N O R W E G I A N C O N T I N E N T A L S H E L F P E T R O L E U M D I R E C T O R AT E

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1 N O R W E G I A N C O N T I N E N T A L A J O U R N A L F R O M T H E N O R W E G I A N P E T R O L E U M D I R E C T O R AT E

2 2 N O R W E G I A N CONTINENTAL 3 NORWEGIAN GAS AT A CROSSROADS f o c u s : m a n a g e m e n t s t r a t e g y r e s o u r c e s g a s g a s g a s t e c h n o l o g y g e o l o g y r e s o u r c e s g a s g a s r e s e a r c h r e s e a r c h r e s o u r c e s d r o p l e t s C O N T E N T Norwegian gas at a crossroads 3 Good at science - but still hip 4-5 No form no colour 6-7 Very much a gas nation 8-9 Putting the pipelines in place Giant guarantee for gas 1 4 A sizeable achievement Roomy reservoirs Three heads on one Troll Selling more flexibly Living with hydrocarbons Studying development In favour of life on Earth? We are, too From muck to methane Norway s gas sector is expanding. Over the next five-six years, exports of this commodity from the Norwegian continental shelf could more than double compared with just two-three years ago. A scenario based on exporting 120 billion standard cubic metres per year from 2011 involves a 50 per cent increase from the present level. This would also mean that our gas resources are tapped more quickly than previously expected. We are currently experiencing a substantial buildup in output. Assuming satisfactory market conditions, we will be able to deliver more gas than at present for the next years. NPD estimates indicate that some five-sixths of our overall gas resources are still in the ground although such calculations remain uncertain and more exploration is accordingly needed. Unlike most gas nations, we have no pure gas fields on our continental shelf. All our reservoirs hold either an oil zone under a gas cap or gas with a high condensate content. Large amounts of seawater and/or gas have been injected into our oil fields for many years. Part of the available gas has thereby been diverted on its way to market into maintaining reservoir pressure, helping us to deliver more oil. Managing Norwegian gas has mainly been related to the management of our oil resources. Large-scale gas flaring has never been allowed on the NCS, which has left licensees with two options increasing injection pressure to recover more oil, or selling to the market after necessary processing and transport. We are now at a crossroads: Oil and condensate production is set to decline over time, reducing the profitability of continued injection. Our attention will increasingly be focused on gas. The timing and scope of such a reorientation will influence overall recovery from the NCS. We must decide how we want to exploit our gas and our expertise in coming decades. These gas resources will present us with political, technological, marketing, environmental and not least financial opportunities and challenges. Over almost three decades of gas sales from the NCS, we have developed a highly integrated and viable infrastructure which allows us to serve different markets. And the Snøhvit development in the Barents Sea will also mean we can deliver independently of pipelines. The NPD will continue to play an active role in managing gas resources by identifying opportunities for this business through analyses of resources, costs, transport and portfolios. This work seeks in part to promote efficient identification of new gas resources and the development of an infrastructure which facilitates optimum recovery. It also aims to optimise utilisation of this infrastructure, including pipeline and processing capacity both on land and offshore, and to ensure that the fullest possible account is taken of socio-economic considerations. Norway s petroleum resources belong to its people. Calculations by the NPD show that substantial opportunities still exist to enhance value creation from the oil and gas sector. To succeed with this, it is important that the industry develops and uses well-educated personnel, and adopts the best technology, products and working methods. The basis has been laid through solid education, purposeful research, competent companies and new collaboration processes. A diversified, competitive and cooperative industry is needed for continued success. Tormod Slåtsveen Director

3 4 f o c u s : s t r a t e g y N O R W E G I A N C O N T I N E N TA L 5 Text: Øyvind Midttun Photos: Bård Gudim Good at science - but still hip Learning Pythagoras theorem or knowing the chemical formula for dextrose needs to be made cool, argues Norwegian science broadcaster Ole André Sivertsen. But they still say he is perfectly sane. Pythagoras theorem: In any right-angled triangle, the square of the hypotenuse is equal to the sum of the squares of the other two sides: x 2 + y 2 = z 2 Daily life is full of exciting scientific phenomena, Mr Sivertsen points out. Yet few youngsters in Norway or in other western nations go to school to learn about them. Despite educational reforms and campaigns, interest in studying the sciences has continued to decline year by year. Formerly a presenter for Norwegian TV science programme Newton, Mr Sivertsen pins the blame on one key consideration poor teaching. Science subjects are very interesting and offer loads of job opportunities, but they re also challenging and time-consuming. You need a certain level of knowledge to grasp the relationships and the logic. This makes it crucial that the subject matter is presented in the right way. Very few people are basically interested in physical formulae and mathematical equations, Mr Sivertsen argues. To arouse interest, you ve got to encourage children s curiosity. They need to want to learn about phenomena, what they see around them and in their daily lives both things they take for granted and topics they find fascinating. A parachute jump is primarily fun and exciting, but doing it yourself or watching it on TV can stimulate a desire to discover more about aerodynamics and gravity. Interest and curiosity lower the learning threshold, which in turn make it possible to understand the overall relationships. Celebrating physics The World Year of Physics is being staged in 2005 as an international celebration of the science and its important place in our daily lives. This year was chosen as the centenary of Albert Einstein s annus mirabilis, when he published three pioneering papers on the theory of heat, the behaviour of light and the principle of relativity. These publications have influenced all modern physics. Read more about the World Year of Physics at When these became clear to Mr Sivertsen, he was hooked and ended up with an MSc in environmental physics from the Norwegian University of Life Sciences at Ås south of Oslo. In direct contradiction to a personal thesis that scientists stick to science, he got sidetracked and ended up in the media. His education has stood him in good stead there. After 88 Newton programmes as well as writing books and accepting freelance educational assignments, he is now editor for science textbooks at Oslo publisher N W Damm & Søn. Many scientists have a serious problem in explaining what they actually do, Mr Sivertsen reflects. If we re going to give science status and make it attractive to study mathematics, chemistry, biology and physics, we ve got to reverse the traditional approach to teaching these subjects. The fight for attention makes attractiveness expensive. But advertising the importance of science and research is an easy option for budget-cutters. That approach cannot continue if interest in the sciences is to be boosted, says Mr Sivertsen. These disciplines need to regain their former status. Researchers and specialists must become more visible, he adds. But it is important to be selective about what is to be taught. Not everything helps to stimulate a desire to learn. We mustn t create an overly romanticised image, he emphasises. Working day after day in a laboratory can actually be fairly boring. But we must dare to create a fascination, to present what s exciting and fun in our subjects. There are more than enough examples to quote. If we re prepared to teach in an understandable and interesting way, we ll help to boost the status of science subjects. And that in turn will enhance recruitment. Chemical formula for dextrose (grape sugar): C 6 H 12 O 6

