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Oil & Minerals
Oil in Norway

Continental divide

Editor’s Briefing | Oslo is defying opponents of Arctic drilling with what could turn out to be its biggest expansion yet
Oil & Minerals
Not seeing the sunset for the rig (Photo: Statoil)

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Map of proposed Barents Sea blocks (in pink)

Click to enlarge

Map of proposed Norwegian Sea blocks (in pink)

Click to enlarge

Norway’s northern continental shelf, according to Petroleum Safety Authority, a regulator, is an area known for its vast distances and lack of infrastructure. It can also be described as one of intense disagreement over Oslo’s plans to expand oil drilling there.

This row, which currently includes a lawsuit against the Norwegian government, is set to grow more intense after Oslo announced yesterday that it was proposing the largest expansion ever of its drilling activities in the region.

Of the 102 exploration blocks recommended by the oil industry for inclusion in the country’s 24th annual oil and gas licensing round, 93 are in the Barents Sea. The remaining nine are in the Norwegian Sea, further to the south and west. (See maps at right)

SEE RELATED: Life after oil

Both areas lie to the north of the North Sea, where the Norway originally made its fortunes as an oil producer. But as those fields are depleted, it has begun opening the Barents Sea to exploration. Prior to this year, last year’s round had been the most significant licencing of blocks in the Barents, with a total of 53 available. Another 34 were offered in the Norwegian Sea. As with this year, no new areas are being opened in the North Sea.

Further underscoring the northern migration of the oil industry, more than half of the blocks being considered for the coming round are north of the Wisting block, the northern-most discovery made in Norway so far.

A final announcement of which blocks will be included in the licensing round is expected before the end of June, after regulators have had the chance to review the input of conservation groups, state agencies, business interests, citizens’ groups and the like. A decision about which firms will be awarded exploration rights is expected by the end of the year.

SEE RELATED: The long game starts now

Businesses and regional lawmakers cheer the expansion. Most importantly, they suggest it is necessary economically to replace declining North Sea output. They also argue that with demand for oil due to persist, it is best that it come from a well-regulated country such as Norway.

But, the announcement also comes as the European Parliament is considering an Arctic strategy that contains wording calling on the EU to work against oil drilling in the Arctic. A decision to expand exploration now shows Oslo’s indignation, and it could score the government points as it prepares for a general election later this year.

Conservation groups, on the other hand, are enraged. Their lawsuit, filed in October, seeks to have oil drilling declared illegal for violating a section of the constitution guaranteeing citizens the right to a clean environment. Expanding drilling adds insult to the injury they believe is already being done.

The lawsuit is just one legal measure opponents have turned to as they seek to stop drilling in the Barents. In 2014, for example, Greenpeace, a conservancy, sought to stop drilling by filing a complaint with environmental authorities, suggesting that an imminent Statoil drill threatened a protected area. The complaint delayed operations, but when it was rejected, the group resorted to traditional tactics, including boarding the drilling rig, to prevent it from completing its operations.

SEE RELATED: New geography

Another argument against opening the new areas that conservation groups are bringing up is the financial risk. Instead of selling licences, Norway awards them on a competitive basis. What’s more, firms that receive a licence can get 78% of their drilling costs refunded, and this practice, say conservation groups, could wind up costing the state billions of dollars if no oil is found, or if prices do not recover enough to make drilling profitable.

“This is an expansion that will be completed at the earliest in 15 years,” Frederic Hauge, the head of Bellona, a conservancy, said in a statement. “Who knows what the price of oil will be at that time.”

Add ‘uncertain’ to the list of adjectives used to describe the northern continental shelf.