Wednesday

20th Jun 2018

Interview

Norway oil minister: we'll keep drilling because we do it greener

  • Norway has over two decades of experience with Carbon Capture and Storage in its offshore gas field Sleipner (Photo: Harald Pettersen / Statoil)

Norway presents itself as an environmentally conscious country. Indeed, its government hopes that within seven years, Norwegians will no longer buy cars powered by fossil fuels.

But while boasting a climate-friendly image, it is also continuing to sell fossil fuels across the world.

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  • Petroleum and energy minister Terje Soviknes – a member of an anti-tax, anti-EU party – praised Norway's CO2 tax and hoped for European cooperation on carbon capture and storage (Photo: Ole Jørgen Bratland / Statoil)

Even though Norwegians are increasingly driving electric cars – which are powered mostly by CO2-free hydropower – the country itself is banking on a continued reliance on oil and natural gas.

"Fossil fuels will be there, and Norway will be there as a stable producer of oil and gas for decades to come," petroleum and energy minister Terje Soviknes told EUobserver in an interview.

He referred to scenarios published by the International Energy Agency (IEA), and in particular one in which the target of keeping global warming below a 2C rise compared to pre-industrial times is achieved. The IEA calls this its sustainable development scenario.

"The International Energy Agency says that natural gas will increase, oil production will in their main scenario be stable, but in their sustainable development scenario [it] will decline," said Soviknes.

"But still in 2040 in a 2C scenario, there will be a demand for 70m barrels of oil a day," he noted.

And if demand is there, then the fossil fuels should at least be produced with as low emissions as possible, he added.

"I don't know if you are aware [of] it, but at the moment we have approximately 50 percent less CO2 emissions from the Norwegian oil and gas production compared with the average emissions from oil and gas production elsewhere in the world," said Soviknes.

Offshore tax

He said that is because of Norway's CO2 tax for the Norwegian continental shelf, in place since 1991.

Soviknes is a member of the right-wing Progress Party, which was founded in 1973 – the same year as a major oil crisis – with tax cuts as one of its core goals.

"We are not fond of taxes, but this CO2 tax on the Norwegian continental shelf has worked," said Soviknes.

"It has motivated the oil and gas companies to reduce their emissions from the production," he noted.

Soviknes also noted that the demand for energy will only increase with a growing world population.

"We need more energy to lift people out of poverty and [increase] their living standards," said the energy minister.

Oil will be around

He said the fossil fuels were not only needed for power generation, but also for shipping and aviation, as well as petrochemical processes.

"Oil and gas will be there and we will be a stable producer – I can assure you. We just produced half of our estimated resources on the shelf so far," he added.

The Nordic country obviously has an economic interest in continuing to sell fossil fuels as well. The government has estimated that the total net cash flow from the petroleum industry will be around €19bn this year.

At the same time, Norway is hoping to reduce its own carbon emissions.

Since much of its electricity is already low-carbon, it has recently looked at other sectors.

Carbon Capture and Storage

Minister Soviknes spoke to this website in the sidelines of a conference held in Oslo about carbon capture and storage (CCS), the technique of liquefying CO2 and preventing it from being released in the atmosphere.

Norway has over two decades of experience with CCS in its offshore gas field Sleipner, but it is now looking to capture CO2 from industrial processes.

"Three, four, five years ago, everybody was talking about CCS as a tool in power generation, to reduce emissions from coal-fired and gas-fired power generation. Now, more and more experts and also politicians are focussing on CCS as a tool in industry," said Soviknes.

He noted that energy-intensive industrial companies have few alternatives available.

"They have CO2 emissions from their industrial processes. They need to do something to be competitive in the future," he added.

Three industrial sites are willing to take part in a pilot project: a waste incineration plant, an ammonia plant, and a cement factory. The idea is that they only need to capture the CO2 and bring it to their front door, with others taking care of the rest.

This spring, the Norwegian parliament is due to decide if it will fund the next phase of the project, the so-called Front-End Engineering Design (FEED) phase.

"I'm quite confident, especially for this FEED phase [that the parliament will approve it]," said Soviknes, whose party is part of a minority coalition.

"Probably we will be ready for a final investment decision in the parliament in 2020," he added.

Anti-EU membership, pro-EU funding

Although his party is against becoming a member of the EU, Soviknes is very much in favour of pan-European cooperation on CCS.

"I see a role for the European Union. We will seek support from the European Union for financing this project," he said.

Soviknes also stressed that the selected storage site has much more capacity for CO2 than the Norwegian companies participating will provide. He could see CO2 captured in the Netherlands or the UK also being transported to the Norwegian storage site.

"My point of view is that we should collaborate within the European Union or European countries all together on this issue. It will mean a lot for our industry and it's really important if we are going to reach the targets in the Paris agreement," said Soviknes.

"I'm really optimistic. There is a new momentum in the discussions about CCS."

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