4 6 f o c u s : r e s o u r c e s N O R W E G I A N C O N T I N E N TA L 7 The simplest hydrocarbon molecule is methane, comprising one carbon atom and four hydrogen atoms. Illustration: Rune Goa Gasworks The alternative to natural gas is town gas. Between 1848 and 1913, gasworks were established in 17 Norwegian towns. This gas derives from coal, and usually contains more than 40 per cent hydrogen. By-products of town gas include coke and ammonia liquor, and the latter was processed in some cases and sold to the canning industry. Town gas was eventually replaced in Norway by hydropower, and the last Norwegian gasworks shut down in But it is still used in some parts of Europe, including areas of Stockholm, and extensively in China, South Africa and other places where natural gas is expensive or unavailable. No formno colour Norway will be exporting more gas than oil within a few years. Its continental shelf holds over billion cubic metres of gas enough to cover the UK s present consumption for 40 years. But what exactly is this commodity? Text: Eric Mathiesen Gas is formed in the same way as oil, from plant remains laid down in sediments which are eventually covered by other deposits such as clay, sand and gravel. When the plant-rich layers known as source rocks have been buried to a sufficient depth, they are subjected to high pressure and energy in the form of heat. The higher the temperature acting on a source rock, the higher the probability that oil and gas will form. Gas forms under hotter conditions than oil, usually around C. Gas is a collective term for substances without a defined form or volume. It consists of freely-moving molecules which fill the space in which they are contained. Reservoirs on the Norwegian continental shelf hold gas both in free form as in the Troll field and dissolved in oil. The latter applies to Ekofisk, for instance In the first case, the gas is said to be free. If it has been mixed with oil, like carbon dioxide in a fizzy drink, it is known as associated gas. NATURAL GAS is a collective term for free and associated types, and comprises a mix of odourless substances which are all lighter than air. This blend consists of various hydrocarbons which are gaseous at normal atmospheric pressure and temperature. Norwegian natural gas has a high methane content per cent. In addition, the mix can include ethane, propane, butanes and small quantities of heavier hydrocarbons. Carbon dioxide, nitrogen and oxygen are also found. Gas flowing up from the well or removed in a separator is of varying quality, and is often termed rich gas. This consists in turn of dry gas and natural gas liquids (NGL). DRY GAS contains no hydrocarbons which become liquid under slight changes in pressure and temperature. It primarily comprises methane, but can also contain some ethane. Sales gas is often used as an alternative term. NGL is a mix of various gas fractions which become liquid under small increases in pressure or reductions in temperature, including ethane, propane, butane and naphtha as well as small quantities of heavier hydrocarbons. NGL can be transported by special ships. LIQUEFIED OR LIGHT PETROLEUM GASES (LPG) consist primarily of propane and butane converted to liquid with the aid of refrigeration. Produced in Norway since the early 1960s at ExxonMobil s Slagentangen refinery near Oslo, LPG is transported in special ships. Applications include heating, cooking and petrochemicals. Natural gas liquefies at a temperature of about -163 C under atmospheric pressure, and one Known under many names Belgian alchemist Johann Baptista von Helmont ( ) carried out many experiments with water and gas, and he theorised that these substances were the only principal elements. Everything else could be created from them. His way of pronouncing the Greek word chaos is said to be the origin of the word gas. But history says nothing about whether the idea of chaos referred to the structure of gas or the wealth of names used for it today. tonne of this LIQUEFIED NATURAL GAS (LNG) corresponds to roughly cubic metres in gaseous form. LNG can be transported by special ships and road tankers, opening new opportunities for exporting gas to distant markets. This has made it possible to sell output from Norway s Snøhvit field in the Barents Sea to the USA and southern Europe. COMPRESSED NATURAL GAS (CNG) consists primarily of methane under a pressure of about 200 bar. Carried by road tankers, it is used in Norway to fuel buses, for heating and by industry. Hydrocarbons Methane is the simplest of all hydrocarbons and the principal component in natural gas. Other names include marsh gas or pit gas, depending on where it is found in nature. As well as being a good source of energy, methane is a greenhouse gas in its own right. It converts to carbon dioxide and water when burnt. Unlike ethane, propane or butane, methane cannot be liquefied under high pressure and is therefore designated as a dry gas. ETHANE is colourless and odourless, and liquefies under pressure or refrigeration. Both ethylene and ethanol can be produced from ethane, which is used as a fuel, a refrigerant and feedstock for plastics production. PROPANE liquefies at -42 C, and is widely used for cooking, heating and gas-driven cars. It has largely replaced chlorofluorocarbons (CFCs) as the drive gas in spray cans. BUTANE can also be liquefied by increasing its pressure or cooling it down. Applications include heating, petrochemical feedstock and a petrol additive to raise the vapour pressure. In addition to these various names, the terms biogas and landfill gas are also used. The first of these refers to a methane-rich gas produced during fermentation processes when organic materials break down, while landfill gas is a special variant produced from waste and harnessed in some places for power generation. A large proportion of the world s natural gas resources are found in remote areas, and are said to be stranded when no economic way can be found to produce, ship and sell them. Cubic metres Norway measures dry gas in standard cubic metres (scm), which specifies the volume of the gas at atmospheric pressure and a temperature of 15 C. One scm of natural gas contains about the same amount of energy as a litre of heating oil, or 10 kilowatts of electricity. More than 4.1 billion scm of gas and 255 million tonnes of NGL have been found on the NCS enough to meet the electricity needs of an average Norwegian home for almost two billion years.

5 8 f o c u s : g a s N O R W E G I A N C O N T I N E N TA L 9 Very much a gas nation Text: Eric Mathiesen Overview of world gas resources in TCM Illustration: IEA/Rune Goa than the 1.1 billion barrels in the Valhall field. Until 31 December 2004, 413 million scm of gas had been injected on the NCS slightly more than total gas reserves in Ormen Lange. While Oseberg, Statfjord, Ekofisk, Åsgard and Sleipner Øst have been the main injectors, such pressure support has taken place on 27 Norwegian fields altogether. A few reservoirs such as Oseberg, Ekofisk, Grane and Fram have received or are receiving gas from other fields to supplement the use of their own output for injection. Most fields inject their own gas, which can be produced and reinjected several times before ultimately being sold to the market after oil production has ceased. The justification for gas injection varies from field to field. It enhances oil recovery in some cases, while lack of export opportunities represents an important factor in others. This approach could accordingly be adopted on fields where the recovery effect is moderate because that allows the oil to be produced without the need for gas flaring. In an area which lacks gas processing or transport capacity, injection is a good option for producing oil from the field. The gas can eventually be recovered should this become feasible. Exporting since 1977 Gas production from the NCS started on 15 June 1971, at the same time as oil began flowing from Ekofisk in the North Sea. But exports did not begin until 1977, when the pipelines from Ekofisk to Germany and Frigg to the UK became operational. Consumption to double Global consumption of natural gas is expected to double by Resource report 2005 Read more about this topic in the NPD s resource report at The printed version can be ordered from postboks@npd.no. More than four billion standard cubic metres (scm) of recoverable natural gas have so far been proven on the Norwegian continental shelf. Another two billion could be awaiting discovery to help underpin the country s strong role as a gas exporter. Norway is a key gas supplier to Europe, accounting for 25 per cent of all west European production. Low domestic consumption helps to make it the second-largest exporter to the continent after Russia. Globally, the Norwegians rank sixth among gas producers despite holding only 1.4 per cent of proven world reserves. Russia, Iran and Qatar have just over 50 per cent. Annual gas exports from the NCS stood for a long time at billion scm. This figure began to rise in the second half of the 1990s, when Troll Gas and the Sleipner fields came on stream. The present annual level exceeds 70 billion scm, and Norway has so far sold some 948 billion scm to other countries. A number of gas fields have been discovered on the NCS over the past decade, adding 770 billion scm to the reserve base. The largest, Ormen Lange, accounts for half this amount and ranks among the world s 10 biggest discoveries since Norwegian gas production is rising as its oil output declines, and annual exports are set to climb steadily to 120 billion scm by Sales should total 500 billion scm over the period, or twice the amount exported in the previous five years. Troll, Åsgard, Sleipner Vest and Kvitebjørn will contribute more than half of this increase. Production from Kristin, Snøhvit and Ormen Lange is also scheduled to start in 2005, 2006 and 2007 respectively. Almost 10 per cent of gas sales in will come from new developments. Injection A total of 175 billion scm of gas is also due to be used for injection over the same period. Injecting natural gas and applying water alternating gas (WAG) injection help to maintain pressure in oil reservoirs and accordingly boost recovery. NPD estimates indicate that gas injection has so far yielded almost 1.3 billion barrels in additional oil more Gas injection on the NCS the most important methods Non-miscible gas injection. This method can be used when the pressure and temperature in the reservoir are such that the gas and the oil behave as two separate phases. The gas is lightest and places itself over the oil as a gas cap, and pushes the oil towards the production wells, which are usually placed lowermost in the oil zone. The largest projects which use this method are on Oseberg and Grane. Miscible gas injection. This method can be used when the pressure and temperature in the reservoir mean that the injected gas dissolves in the oil and the oil becomes more fluid. It is considered a very efficient method (high microscopic displacement efficiency). The largest projects where this method has been used are gas injection in the Statfjord formation on Statfjord and in the Smørbukk Sør reservoir on Åsgard. Tertiary gas injection following water flooding. This means that gas is injected into a reservoir following a lengthy period of water injection. In areas where the oil is not displaced by the water, it may be displaced by gas, thus increasing the vertical and horizontal displacement efficiency. The method is used in the Brent formation on Statfjord. Water alternating gas injection (WAG). Gas and water are injected alternately into the same well. This can take place under miscible conditions in the reservoir, as is the case on Snorre, but in most cases it takes place without miscibility, that is to say that the oil and the gas behave as different phases in the reservoir. The effect is then somewhat similar to that obtained by tertiary gas injection, with water and gas displacing the oil from different parts of the reservoir. A number of fields on the Norwegian continental shelf employ this form of injection. Under miscible conditions, the microscopic displacement efficiency will also increase. Injection in gas/condensate fields to increase the recovery of condensate. In a gas/condensate field, the natural gas contains both light and heavier components. If such a field is produced without injection, the pressure will gradually drop. Some of the heavier hydrocarbons in the gas will then be precipitated (condensed) in the reservoir and cannot be produced. If gas is injected, the pressure will remain high for a longer period and a larger proportion of the condensate content will be produced. The largest projects using this method are on Sleipner Øst and in the Smørbukk reservoirs on Åsgard.

