Norway can provide additional gas to help make up for the expected drastic reduction in Russian deliveries to Europe later this year, but not on a scale that puts the management of its oil reservoirs at risk, the country’s Petroleum & Energy Minister Terje Lien Aasland told Upstream.
The European Union plan for reducing reliance on Russian gas by two-thirds in the current year rests chiefly on a big increase in imports of liquefied natural gas, but will also depend on alternative suppliers of pipeline gas delivering an additional 10 billion cubic metres per year.
The plan, announced by the European Commission, was a rapid and resolute response to Russia’s aggression against Ukraine, and the threats to restrict or cut off gas flows that the Russian government has regularly used as an economic weapon.
As Western Europe’s biggest oil and gas producer, Norway has already come forward with plans to increase output.
Last month, the country’s Ministry of Petroleum & Energy authorised increased gas production from the Equinor-operated Oseberg, Troll and Heidrun fields on the Norwegian continental shelf.
However, all three fields are said to be producing at close to capacity and the Norwegian government said that the approved applications are more about sustaining the currently high export volumes of Norwegian gas than about boosting flows significantly.
Some industry experts have advocated a switch in priorities to gas production, which produces less greenhouse gas emissions than oil.
Aker BP’s Skarv field and Wintershall Dea’s Dvalin field are two more examples of assets that could be managed to produce more gas than at present.
There have been suggestions that Norway could produce the additional 10 Bcm of piped gas required by the EU all on its own, although limited pipeline capacity for such additional flows would probably require routing much of the extra gas to continental Europe through the UK.
In an exclusive interview with Upstream, Aasland made it clear that increased gas production must not be pursued to the point that lower reservoir pressures undermine oil extraction.
“The oil and gas companies are considering if they can increase gas production from the Norwegian continental shelf by, for example, reducing gas reinjection in oil reservoirs”, he told Upstream from the sidelines of this week’s Offshore Strategy Conference in Stavanger.
“We are positive toward this, so long as it does not involve poor resource management.
“We have a tradition of not sacrificing profitable oil reserves to increase gas production.”
Aasland acknowledged that he sees limited scope for achieving a significant increase in gas exports from currently producing fields, but added that new fields such as Njord, Bauge and Hyme will come on stream later this year.
The minister said the start-up of these new fields will result in output from the shelf increasing overall, but he declined to say how much.
Appointed as energy minister just one month ago, Aasland said he also believes Norway will be able to produce enough gas to maintain the higher production level into the next decade.
The Norwegian Petroleum Directorate has warned that Norway’s gas production will drop significantly from 2030 unless significant new discoveries are made, and developed, but Aasland’s view was more bullish.
“We have recently announced the awards for licences in pre-defined areas (APA) for 2022. I hope there will be significant interest for applying for this acreage, and that there is a revitalisation following the new situation in Europe,” he said.
Norway already supplies between 20% and 25% of the natural gas consumed in the EU, mostly through an extensive network of pipelines under the North Sea.
A longstanding member of the Norwegian parliament’s Energy & Environment Committee, Aasland said he expected Norway to continue to produce enough gas to support the country’s plans to become a major player in blue hydrogen, produced from natural gas with greenhouse gas abatement achieved through carbon capture and storage.
Exploration acreage
He hinted that the coalition government, which lacks an overall majority in parliament, is ready to push for cross-party support for offering some more enticing exploration acreage.
Plans for launching the country’s 26th licensing round have been shelved as a concession to the anti-fossil fuel Socialist Left party, as part of the negotiations intended to secure approval for Norway’s national budget.
Unlike the APA acreage, which is focused around established producing plays, the licensing rounds — which are supposed to be biannual — include pure exploration plays, with higher risks and potentially bigger finds.
“Access to acreage, exciting acreage with lots of potential, either in APA or potentially a 26th round, is key for maintaining a high production level on the Norwegian continental shelf,” Aasland said.
Norway’s long-term ambitions to scale up its role as an energy supplier to Europe extend to clean energy, including green hydrogen, due to the country’s potential for offshore wind.
“Europe is looking towards Norway as it is seen as a stable and predictable provider of energy, and Europe has huge ambitions for transforming its energy system towards carbon neutrality. This opens possibilities for us,” Aasland said.
In the field of hydrogen, Norwegian Prime Minister Jonas Gahr Store recently signed a joint statement with German Economy Minister Robert Habeck opening the way to feasibility studies for possible construction of a major hydrogen pipeline to import clean energy from the Nordic nation.
Blue Norway
In Germany, the initiative was described as a pipeline to transport green hydrogen, with the possibility of an initial phase for blue hydrogen.
Green hydrogen is made using electrolysis powered by renewable energy to split water molecules into oxygen and hydrogen, creating an emissions-free fuel.
Germany’s new coalition government favours developing green hydrogen over blue, but Norway’s state-controlled oil and gas major Equinor is investing in both.
Aasland believes that the German reticence on blue hydrogen can be met through technical discussions.
“Both blue and green hydrogen are without emissions, and they have two different qualities,” he said.
“Blue hydrogen can provide stable hydrogen production at scale necessary to decarbonise European industry. Green hydrogen can be produced in smaller scale by excess intermittent wind power.”
In Norway's case, Aasland said the country does not plan to export green hydrogen.
“We do not have sufficient power production to start green hydrogen production for export. In the future there might be some opportunities for export of green hydrogen, but our main focus is blue hydrogen,” he said.
Barents Sea pipeline
The EU plan to end any reliance on Russian gas before the end of the decade has also added momentum to calls by several political parties in Norway for approvals of a gas export pipeline from the far north Barents Sea, believed to have the highest potential for big new gas discoveries offshore Norway.
Aasland said the government has not concluded its analysis about a gas pipeline from the Barents Sea.
“There are many factors one needs to consider. One needs to assess what will happen with the LNG facility and the jobs at (Equinor’s Hammerfest LNG project at Melkoya). The profitability of such a pipeline also needs to be evaluated,” Aasland said.
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