Chapter 9: The petroleum cluster
A useful way to think about the Norwegian offshore industry is to see it as an enormous business cluster, where “cluster” is defined in this context 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 research and innovation activities that can ultimately become at least as valuable as the products and/or commodities on which the original industry is based. In Norway, 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”. Leading energy companies with a major presence in the Greater Stavanger region include Conoco Philips, Dong, ENI Norge, Gaz de France, Marathon, Revus Energy, E.ON Ruhrgas, Shell, Statoil, Talisman Energy, and Total. The Norwegian Petroleum Directorate and the Petroleum Safety Authority are also based in the Stavanger region. 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. Smaller 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, while commercial interests collaborate through the Tromsø Patch business cluster. 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. According to the oil and energy ministry, the revenues generated by the petroleum cluster have made it “the backbone of the Norwegian welfare state”. The NPD, for its part, points to a network of “internationally competitive supply and service companies covering the entire value chain: from exploration via development, production and operation to decommissioning”, directly or indirectly creating hundreds of thousands of jobs. Subsea sensation 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”. With a membership of over 180 companies, INTSOK monitors global market conditions, helps select target countries and coordinates marketing activities, such as vendor meetings with oil companies and contractors; it also provides guidance and advice to SMEs trying to access international markets. The KonKraft programme is another initiative which aims to “enhance cluster dynamics” by addressing issues of strategic importance to the petroleum sector. It operates as a forum, comprising leaders from oil companies and service companies, trade unions, research institutions and government bodies, including representatives from the Ministries of Petroleum and Energy, Finance and Environment. The mandate of the forum is to strengthen the competitiveness of both the NCS and the Norwegian supply and service industry. Petromaks and OG21 The overall objective of Petromaks is “to enhance the next 50 years of oil-related activity and secure gas production in a 100-year perspective”, says the RCN. “It is crucial that the Norwegian petroleum industry be further developed as an internationally competitive industry; this will ensure that the sector continues to play a key role in the sustainable growth and financing of the Norwegian welfare society and promote sound management of Norway’s natural resources.” 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 eight key challenges seen as “crucial to the future value creation on the NCS and for enhancing the competitiveness of the oil and gas industry”:
These are linked respectively to eight corresponding “technology target areas” (TTAs):
One way and another, projects involving the Research Council of Norway, Petromaks and OG21 represent $500 million or more in research funding but R&D is an insatiable beast, and there is always an urgent need for more. One of the many ironies of Norway’s economy, for example, is that virtually none of its natural gas is used for domestic heating, most of which is fuelled by hydroelectricity. As early as 2003, in a White Paper on domestic use of natural gas, the government committed itself to promoting the development of carbon capture technologies for gas-fired power plants with carbon sequestration as a way of boosting the domestic energy supply while meeting international climate obligations a commitment which we have seen is now close to realization. Other elements of the strategy outlined in the White Paper included government grants for technology and product development, investment support for the new power plants, establishment of a state-owned innovation company, and “studies of state participation in developing and operating an infrastructure for carbon dioxide, facilitating the use of carbon dioxide for enhanced oil recovery or storage”. Inevitably, the cluster concept looms large in OG21, which, in the ministry’s words, “plays 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”. | ||||||||||
| ||||||||||
Technology hub INTSOK in particular is seen as an effective tool for promoting the Norwegian offshore industry’s capabilities to key clients in the global marketplace. The Norwegian service industry’s strong technology position, its capability as a cluster and INTSOK’s activities enable the Norwegian petroleum cluster to expand internationally and maintain Norway’s position as one of the world’s most attractive hubs for technological development. Towards this end, it is important for Norway to continue its efforts to improve the competitive strength of universities and institutes in petroleum research and to maintain and develop the cluster’s ability to absorb new knowledge and commercialize this into new competitive products. Critical challenges As an increasing number of the fields on the NCS move into the tail-end production phase, the role of smaller companies taking over production will increase. These do not have large R&D departments, nor usually the internal competence to drive R&D. The TTA concept provides a platform for these companies to participate, both in generating interest and especially in funding. Public funding to R&D in these TTAs could clearly leverage the approach and boost a greater competence for application in fields nearing the late phase of their lifetime. New technologies will arise, and Norway will be part of the new era, provided we initiate the process now. Increased funding to R&D for new technologies e.g. nanotechnology, sensor technology and biotechnologies will pay off, in the petroleum sector and beyond. In short, the OG21 strategy, while very much an ongoing work-in-progress, recognizes that the petroleum industry must accept that technological development is the single most important factor for reducing costs, enhancing the competitiveness of Norway’s oil and gas activities and resolving the considerable challenges facing the industry. It is, in short, the future. In this respect, it could be argued that OG21 and the mighty industrial sector it represents has already sketched out the next chapter in Norway’s ongoing North Sea Saga.... | ||||||||||
| ||||||||||