6 10 f o c u s : g a s N O R W E G I A N C O N T I N E N TA L 11 P u t t i n g t h e p i p e l i n e s i n p l a c e Text: Morten Pedersen & Håvard Nygård Developments in the European market have been and will remain crucial for Norway s gas sector and for the construction of its huge gas transport system. This network allows the country to serve as Europe s third largest gas supplier. About 15 per cent of the gas used by Europe in 2004 came from the Norwegian continental shelf. Ekofisk was hailed as the first oil field on the Norwegian continental shelf at the time of its discovery in But it also contained large volumes of gas and that posed a problem. The lack of transport opportunities to potential markets in the UK or continental Europe meant that the original production strategy proposed for the field was based on gas flaring. Although this approach was accepted on other continental shelves, the Norwegian authorities were strongly opposed to burning off these resources. All the country s offshore oil discoveries contain larger or smaller volumes of gas, and Ekofisk happens to be one of the largest gas fields on the NCS. Strengthened when the Petroleum Act formally banned flaring of associated gas, Norway s official policy compelled the operator to find other ways of disposing of these volumes. Sales contracts for the Ekofisk gas were accordingly signed with continental buyers in 1973, making it possible to lay the Norpipe line from the field to Emden in Germany. When exports started four years later, the gas was redefined from a problem to a benefit and Norway had been launched on its way to becoming a gas great power. Unlike oil, which can simply be pumped into a tanker and shipped away, gas demands a much more substantial investment in transport systems. Laying pipelines from the NCS to Germany, the Netherlands, Belgium, France or the UK was expensive, and needed predictable gas sales prices and volumes to reduce the financial risk. The first Norwegian gas sales deal was concluded by Phillips on behalf of the Ekofisk licensees, and included predefined mechanisms for price determination. Gas from the early fields, including Frigg, Statfjord and Gullfaks Phase I as well as Ekofisk, were sold under depletion contracts which covered all the gas in the relevant discovery. When these contracts were signed in the late 1970s, the UK was largely self-sufficient in gas from its own North Sea sector. The Germans also had sales deals with the Soviet Union and the Dutch. Norway s contribution was small, but these markets were in a growth phase and the agreements introduced Norwegian gas to both British and continental outlets. Then and now, the advantage of the NCS compared with its principal rivals, the former Soviet Union and Algeria, was its proximity to these markets. To Norway The Ekofisk and Frigg contracts attracted a good deal of negative comment among Norwegians because they did not bring the gas to Norway before it was finally exported. Critics complained about what they saw as a failure to create value and jobs at home, and were not swayed by the argument that it was impossible to lay pipelines across the Norwegian Trench. When Mobil discovered Statfjord in 1974, studies were launched into crossing the Trench. This deepwater feature separates the coast of Norway from the shallower areas of the North Sea. These investigations concluded that the time was right to take the big step, and Kårstø north of Stavanger was chosen as the landfall point. Construction of what ranks today as Europe s largest rich-gas processing facility began, and the Statpipe system was completed in Initially embracing 880 kilometres of pipeline, the Draupner S riser platform and the Kårstø plant, it connected with Norpipe to carry Statfjord gas to Emden. Challenging The Troll field in the North Sea was proven in Despite huge gas reserves, it was initially regarded as commercially marginal because a development would be technically very challenging. Major investments would accordingly be required to bring this gas to market. In addition, the NPD and the Ministry of Petroleum and Energy insisted that the licensees had to recover the substantial amounts of oil proven in thin zones in the Troll West reservoir. Optimising the recovery of this crude depends on maintaining pressure in the reservoir by limiting annual gas production. At the time when the Troll licensees were striving to make a development commercially interesting, Norwegian gas was still being sold under depletion contracts. (Photo: Statoil) However, the size and complexity of Troll s reserves called for a different approach to the market. The key requirement was to sell enough gas for development to start. Troll sales talks were pursued during the Cold War, when western Europe and the USA wanted to avoid excessive dependence on Soviet gas both politically and for security of supply. The first sales agreements for Troll gas were signed in 1986 with major energy companies in continental Europe.

