Statoil set to develop Arctic's sleeping beauty
Date: 27-Feb-02
Country: NORWAY
Author: Inger Sethov
Politicians in Hammerfest, the world's northernmost town, hail the 46 billion crown ($5.18 billion) plan to build Europe's first liquefied natural gas (LNG) plant as a way to stop people drifting away from the region, set amid snow-capped mountains.
"We have been waiting for this, working for this, dreaming about this for 18 years. Now, it's finally going to happen," said Hammerfest Mayor Alf Jakobsen. Hammerfest is just south of the northern tip of Norway, the North Cape.
He said he was optimistic that construction would start later this year despite protests from environmentalists, creating up to 2,000 new jobs and turning the fisheries community into an industrial gas centre in the north.
Statoil, which discovered Snoehvit as the first commercial find in the region in 1984, has invested 500 million crowns in Barents Sea exploration since drilling started around 1980.
It is committed to starting construction immediately after a final go-ahead from parliament, expected next month, with expected output of 5.7 billion cubic metres (bcm) of LNG per year for 30 years from 2006.
Norway's parliament is due to vote on March 7 on whether to give the green light for the project, which will be developed as a subsea tie-back to production facilities run from Melkoya island, near Hammerfest.
STATOIL SAYS CONFIDENT
"We are confident that we will get the approval that we need," said Halvor Engebretsen, Statoil industry coordinator in Hammerfest. "We will start construction as soon as the approval is clear."
Statoil has already signed contacts to deliver the LNG to customers in the United States and Spain from 2006, pending a final approval. "We need to start now to fulfil our contract agreements," Engebretsen said.
Statoil calls Snoehvit "a new chapter in Norway's petroleum industry" but says it has no current plans to start oil production in the Barents Sea.
"This is a gas project, and a gas project only," Engebretsen said. Some had initially hoped that the Barents Sea would also have vast oil reserves, extending an oil bonanza from the North and Norwegian Seas where output from many fields has peaked.
But some locals still pin hopes on an Agip oil find, Goliath, near Snoehvit, which has estimated reserves of up to 250 milion barrels of oil.
"We hope that there will be further developments in the Barents Sea so that Hammerfest can continue to be an attractive place to live," said Bjoern Walsoe, a consultant for the local municipality. He said housing prices have jumped by 40 percent in Hammerfest in the past six months.
A clear majority of the 9,200 inhabinants of Hammerfest, mostly employed in fishing and public services, back Snoehvit.
The exception are mostly young environmentalists, worried about emissions of carbon dioxide (CO2) and the possibility of future oil exploration which they say could threaten the fragile Arctic environment.
"We're not exactly popular among the locals," said John Einar Pryds, the local leader of Norway's Nature and Youth environment group. He said there were stories of elderly ladies poking anti-Snoehvit campaigners with their umbrellas.
ENVIRONMENTALISTS TO FIGHT
"We will fight until the end and we do not rule out illegal actions if they start construction," Pryds said.
Statoil says its project the most environmetally friendly LNG development in the world as the CO2 contained in the wellstream will be separated out, piped back to the field and reinjected into reservoirs.
But CO2 emissions from its on-land gas-fired power production will still amount to 860,000 tonnes per year, or two percent of Norway's total CO2 emissions.
Pryds said it would be a paradox if the Norwegian government allowed the project to start since the Christian People's Party, a member of the three-party coalition, had previously voted against plans to build Norway's first gas power plants.
He said Snoehvit production would also make it difficult for Norway, whose C