Chapter 7: Oil
a momentum of its own
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In this connection, a useful way to think about the Norwegian offshore industry is to see it as an enormous business cluster, where "cluster" is defined as a concentration of interconnected producers, suppliers, and associated institutions in a particular commercial sector and geographic region. The point of a cluster is that it develops a momentum of its own as its collective technological and intellectual resources generate a multiplicity of R&D and innovation activities that can ultimately become at least as valuable as the products and/or commodities on which the original industry is based.
Of course, numerous smaller clusters have developed within this vast nationwide enterprise. The "oil city" of Stavanger in particular boasts of its status as an "energy cluster" based on expertise and experience extending "across the vast array of sectors within the petroleum industry". The second largest such grouping, in and around Oslo, largely comprises ICT-and engineering-intensive companies, as opposed to the emphasis on production, equipment and supply in Stavanger.
Such clusters are developing rapidly all along the Norwegian coast: in the far north, at least half a dozen educational institutions, nourished in large part by the Snøhvit development, have formed an "Energy Campus" which already includes the largest natural gas research and educational centre in the country. Down at the other end of Norway, the project known as NODE (Norwegian Offshore & Drilling Engineering) aims to ensure that companies in Sørlandet, the southernmost region, continue to make a world-class contribution to the petroleum industry.
"The skills, experience and technology developed on the Norwegian Continental Shelf are utilized by the international oil and gas industry all over the world", the Norwegian Petroleum Directorate says. An organization known as INTSOK (the Norwegian Oil and Gas Partners), established in 1997 by the Norwegian oil and gas industry and the Norwegian government, is tireless in its efforts to promote the internationalization of the Norwegian oil and gas industry "on the basis of the industry's leading edge experience, technology and expertise", while KonKraft, which describes itself as "a collaboration forum" for the Norwegian Oil Industry Association (OLF), Federation of Norwegian Industries, Norwegian Association of Ship-owners and Norwegian Trade Union Federation (LO), is another initiative which aims to "enhance cluster dynamics" by addressing issues of strategic importance to the petroleum sector.
Petromaks
The government pursues what it describes as its "total commitment to R&D in the petroleum sector" in large part through Petromaks, an umbrella programme supported by the Research Council of Norway. As "the largest value creation potential in Norway lies in increased exploitation of existing fields and in better access to new reserves", Petromaks plays a vital part in any long-term scenario for the Norwegian continental shelf. The overall objective is "to enhance the next 50 years of oil-related activity and secure gas production in a 100-year perspective" while continuing to develop the Norwegian petroleum industry as an internationally competitive industry so as to ensure that the sector continues to play "a key role in the sustainable growth and financing of the Norwegian welfare society and to promote sound management of Norway's natural resources".
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- Environmental technology for the future
- Exploration and reservoir characterization
- Enhanced recovery
- Cost effective drilling and intervention
- Integrated operations and real time reservoir management
- Subsea processing and transportation
- Deepwater, subsea and arctic production
- Gas technology
- Health, Safety and Environment (HSE).
Strategic R&D
Petromaks is also responsible for implementing the strategy drawn up by the Norwegian petroleum industry's strategic body OG21 (Oil and Gas in the 21st Century).
OG21 is a task force set up by the Ministry of Petroleum and Energy in 2001 to help the petroleum industry to formulate a national technology strategy for added value and competitive advantage in the oil and gas sector. The objective is to develop a more coordinated and focused approach to R&D throughout the industry. The strategy focuses on key challenges seen as "crucial to the future value creation on the Norwegian Continental Shelf and for enhancing the competitiveness of the oil and gas industry", including the need for sustainable development of the sector and for increased exports of technology. These are linked in turn to eight corresponding "technology target areas" (TTAs), among them environmental technology.
OG21 notes that "environmental technology should be incorporated with all technology development to obtain sustainable development and it is expected that many of the projects under other TTAs will cover the needs identified as gaps here". Current priorities in this context include "the pursuit of 'cleaner and more energy-efficient petroleum production' [which] can be compatible with and complementary to the pursuit of 'alternative energy solutions'"; and a demand for "more even-handed treatment in terms of government support and funding" for such pursuits.
Crucial clusters
Inevitably, the cluster concept looms large in OG21, which the ministry sees as playing "a crucial role in making sure that public funding is coordinated and that it supports and supplements the efforts in the petroleum cluster in an optimal way".