7 12 f o c u s : g a s N O R W E G I A N C O N T I N E N TA L 13 Flaring ban The ban on gas flaring on the NCS is covered in section 3 of the temporary regulations for the proper exploitation of petroleum resources in Norwegian inland waters, Norwegian sea territory and the part of the continental shelf subject to Norwegian jurisdiction, issued by the Ministry of Petroleum and Energy on 17 October It has been maintained in subsequent regulations. Kårstø north of Stavanger is the largest rich gas processing plant in Europe. (Photo: Statoil) Committee Once the major Troll contracts had been put in place, the Norwegian government established a special Gas Negotiating Committee (GFU). Comprising Statoil, Hydro and Saga Petroleum, this body was given the job of marketing and selling all Norwegian gas. No company including the GFU members could sell its own reserves. The GFU negotiated field-independent contracts, where the gas sold did not come from a specific source. The decision on which fields should supply a particular contract was made by the petroleum ministry in allocation rounds. These share-outs took place regularly at the recommendation of the Gas Supply Committee (FU), where the NPD and companies with gas resources on the NCS were represented. These committees aimed to ensure the best possible resource management. The most socio-economically profitable gas fields were to be brought on stream first, with pipelines and receiving terminals developed in the most cost-effective way. Troll was invaluable as the guarantor for contracts secured by the GFU. Sales actually related to gas from this field, even though other sources might be given delivery responsibility later. This influenced not only the services which the GFU could offer gas buyers, but also the price it could obtain for these resources. The GFU/FU system achieved a coordinated development of Norway s gas fields on the basis of socio-economic assessments. Gas owners and the government determined jointly where delivery responsibility for contracts should be allocated, and fields with the most oil in addition to gas were developed first. Directive The European Union s directive 98/30/ EC on the single gas market set a deadline of 10 August 2000 for member countries to incorporate its provisions into their national legislation. It aimed to open the European market to competition by giving big gas companies and qualified buyers access to gas transmission and distribution pipelines, stores and liquefaction plants. The directive also specified that natural gas companies and buyers must have access to pipelines in the production system, including landfall pipelines from the NCS. Under the European Economic Area agreement, which links Norway with the EU, the country is required to implement this gas directive. That means third-party access to the Norwegian gas infrastructure is available to companies which do not have an ownership stake in these facilities. With neutral and efficient use of transport and processing facilities crucial for the value of Norwegian gas, ensuring that these installations remain a unified system is very important. The government resolved to wind up the GFU system on 1 June 2001, allowing companies to sell their own gas. The GFU was permanently dissolved from 1 January Simplify The Gassled joint venture was formally established in 2003 as part of government efforts to simplify the ownership of Norway s gas transport system. Until then, each pipeline had been organised as a separate joint venture. This meant gas shippers sometimes had to negotiate transport terms with several different partnerships. To improve the efficiency and management of the system, the Ministry of Petroleum and Energy initiated a simplification process as early as Gassled has unified the various joint ventures for most of the major gas pipelines on the NCS into a single large organisation. The Storting (parliament) also resolved in 2001 to establish a new state-owned operator company for gas transport called Gassco which could be independent and ensure equal treatment of gas owners and shippers. Gassco s principal duties fall under three main headings administration of existing transport capacity, serving as operator for installations owned by Gassled, and developing new facilities. Big resources NPD estimates indicate that big resources remain to be found on the NCS. Their discovery depends on such factors as market projects and the willingness of the companies to explore. Most of the undiscovered resources are thought to lie in the Norwegian and Barents Seas, further from the market than the North Sea gas which has formed the bulk of Norway s exports so far. Small fields, often located in deep water and far from markets, will not be able to carry the cost of a new pipeline on their own. One solution could be to develop new transport solutions which cover several such discoveries. Another option is to wait for spare capacity to become available in the existing network. The Barents Sea lies even further from gas markets, so the Snøhvit development now under way in these waters is based on gas liquefaction. This is the first time such technology has been adopted to produce liquefied natural gas (LNG) on a large scale from the NCS. Snøhvit production is piped to a plant on Melkøya island outside Hammerfest in northern Norway for processing and liquefaction before being shipped to market. The advantage of LNG is precisely that gas can be carried by sea, allowing it to be sold beyond the reach of pipelines. Its owners are then able to exploit price variations between one market and another. Gas resources remaining to be discovered in the Barents Sea could also be exported by ship, as LNG or with the aid of other technologies. The outlook for the Norwegian gas transport system is challenging. Questions faced include how new resources will find their way to market. This could involve tie-ins to existing giant fields as their production declines, which would fill spare capacity in the Norwegian and British pipeline systems. Alternatively, new pipelines might be laid. Under any circumstances, a key requirement for cost-effective operation is to optimise capacity utilisation and have the pipelines full when market demand for gas is at its highest. This makes it important to ensure that Norwegian fields can continue to fill pipelines and terminals in the North Sea basin s integrated transport system over coming decades.

8 14 f o c u s : g a s technolog y NORWEGIAN C O N T I N E N TA L While the NPD believes that opportunities for continued growth are good, this depends on the willingness of the companies to regard spending on new infrastructure as a long-term investment. The alternative is to tie in new fields as capacity in existing pipelines becomes available depending on which solution gives the best socioeconomic outcome. Text: Kristin Henanger Haugen A sizeable achievement Troll has been described as one of the 10 technical wonders of the modern world, on a par with such feats as the first moon landing and the first heart transplant. Gassco and its president, Brian Bjordal, control gas deliveries to the whole of Europe from Bygnes north of Stavanger. (Photo: Emile Ashley) This field covers 750 square kilometres of the North Sea in blocks 31/2, 31/3, 31/5 and 31/6, and remains the biggest gas discovery on the Norwegian continental shelf. Holding 60 per cent of Norway s offshore gas reserves, it is set to continue producing for at least 50 years from its vast reservoirs metres beneath the seabed. Huge Block 31/2 was awarded under Norway s fourth licensing round in 1979, with Norske Shell as operator. The first wildcat in the summer of 1979 proved huge volumes of gas with underlying oil. Norske Shell became responsible for the first gas development phase on Troll, and block 31/2 holding 32 per cent of total field reserves was declared commercial in The three other blocks, which contain the remaining 68 per cent, were awarded to Norwegian oil companies Statoil, Hydro and Giant guarantee for gas Groningen is the biggest gas field in Europe, about twice the size of Norway s Troll, and a good midwife for small discoveries and deposits. Text: Kristin Henanger Haugen Sales and transport company Gasunie was created by the Dutch government, which owns 50 per cent, in cooperation with Exxon and Shell. The two companies own 25 per cent each. Esso and Shell struck natural gas at Slochteren in the Dutch province of Groningen during 1959, but it took several years before the true size of this field became apparent. The companies were originally disappointed at not finding oil. When they learnt just how much gas Groningen contained, however, the aim was to produce and sell it as fast as possible. This approach reflected a conviction that nuclear power would become the most important energy source within the next 40 years. But that prediction proved wrong, and the position of natural gas as an energy source is stronger than ever today. On stream since the 1960s, the whole Groningen field lies on land. This makes production far simpler than operations far out to sea. The Dutch succeeded within less than a decade in restructuring their whole energy system, and connected virtually every household in the country to the new gas grid. When the oil crisis in 1973 made it clear that something had to be done to conserve the reserves in Groningen, the authorities sought to encourage the development of smaller fields. As a result, the companies were compelled to allow the giant s gas to remain in place while they were paid a better price for production from other discoveries. This policy still prevails in the Netherlands, but licensees of small fields can now opt to sell either to Groningen and Gasunie or directly to the market. What Groningen sells is its capacity, or the ability to deliver large gas volumes over short periods if smaller fields fail to maintain output. While this makes the giant a guarantor for Dutch gas deliveries, some observers believe that such a role will become superfluous when the market is fully liberalised. But the market remains insufficiently flexible at present to offer a good alternative for the small fields. In fully-liberalised and well-functioning conditions, a large part of the gas produced would probably be sold directly to the market. Groningen s delivery guarantee would still be important, however, particularly for the more commercially marginal discoveries. Troll A is the tallest human construction ever moved across the face of the planet. Condeep structures in concrete are often said to be one of Norway s biggest-ever offshore successes. (Photo: Pål Christensen, Stavanger Aftenblad)

