Sea. Throughout the 1970s, oil production expanded rapidly in the North Sea, in both the British and Norwegian sectors.

Norway went on to develop its own oil companies and a competent supply industry. It competed internationally in the offshore sector of the industry and developed new technologies that allowed it to go into deeper waters, where it was too deep to use divers and you needed remotely operated vehicles, sonars and steering equipment. Industry continued to move into deeper waters in the 1990s and 2000s, off Brazil and in the Gulf of Mexico, but using Norwegian technology.

Arctic Deeply: Did environmental considerations help control the growth of Norwegian offshore oil production?

Ryggvik: The environmental challenge was a very important discussion in the country. Historically, Norway was a maritime country. When the drilling began, it had a strong fishing industry that was afraid a well blowout or tanker would pollute the landscape and destroy the fisheries.

There were limitations on the industry, from the very start. The first concession rounds were limited to areas below 62 degrees latitude [the line separating the North Sea from the Norwegian Sea]. It protected the fisheries in the beginning and it was a way to avoid getting into arguments over the environment or have confrontations with the fishing industry.

In the 1970s and 1980s, the main overarching slogan that summarized Norwegian oil policy was that we should have a slow pace of oil extraction. It was partly a response to the oil crisis. We knew that it was a limited resource, and there would be an end one day. But that if we took it up slowly, it wouldn’t destroy the rest of the economy and it would be a lot simpler to adapt when production slowed down.

But there were also environmental considerations, that we should extract oil in an environmentally friendly way, to make sure that there were no spills. Norway also had strict regulations against burning gas [associated with oil extraction], because it was a resource. Companies that wanted to develop an oil field had to figure out what to do with the gas without burning it. Now we know that burning it is bad, because it creates carbon dioxide.

Arctic Deeply: Norway is seen as an environmental leader, which seems to contradict its commitment to offshore oil extraction.

Ryggvik: The Brundtland Commission [World Commission on Environment and Development], led by Gro Harlem Brundtland, put carbon dioxide emissions on the global map and initiated the process that led to the Kyoto Protocol. The Norwegian Parliament decided to limit carbon dioxide pollution from Norway, based on the idea that we should be the best when it came to the environment.

But then the banks collapsed [1988-93], and there was large unemployment in Norway. We had had very strong regulation on oil production and then we left it – production tripled between 1987 and 2000. It was seen as the way to solve the economic crisis. Suddenly, we were one of the countries taking out its resources the fastest.

Production has halved since 2000, but we have been saved by the price of oil, which quadrupled between 2000 and 2014. And because there was no restriction on the activities, the number of people working in the oil industry increased threefold. More and more people became dependent on oil production.

Even as we were learning about the environmental crisis, we tripled oil production. How could we then pretend to be a country concerned about the environment? Well, Norway was instrumental in developing the Kyoto regime and the accounting process. The system was based on the burning of oil, and we didn’t burn that much. We use an enormous amount of electricity, because we have cheap electricity [mostly from hydropower]. So we came out OK. Still, the carbon dioxide pollution that comes with the production of oil increased manyfold, and it destroyed the Norwegian carbon budget.

The Vestfjord with the mountains of Lofoten seen from the island of Løvøy in Steigen. CC BY-SA 3.0 (Wikimedia/Finn Rindahl)

The Vestfjord with the mountains of Lofoten seen from the island of Løvøy in Steigen. CC BY-SA 3.0
(Wikimedia/Finn Rindahl)

Arctic Deeply: Why is the struggle with the Lofoten Islands, north of the Arctic Circle, back in the news?

Ryggvik: The area has been closed to oil production for the past three governments. In the Norwegian political system, the major party needs smaller parties to support it so that it can form a government. In 2013, the newly elected conservative party formed a minority government with the backing of other parties based on a compromise that they would protect the Lofoten Islands.

[Editor’s note: Norway’s oil minister had previously asked to have the ban lifted following the upcoming 2017 election, in order to boost the economy and create jobs in the north. It has since backtracked on those plans.]

Arctic Deeply: Can we expect to see more oil production in the Norwegian Arctic?

Ryggvik: The main issue now is to what degree should the Arctic be opened. The first [Arctic] concessions were close to the coast and not in deep water. The area that they have opened up now is much more critical. It is much further north, and if you have a blowout, you can’t mobilize people as quickly. It will be much more costly, because you need special platforms for helicopter bases, etc. And it is close to the Arctic ice pack.

We now have a large industry that needs activities. We started below 62 degrees latitude and then moved further north, past Lofoten and now to the Barents Sea. There probably isn’t much oil there for the companies, but there is strong pressure from the supply industry and some of the trade unions. There is a big struggle now to get the trade unions to understand that it isn’t in their best interest. Half of the trade unions now support the idea of protecting oil in the Arctic. They’re arguing that we have to make Norway a green workplace rather than an oil workplace.

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