The strategy embraces the concept of the Norwegian petroleum industry as "a fully integrated and competitive cluster" comprising national oil companies, international oil companies, offshore oil contractors, technological service companies and industry initiatives. "The growth of a cluster", the authors of OG21 note approvingly, "is a self-reinforcing cycle" through which "it is possible to see the contours of an internationally recognized petroleum technology hub". However, the process requires "joint funding and increased inward investment in financial and human capital".
Pollution control
Norway's long, weather-beaten coastline is one of the world's most difficult areas in which to carry out large-scale industrial operations. At these northern latitudes there are huge variations in weather and light conditions, ranging from a harsh Arctic climate to mild winters with mean temperatures above freezing in many mainland coastal areas. Including fjords and bays, the length of the continental coastline totals 25,148 km; including islands, the figure is 83,281 km.
For decades the Norwegian petroleum industry has operated under such conditions, and with remarkable success. From the start, maintaining effective oil spill response preparedness and response systems has been a priority for the industry. In recent years, greenhouse gas emissions to air and less dramatic, more routine discharges of oil and of various kinds of chemicals into the sea have also come into sharper focus.
The Pollution Control Act of 1981 spells out the duties and obligations of industry, local authorities and central government with regard to acute pollution incidents. KLIF, the Climate and Pollution Agency, is responsible for a national contingency system; the agency also controls and monitors response operations at all levels, organizes regular training and exercise programmes, and carries out environmental risk analysis.
Emissions and discharges are also regulated extensively by the Petroleum Act and the CO2 Tax Act. Installations on land face the same types of instruments as other land-based industry. In petroleum legislation, the processes relating to the approval of new development plans (PDO/PIO) are key. Installations located on land or in the sea within the area of operations are also subject to the provisions of planning and building legislation. Various statutes and regulations apply in the different phases of the petroleum industry, from the exploration, through the development and operation phases, to decommissioning. Norway is also obliged to reduce its emissions of various compounds in compliance with international agreements.
KLIF, the Norwegian Petroleum Directorate (NPD) and the Norwegian Oil Industry Association (OLF) have set up a joint database for discharges to the sea and emissions to the air from petroleum operations. All operators of petroleum activities on the Norwegian Continental Shelf report discharge and emission data directly into the database. This system helps both the operators and the authorities to produce comprehensive analyses of historical discharges and emissions.
Produced water
The most significant source of oil released to the sea from day-to-day operations is the discharge of water. This contains residues of oil as droplets (dispersed oil), other organic compounds (including dissolved oil fractions), inorganic compounds (heavy metals, naturally occurring mildly radioactive compounds) and the residues of chemical additives. "Produced water", originating in permeable sedimentary rocks within the wellbore and extracted along with the oil and gas, is also highly saline.
Acute oil discharges, by comparison, exert environmental impacts determined by many factors in addition to the scale of the discharge. Conditions such as the location of the discharge, the season, wind strength, currents, and the efficiency of contingency measures determine the extent of the damage.
Because Norway has a very scattered population, small communities along the coast depend on maritime transport: petroleum products are transported by ship between hundreds of tank facilities, for further distribution by road. Vessels are inevitably damaged or lost, resulting in oil spills. Rail and road transport of chemicals and petroleum products can also lead to accidents in which spills from petroleum cargoes can pollute rivers and soil.
Norway's preparedness and contingency strategies focus on preventive measures. For oil spills, mechanical recovery is preferred, as close to the source of the spill as possible; dispersants may be used either when mechanical recovery is not feasible or in combination with mechanical recovery as long as a net environmental benefit is attainable. Vessels of opportunity - i.e., those normally used for other activities such offshore supply vessels, fishing boats etc. - supplement the activities of the Coast Guard. All national oil spill resources (private, municipal and governmental) can be activated if required.
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In the event of a major national emergency, the national contingency system operates as a single integrated response organisation.
Offshore, the Norwegian Clean Seas Association for Operating Companies (NOFO) manages a number of oil spill recovery bases for use during clean-up operations. In any incident on the Norwegian Continental Shelf the polluter is responsible for taking all necessary steps to limit the extent of the damage, and to clean up the spilled oil. This unlimited responsibility covers offshore, nearshore, inshore and onshore response.
In addition to the oil pollution contingency plan which the operators have jointly established through NOFO, KLIF also requires each individual operator to provide its own emergency resources at the oilfields in event of minor oil spills. This preparedness is also an important front-line resource in the event of major incidents.