9 16 f o c u s : t e c h n o l o g y g e o l o g y N O R W E G I A N C O N T I N E N TA L 17 Saga in the same year. Under the terms of the 31/2 licence, Statoil was allowed to take over as operator eight to 10 years after the field was declared commercial. This happened in The two Troll licences were unitised in 1985, permitting an integrated development. Hydro became operator for the Troll Oil development in the western part of the field block 31/2. Gas The Troll Gas development comprises the A platform, the processing plant at Kollsnes near Bergen and the pipelines linking these two facilities. Gassco is now operator for Kollsnes. Troll A ranks as the tallest structure ever moved by humans over the face of the planet, and its concrete gravity base structure (GBS) has been built for a producing life of 70 years. This installation came on stream in the first half of 1996, but contractual deliveries under the Troll gas sales agreements began three years earlier from Sleipner East. Troll A was the last in the series of concrete platforms built in Norway from 1973 to 1996, and this installation can be seen as a reflection of all that the Norwegian oil industry has achieved. Oil Hydro brought its Troll Oil development on stream in the autumn of In addition to being the largest gas producer on the NCS, Troll has been its biggest source of crude in recent years. This was accomplished by the development of horizontal drilling technology, with oil output landed through two pipelines to the terminal at Mongstad near Bergen. The combination of gas and oil production on Troll provides a fine example of the importance of good resource management. By insisting on overriding resource considerations and taking a strong stand on achieving such combined output, the NPD has made its own contribution to the fantastic story of Troll. the field and filled its structures. The light gas rose to the top, with the heavier oil beneath and an aquifer at the bottom. Interfaces between water, oil and gas are virtually horizontal under prevailing pressure conditions. This is shown in the illustration by colouring everything under the oil/gas interface green, with the aquifer presented in turquoise. Imagine that the green and red landscape is filled with gas and rises from a dark sea of water. The oil lies in a thin green zone between these two. Troll Vest s oil zone is metres thick, and the green strip may not appear very impressive on the map. But the fact that oil extends under the whole yellowred area in this part of the field means the reserves are nevertheless considerable. The oil zone is at its thickest in the oil province to the west on the right in the illustration and measures some metres. In Troll Øst, by contrast, only the turquoise of the aquifer can be seen. However, this part of the field contains an oil zone The Troll field viewed in a rather unusual perspective from north-west towards the south, with south at the top. The area shown is about 20 kilometres wide. measuring from zero to four metres in thickness. Several factors explain why the western structure contains more oil than Troll Øst. Both oil and gas formed in the deep geological basins west of the field, and have therefore entered the reservoirs from that direction. Since hydrocarbons are lighter than water, they will rise to where the pressure is lower. Oil flows more slowly than gas through the sandstone, and has therefore taken longer to get into place. The reservoir sands are also Illustrations: Fridtjof Riis Text: Fridtjof Riis R o o m y r e s e r v o i r s The Troll field comprises a thick layer of sandstone holding oil and gas metres beneath the seabed and in metres of water. Gas is found in the pores between the sand grains in its giant eastern and western reservoir structures. Each of the Troll formations is about 30 kilometres long, with the uppermost 250 metres filled with gas. In the illustration, the sand is coloured red at its highest points and yellow lower down. The landscape on Troll has not always been the way it is today. Its sandstone reservoirs were laid down in the Late Jurassic, about 130 million years ago. This material derived from a region of valleys which was probably the ancestor of today s Sogne Fjord area of western Norway. As more and more sand washed down from the east, the ancient coastline was pushed further out by a large delta system. The whole of this region had a virtually horizontal surface. Today s Troll reservoirs have been formed by a series of movements in the Earth s crust over the past 130 million years, with the entire area uplifted and tilted since the Ice Ages began 2.5 million years ago. The illustration indicates faults as dark and grey slopes, showing how extensive faulting with displacements of more than 200 metres has elevated the topmost parts of Troll. Tilted As the fault blocks moved, the sandstone sediments making up the reservoir were tilted. Oil and gas eventually percolated into

10 18 f o c u s : g e o l o g y r e s o u r c e s N O R W E G I A N C O N T I N E N TA L 19 MODELS Geological and reservoir models are used to describe a field, as well as to monitor and plan future production. A geological model provides a three-dimensional picture of the sandstone layers in a field, and where oil and gas are located. Built on information from all the wells and interpreted seismic surveys data, the geological model helps to determine where new wells should be placed. A reservoir model is used to calculate how the oil, gas and water move in the formation and how pressure in the structure changes as the hydrocarbons are produced. Such models provide a less exact picture of the geology in a field than the geological version. Residual oil in the north The thin oil zones and residual oil deposits in Troll can be explained in the same way as the discoveries in the Hammerfest Basin of the Barents Sea. In the latter case, however, the Ice Age effects are much larger. Most of the crude once found in this basin have become residual or trace oil because of heavy glacial erosion. Remaining producible oil zones have so far only been identified in the Snøhvit field and the Goliat discovery. less permeable in fault zones. Some of the latter have accordingly functioned as barriers, preventing the oil zone reaching equilibrium and becoming equally thick across the whole field. Understanding as many as possible of these barriers is important for designing an optimum production strategy for Troll. Horizontal The illustration shows the network of horizontal wells in Troll West. Placed right at the base of the oil zone, these typically run for metres through the reservoir. To optimise crude recovery, the overlying gas must be prevented from intruding into the wells. The water below also has to be kept out. Both aquifer and gas cap are set into slow motion as reservoir pressure declines during oil production. Geologists try to provide as much data as possible to the reservoir engineers who model these movements. The NPD has been particularly concerned to establish how far gas output from Troll Øst influences the oil zone in the western structure. Gas is being produced from the southern part of the eastern formation, but pressure has been declining slowly across the whole field. The two sections of Troll are separated by a major fault, but are in communication through two narrow More than 100 production wells have been drilled in Troll West, including 35 multilaterals with one or more sidetracks draining oil from different sandstone layers in the reservoir. areas where the gas cap was only a few metres thick before production began. Production data indicate that this communication is best in the northernmost channel. As the illustration shows, faults cutting across this channel have a much smaller reach than the big fault across the central and southern channel. Nature ravaged Troll long before people began to show an interest in oil and gas. During the Ice Ages, the Norwegian Trench where this field lies was periodically covered with ice. This has removed several hundred metres of the topmost rocks over the eastern structure. The weight of the ice pushed the field down towards the east. As a result, the landscape has seesawed taking the oil zone and gas cap with it. When oil is displaced by water, some of the crude will always remain between the sand grains. That makes it important to keep the oil zone as stable as possible during production. The oil left behind, known as residual, is irrecoverable. Troll Vest in particular contains much residual oil, which shows how this zone has moved in geological time. Such information can be used to say something about where the most important geological barriers are located. Three heads on one Troll Three giant steel topsides rear from the waters west of Bergen. They produce oil and gas from Troll, by far the largest discovery on the Norwegian continental shelf. Text: Leif Hinderaker Norwegian folk tales are replete with cases of three-headed trolls. Reserves of billion standard cubic metres of gas and roughly 1.5 billion barrels of oil and natural gas liquids, also make the Troll field a giant in international terms. Three platforms stand there Troll A, B and C. Statoil operates the A gas installation on Troll Øst, with Norsk Hydro responsible for oil production from the other two units on the western structure. Through the Petoro management company, the Norwegian state s direct financial interest (SDFI) in petroleum activities is the biggest licensee in Troll. Gas deliveries from the A platform began in 1996, with most of the processing taking place on land at the Kollsnes terminal near Bergen before being exported by pipeline to Europe. Millions of Europeans use Troll gas every day all through the year, but only about 15 per cent of the field s reserves have so far been recovered. The remainder equals three times the resources in the Ormen Lange field currently under development in the Norwegian Sea. Troll A stands 472 metres high, measured from the base of its skirts to the top of the flare boom. The hollow shafts accommodate various technical functions. (Photo: Statoil)

11 20 f o c u s : r e s o u r c e s g a s N O R W E G I A N C O N T I N E N TA L 21 AREAS Troll Field: 750 square kilometres Oslo: 454 square kilometres Bergen: 465 square kilometres Trondheim: 342 square kilometres Stavanger: 71 square kilometres Kautokeine (northern Norway): square kilometres Troll contains large amounts of oil in a thin zone under the gas. This is produced in the western structure from the B and C platforms, on stream since 1995 and 1999 respectively. More than 100 horizontal wells many of them multilaterals have so far been drilled in the Troll oil zone. Production drilling is continuing in order to improve recovery. Oil also exists in deeper layers beneath Troll Vest, under the oil-water contact. These resources could be substantial but are very challenging to produce. Troll Øst contains oil as well, in a zone varying in thickness from zero to four metres. Hydro has clear ambitions to increase recoverable oil reserves in Troll Vest, and launched a vision in 2004 of recovering almost 1.9 billion barrels from the field. However, the company has yet to put meat on the bones of these plans and specify what technology developments will be required to implement them. Challenging Troll has represented a challenge from the start. Although good results have been achieved, important milestones remain to be passed. Operating the field is viewed as such a demanding activity that the government found it appropriate to have two operators in both development and production phases. Troll Øst and Vest are not entirely separate reservoirs, however, so a coordinated approach to managing the field has been considered important by the authorities. Creating a Troll Unit, with a joint management committee, ensures that decisions on gas and oil production are taken in one and the same forum. The huge assets involved and the potential close links between the oil and gas reservoirs mean that the developers must proceed with care. Deep underground, a greater or lesser degree of pressure communication could exist between the two structures. A special problem with Troll Øst is that producing too much gas or too fast could hit future oil output from the western side. The government has accordingly imposed restrictions on annual gas offtake through its production permit system. Meanwhile, the NPD gives weight to gathering the best possible data from relevant wells as they are drilled in order to support the assessments and decisions it and the licensees must make. Another issue relates to the timing of large-scale gas output from Troll Vest. So far, only the gas which comes up with the oil has been produced. Starting too early is likely to have major consequences for oil recovery. Declining reservoir pressure would substantially reduce crude production and limit opportunities for increasing recoverable reserves. Studies Extensive studies are now being pursued by the Troll licensees, with the focus on assessing different future options for the field. The challenges are complex and the various problems interact. Questions include the right future plateau production for gas, and whether the oil/gas interaction has been correctly assessed. Other issues relate to starting gas production from Troll Vest, the construction of new pipelines and the role to be played by the field on the NCS in coming years. Text: Øyvind Midttun Gass på børs Selling more flexibly The liberalisation of European markets in recent years means that a growing volume of gas is traded short-term bought and sold on an hourly or daily basis at the highest price bid. Gas transactions are thereby coming more into line with oil sales. Crude oil has always had a short-term market, with cargoes in supertankers often changing owners several times between loading and discharging. But this is new for pipeline gas in Europe. The dissolution of old monopolies and a general opening up of European gas sales has encouraged a growth in spot trading and short-term contracts. Prices are then based on the intrinsic market value of the gas, explains Tor Martin Anfinnsen, senior vice president for the short-term market in Statoil s Natural Gas business area. Net exports of natural gas from the Norwegian continental shelf last year totalled 78.5 billion standard cubic metres, with Statoil accounting for 21.6 billion. Only Petoro, manager for the state s direct financial interest on the NCS, had a larger share at 24.9 billion scm. Since this is also marketed by Statoil, the latter handles more than half of Illustration: Lars Falck-Jørgensen Norway s gas exports. Long-term sales contracts give buyers some flexibility in the amount of gas they take, usually within a range of per cent of the contractual volume. Because purchases fluctuate over the year, producers may have too much or too little gas at different times. This is evened out by short-term deals, a process Statoil calls value optimisation. Access to a market for shortterm buying and selling of gas

12 The largest exporters of Norwegian gas in 2004 Company 22 f o c u s : g a s N O R W E G I A N C O N T I N E N TA L 23 Petoro 24.9 Statoil 21.6 Norsk Hydro 8.8 Total E&P Norge 7.1 ExxonMobil 5.1 Norske Shell 2.4 Eni Norge 2.3 Norske ConocoPhillips 1.8 Mobil Norge 1.6 ConocoPhillips Skandinavia 1.3 Exports (bn scm) means we can maximise the use of infrastructure and capacity, says Mr Anfinnsen. When sales under long-term contracts are high, we can supplement our own supplies with gas from the market and vice versa. That allows us to bring annual production close to 100 per cent of capacity. Traditionally, the European gas market comprised few players and longterm deals. A limited number of large producers sold to a small group of big buyers. Contracts were negotiated bilaterally, with buyers undertaking to pay for a specified amount of gas over a fixed number of years. Prices were determined by the cost of competing energy sources, primarily oil products. In several European markets, new long-term agreements can now be concluded without indexation against other energy sources. Prices are based instead on the actual value of the gas. When Statoil signed a major contract in 2002 with Britain s Centrica for the annual delivery of five billion cubic metres of gas in , for instance, the price was indexed against the spot price on the UK gas exchange. Known as the National Balancing Point (NBP), this market also provided the reference price for Centrica s 10-year contract with Dutch supplier Gasunie. The UK has moved furthest from the old monopoly system, primarily owing to the break-up of British Gas plus good help from the European Union s gas 1998 directive. Britain has shown a more open attitude towards free competition than other gas-importing countries in the EU. The NBP is currently by far the most liquid gas market in Europe, says Mr Anfinnsen. It has the largest number of buyers and sellers, and the largest number of trades. Other European gas exchanges exist, including the Zeebrugge Hub in Belgium, the Title Transfer Facility in the Netherlands, Austria s Baumgarten and the Euro-Hub at Emden in Germany. Although these markets are growing, they still have a long way to go before they approach the level of activity seen at the NBP. Long-term gas contracts will continue to dominate for many years to come, believes Rune Bjørnson, now Statoil s executive vice president for Natural Gas. He also served at one time as chair of the Gas Negotiating Committee (GFU), the former Norwegian counterpart to the European gas buyer monopolies. In his view, the liberalisation process is set to continue and markets in continental Europe will following in the UK s tracks. Our goal at Statoil is to maintain and expand gas production from the NCS, Mr Bjørnson emphasises. We ll undoubtedly see more of our gas being sold spot or on short contracts, but long-term deals will dominate for many years and be our most important source of value creation. Conditions may become similar to those in the UK, where we re now delivering gas under long-term agreements but at prices set by the shortterm market. The question of selling long- or short-term is likely to get less important. What will matter then is whether you as a producer are able to sell and deliver a product and an image which comes closest to what the customer wants. Mr Bjørnson notes that demand is growing rapidly, and says gas is a very important priority area for Statoil both on the NCS and internationally. Our ambition is to increase equity production of gas to roughly 50 billion cubic metres annually by 2015, which involves doubling output from the present level. That will be demanding, but our long experience of producing and selling gas has given us a very competent organisation in this area. Living with hydrocarbons Text: Kristin Henanger Haugen Photo: Emile Ashley The rain patters on the asphalt, making a waterproof jacket welcome. A bus stands waiting. A fleece provides extra warmth on yet another petroleum day. People seldom reflect how often they come into contact with products based on oil and, to a great extent, on gas. These range from children s Lego bricks to contact lenses and shoes. Things were very different a century ago, when hydrocarbons played a much smaller part in our lives. Today, it is hardly possible to get through a normal day without encountering them. Cars, telephones, salami packaging, garden hoses, stockings the list is endless. These things may be of greater or lesser significance, but all represents small pieces of everyday life.