Central government deals with oil spills that are not covered by private or municipal preparedness, primarily discharges from shipping traffic and major spills from unidentified sources. Additionally, if the private or municipal party responsible cannot cope, the government will take over management of the operation.
The government is also responsible for coordinating private, municipal and regional preparedness in a national emergency response system. The Ministry of Environment has delegated this responsibility to KLIF, which operates a Department for Control and Emergency Response. Other resources include contingency depots with equipment and response personnel, governmental oil pollution control vessels, Coast Guard vessels equipped with oil recovery equipment, and specially equipped surveillance aircraft, combined with satellite surveillance.
International assistance in the event of oil spills is arranged by treaty, such as the Bonn and Copenhagen Agreements.
Oil spill technology
In January 2009 NOFO launched a development programme for new oil spill technology. More than 100 companies from home and abroad competed for funding; by February 2010, 15 projects from twelve companies, worth about NOK 30 million, were underway.
"Emergency equipment we have today is the best on the market, but there is still room for improvement", NOFO said. "Now we are trying to take a stronger catalytic role. The time is over for minor improvements to existing equipment: we are looking for major technological breakthroughs."
The industry is basically looking for more efficient equipment to take up oil spills at sea level. Projects also involve remote sensing technology, coastal and beach operations, and degradation of oil in seawater.
Mechanical equipment for dealing with oil spills includes booms and skimmers, which are used respectively for containing the spill and recovering the oil from the surface. Dispersants, on the other hand, are detergent-like chemicals used to remove oil from the sea surface by enhancing the rate of natural dispersion so that it will break up before reaching the shoreline; once dispersed, the oil is more rapidly biodegraded by naturally occurring micro-organisms.
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Weather conditions, especially the wave height and periods, are probably the most significant limitation on oil recovery. Another limiting factor is the crew's safety in handling the heavy equipment, particularly in rough seas, where oil on deck can make it almost impossible to work safely.
Light conditions in Norway vary dramatically: in the far north, for example, there are 24 hours of daylight during the summer and zero hours during the winter. As offshore oil exploration and production move - not without controversy - up the northern coast, new challenges will arise.
About 90 per cent of the oil in a spill is contained in perhaps 10 per cent of the oil slick area. Extensive surveillance from the air is therefore of vital importance. In low visibility it will be necessary to use aircraft equipped with SLAR (Side looking airborne radar) to detect the oil slick, and special infrared/ ultraviolet scanners to detect the thickest parts of the slick.
However, mist and low clouds can hamper the use of sensors. Improving our capacity to recover oil in conditions of darkness and low visibility is an obvious priority.
In Norway, as in many other countries, mechanical recovery is the first line of defence in responding to oil spills. Weather conditions along the Norwegian coastline are such that mechanical recovery is an option for only about 60 per cent of the year: the limit is wave heights above three metres. Up to 70 per cent efficiencies for mechanical recovery have been achieved; but the average is somewhere between 10 and 40 per cent. The rest of the spill that does not disperse or evaporate naturally will invariably end up on the shoreline.
The limit for effective use of dispersants is wave heights of around six metres. In fact, dispersants need some waves to generate mixing energy; but even in still conditions, the dispersant will stay with the oil and so ultimately boost the efficiency of the clean-up operation.
Offshore target
A "zero discharge" target has been endorsed in White Papers on sustainable development and the marine environment. This objective means that, as a general rule, no environmentally hazardous substances should be discharged to the sea, in the form either of added or naturally occurring chemicals. The target applies to all offshore operations, from drilling and well operations to production and pipeline discharges.
Norway's petroleum industry occupies a leading-edge position in environmentally efficient solutions for limiting greenhouse gas emissions. In combined cycle power plants, for example, heat from turbine exhaust gas is used to produce steam, which in turn is used to generate electric power. These plants are unique in an offshore context.
Since 1996, a million tonnes of CO2 has been stored annually in the Utsira formation in connection with the processing of gas from the Sleipner field. In future, Norway will have excellent opportunities for storing CO2 thanks to its access to large water filled reservoirs and fully produced oil/gas reservoirs off the Norwegian coast.
As we have seen, there is also great potential for increased oil production through the use of carbon capture and storage (CCS) technology and the injection of CO2 into mature oil fields.
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