13 f o r e s e a r c h N O R W E G I A N C O N T I N E N TA L 24 f o c u s : g a s 25 Norway occupies a special position. Despite having about three per cent of the world s gas resources, the country uses very little of this commodity itself. Most of its gas is exported to Britain or continental Europe, unlike most other producers which consume a much larger proportion of their output domestically. Only a fraction of the world s natural gas is used to produce industrial products, with just four per cent providing feedstock for petrochemicals in Europe and only two per cent worldwide. Unprocessed natural gas is often called rich gas because it contains a number of heavier hydrocarbons, which are removed before the remaining dry gas is sold to Europe. Known as dew point processing, this separation method is applied in special plants such as the Kårstø complex north of Stavanger. Ethane, propane and butanes collectively termed natural gas liquids (NGL) are removed there, along with condensate or natural gasoline. Dry gas (largely methane) is used for cooking as well as for heating in households and industry, with a growing proportion being burnt to generate electricity. When gas replaces coal or heavy fuel oil in power stations, emissions of carbon dioxide are greatly reduced. The chemical industry uses dry gas as feedstock for ammonia and methanol production, and in oxo processes which involve converting the methane to synthesis gas. This mix of hydrogen and carbon monoxide is then used to produce the final product. Ammonia provides feedstock for making fertilisers and explosives as well as artificial fibres for carpets, jackets and sweaters. Methanol has a variety of applications, including additives in paint, solvents and feedstock for producing the adhesives found in fibreboards. Oil-based paints or stains derived from this chemical protect external woodwork in houses. Cars provide good evidence of the modern dependence on oil and gas, apart from their obvious need of petrol or diesel oil, lubricating oils and asphalt to run on. A growing proportion of the actual vehicle is also made from petroleumbased plastics, which have the advantage of weighing less than the equivalent metal components. This creates a lighter car, which needs less fuel more of the one, less of something else, but always petroleum. Studying development A correlation exists between the general level of education in a region and its long-term economic development, says US professor Richard Lester. That should influence views of what a university is about. The role of universities in the economy should be evaluated on a far wider basis than simply counting the number of ideas which have turned into new companies, says Prof Lester. The head of the Industrial Performance Centre at the Massachusetts Institute of Technology (MIT) in Boston accepts that start-ups, research results, patents and licences are all good contributions. But he insists that the key function of a university is to educate young people. Independent MIT welcomed its first students in 1865 with the intention of becoming a new type of independent university for the benefit of America s expanding industries. William Barton Rogers, a leading American scientist of his day, proposed its creation. A pragmatic and practical man, he believed that the best way to foster professional expertise was to link teaching and research in combination with a focus on real problems. One of his key ambitions was to develop teaching and research laboratories, and MIT currently has multidisciplinary facilities of this kind. The university ranks today as a world-class educational institution, with teaching and research relevant for the practical world still its principal strategy. And this approach has borne fruit, according to a 1994 survey which showed that MIT graduates had founded companies providing 1.1 million jobs and earning USD 232 billion. Nor is its scientific success to be sneezed at a total of 59 MIT-related Nobel prizes have so far been awarded. Text: Eldbjørg Vaage Melberg Photo: Minna Anneli Suojoki

14 26 f o c u s : r e s e a r c h N O R W E G I A N C O N T I N E N TA L 27 Partner in Stavanger Stavanger has become one of the latest recruits to a global research programme on local innovation systems initiated by MIT three-four years ago. Involving 25 selected communities, the main question being addressed by this programme is the role played in such change processes by local universities. Collaboration has been established with universities and communities worldwide, and Stavanger and Aberdeen are the two latest recruits. MIT is cooperating in the Norwegian oil capital with the Rogaland Research institute, and this part of the work is funded by the Research Council of Norway. The goals are ambitious, and the intention is that the results can be used in developing strategies for universities, regions and government. Funds Most of MIT s research funds come from the US federal government only per cent are contributed by industry. In other words, even a prestigious establishment like this depends on the state to finance most of its research. That will always be the case, Prof Lester acknowledges. This is because universities pursue studies which industry will not pay for. All societies need long-term research, he says, But it ll never be funded by industry because individual companies can t see how they might benefit from such work. Profit Long-term research isn t launched for short-term profit, Prof Lester notes. It might not yield measurable results in financial terms, but the knowledge gained could prove applicable in other contexts. He cites the fact that radioactivity is used today in well logging as an example of how research in one field can provide results which benefit a different area. The fundamental physics research which laid the basis for this application was government-funded. That work spilled over into medicine, leading in part to the technology now employed by the oil industry. It s impossible to say where the results of long-term research will find a use. Prof Lester has been involved in developing surveys on innovative processes in industry, which ask companies where they acquire the knowledge essential for new advances. Most respondents emphasise the information they get from outside their own field. That illustrates the importance of keeping up with developments in other areas, which companies can achieve through collaboration with a research-based university. The latter serves as a window into a world they would otherwise be unable to see, Prof Lester notes. That s why industry likes MIT. In favour of life on Earth? We are, too Text: Eldbjørg Vaage Melberg How do you make sure there is a liveable Earth left for your descendents when you are gone? That is the key question for environmental specialist David Hunter Marks and his team. Prof Marks heads the laboratory for energy and the environment at the Massachusetts Institute of Technology (MIT), and a staff of world-class engineering, scientific and political experts. Their focus is on central technological, social and environmental issues at the interface between production, energy use and sustainability. According to Prof Marks, studying energy without simultaneously taking the environment into account is impossible. They are too closely interrelated. He emphasises that the main issue pursued by his lab encompasses a number of subordinate questions of greater or lesser significance. Playing with the wind. Painting by Oscar Reynert Olsen.

15 28 f o c u s : r e s e a r c h r e s o u r c e s N O R W E G I A N C O N T I N E N TA L 29 These include how to balance the habits of the developed nations with the hopes of developing countries, and how to make successful use of political winds and wind power. Others focus on how to produce sufficient amounts of hydrogen to replace petroleum, without having to use fossil fuel to actually make this gas. And how should individuals decide which car to own or whether they should drive at all. Unconcerned One question which leaves Prof Marks relatively unconcerned is what humanity will do when all the fossil energy sources have been consumed. He notes that the Stone Age did not end because all the stone was used up, but because better solutions were discovered. Similarly, humans will use fossil fuels for a long time, but will eventually come up with cleaner and better-adapted ways of using energy. Prof Marks points out that large quantities of oil, gas and coal are available, but that people must create energy systems which are less dependent on these resources. The long-term goal is to develop non-polluting forms of energy. In the meantime, methods for capturing and storing carbon dioxide need to be developed. According to Prof Marks, the internal combustion engine in cars (including the hybrid vehicles now starting to appear on US roads) is capable of further improvement. This means in turn that running on petrol will continue to be both cheaper and more efficient than using hydrogen for many decades to come. He notes that not only have methods been developed to recover more petroleum from existing fields, but work is also under way to find less environmentally-harmful production techniques. In his view, hydrogen does not offer a magic wand which will reduce human dependence on fossil fuels in the long term, if ever even if it burns cleanly, with water as the only by-product. Hydrogen actually creates a number of new problems, not least because like electricity it is not an energy source but an energy bearer. It has to be produced, and that takes energy more energy than can be extracted from the resulting hydrogen. And fossil fuels are needed to produce it. Many other renewable or nonrenewable energy sources can probably be harnessed to make hydrogen, including nuclear power, wind energy or biomass. But that will cost huge sums. In addition, a hydrogen economy calls for a large and expensive infrastructure. It would take several decades to replace existing vehicles with hydrogen-fuelled alternatives. Converting existing buildings and constructing new ones to use hydrogen for heating would also be a huge task. Hydrogen will find its place in the future energy mix. But it would be wrong for the world to become reliant on a single energy bearer, Prof Marks maintains. He argues that the only responsible approach is to research, test and adopt a wide range of possibilities and to do it now. Saving Energy saving naturally helps, Prof Marks agrees, and says that MIT scientists are seeking innovative methods for achieving reductions in consumption. Heating accounts for much as a third of the energy produced in the world and transport for roughly a quarter. Planning society to reduce energy costs could help to improve the quality of life. Prof Marks says that nobody will have to sacrifice part of their quality of life to safeguard the environment, but maintains that something must be done right now globally. People who are assured that their short-term needs will be satisfied can think about the longterm future, for themselves and for the environment. This poses a challenge for residents in the rich nations, says Prof Marks one summed up in the title of the lab s latest publication, which also provides the heading for this article. Text: Eldbjørg Vaage Melberg Photo: Pål Rødahl From muck to methane The hunt for energy based on alternative renewable sources is in full swing today, with gas from biological sources biogas regarded as a potential ingredient in tomorrow s energy mix. Derived from animal dung or waste materials, biogas has been in use by humans since time immemorial, reports Professor Torleiv Bilstad at the University of Stavanger. The ancient Chinese are known to have used it, for instance, and the technology involved was very simple. Dung was collected in airtight containers, where methane was produced by bacteria. Today s principles for biogas production are essentially the same. Bacteria feeding on the waste give off gas, which is siphoned into containers and used for lighting and heating. The residue of the process is fertiliser full of nitrogen and phosphor which the Chinese used to spread around their orange trees, Prof Bilstad explains. Natural gas produced from underground reservoirs has the same origins as biogas, in that both derive from organic materials. But while it takes about 200 million years to produce the one, the other is available in a couple of weeks. Both biogas and natural gas consist mainly of carbon dioxide and methane. Only the latter yields energy, so the carbon dioxide has to be removed from natural gas before it is exported. All modern sewage treatment plants include a biogas facility. After the solids have been removed from the effluent, they are pumped into tanks to produce the gas. The big treatment plant at Mekjarvik, which handles sewage from the Stavanger region, is heated by biogas, and the USA utilises the same system. Pig farmers in Denmark and the Netherlands actually generate biogas for sale to the distribution network. The residual fertiliser is just as good as pure animal manure, since all the nutrients remain. A number of dairy farmers in Rogaland, the county which embraces Stavanger, hatched plans a few years ago to join forces in building their own biogas facility, Prof Bilstad reports. Although these plans foundered for economic reasons, he remains convinced that biogas can form part of the energy supply for the world s future population. But it will never be able to meet more than a tiny fraction of today s huge energy consumption.

16 30 f o c u s : d r o p l e t s N O R W E G I A N C O N T I N E N TA L 31 Making a mark at the WPC NPD economist Mari Kvaal has been given the prestigious task of delivering a paper to the World Petroleum Congress in Johannesburg, South Africa, at the end of September. Addressing the section allocated to young speakers, she will be talking about the economics of exploration on the Norwegian continental shelf. Ms Kvaal is one of eight speakers selected from the 52 who took part in the WPC s youth forum in Beijing last August to deliver her paper in Johannesburg. The NPD is proud of her selection, says Reidar G Trædal, who also serves as secretary of the Norwegian national committee for the WPC. I think it s very impressive that she s been selected to speak at this major industry forum. Ms Kvaal will be going to South Africa with several NPD colleagues, including director-general Gunnar Berge, Mr Trædal himself, Rolf Wiborg and Brit B Ravndal. While Mr Berge is due to participate in a round-table conference on flaring, Mr Trædal will be attending the WPC council together with fellow Norwegian Finn R Aamodt. Research prize for Nævdal Mathematician Geir Nævdal has won the research prize for 2004 from Rogaland Research (RF) for his key role in opening a completely new field of activity at the foundation. Involving the development of techniques for updating reservoir and wellstream models in real time on the basis of measured data, this work has enhanced RF s international reputation. In 2004 alone, Mr Nævdal had 19 articles accepted by international scientific journals. Fact maps The NPD s interactive map service include such details as every production licence, discovery, field, well and installation on the Norwegian continental shelf. Its interactivity means that users can zoom into areas and decide which details should appear on a particular map. A search function is also incorporated. Creating updated illustrative maps for various purposes is easy for external users, and these charts are closely integrated with the fact pages on the NPD s web site. Information on the fact pages/maps is updated daily. See Oil conference for Raufoss in 2006 Planning of the Norwegian oil industry s third domestic conference, due to be staged at Raufoss in mid-norway from 7-8 March 2006, is in full swing. This meeting aims to inform Norwegians about the oil and gas sector and its importance for the whole country, explains Else Ormaasen, the NPD s representative on the programme committee. It also plays an important role in highlighting the political, technological and industrial challenges facing the industry. Another objective is to mobilise technology-based companies in the Norwegian regions to seek contracts from the oil sector. The programme committee is chaired by Hans Erik Stadshaug from prefabrication specialist Moelven ByggModul AS, and also includes Storting (parliamentary) representative Sylvia Brustad. Its other members are Oppland county governor Audun Tron, Stein Knutsen, chair of Vestre Toten local authority, Harald Thoresen from the Confederation of Norwegian Business and Industry (NHO), Maiken Ims from the Norwegian Oil Industry Association (OLF), Ingolf Brudeli of Intelligent Controls AS, Svein Terje Strandlie from RTIM, Stein Thomassen of the Gjøvik Business Development Board and Hans Riddervold from the Norwegian Petroleum Society (NPF). Volume Responsible publisher: Norwegian Petroleum Directorate P O Box 600 N-4003 Stavanger Norway Telephone: Telefax: postboks@npd.no Editorial team: Eldbjørg Vaage Melberg - editor Øyvind Midttun - journalist Kristin Henanger Haugen - journalist Janne N jai - design/layout Rune Goa and Arne Bjørøen - graphic production Kalmar Ildstad - principal engineer Eric Mathiesen - principal engineer Lars Falck-Jørgensen - illustrations Rolf E Gooderham - English editor Print run Norwegian: Print run English: Printer: Kai Hansen, Stavanger Paper: Arctic Volume 200/130 g Subscriptions: NorskSokkel@npd.no Free of charge Next issue: December 2005 Human capital Norway s key resource Norwegian Continental Shelf on the web: The Norwegian status as a prosperous country depends primarily on its human capital, according to calculations of national wealth made by Statistics Norway. These show that oil and gas reserves accounted for 12 per cent of such wealth in 2004, with human capital responsible for no less than 77 per cent. Front cover photo: Emile Ashley Petroleum in our daily lives