July 29, 2010 / 11:08 AM / 7 years ago

Analysis: BP spill seeps into Norway's Arctic drilling debate

OSLO (Reuters) - Norway’s decades-old political consensus on offshore drilling is under attack in the wake of the BP oil spill, just as it covets new riches in the Arctic.

The powerful oil industry says it needs to tap resources off the Arctic archipelagoes of Lofoten and Vesteraalen and in a huge, recently demarcated Barents Sea border region with Russia to continue Norway’s oil boom amid dwindling North Sea output.

But, emboldened by the Gulf of Mexico well blowout, Norwegian environmentalists seek to grab the upper hand in a battle they feel they have long been loosing.

So far Oslo’s energy policy has not been affected much by the spill, but the drilling lobby is nervous.

Norway is still Europe’s No. 2 energy supplier but its oil exports, at 2.13 million barrels per day in 2009, are 31 percent below its 2001 peak. Natural gas sales are rising.

Energy Minister Terje Riis-Johansen said this month that he was personally against opening the Lofotens archipelago.

The government is expected to take up a position on opening the region to oil activities in early 2011.

“Perhaps the Norwegian authorities will wait at least a few years with awarding licenses in previously unexplored Arctic areas, not to provoke the environmentalists and the population in general,” said Bjoern Brochman, director of gas market analysis at Point Carbon, a Thomson Reuters company.

Statoil also reluctantly agreed that the U.S. spill has made it more difficult to open the Lofotens.


Environmentalists warn that the oil industry is taking on more and more risk in the Arctic. It takes longer for oil to dissolve in freezing Arctic waters, while winter darkness and limited port facilities would hamper cleanup efforts.

The seas off the Lofotens have unique cold water reefs and are the spawning grounds of the world’s largest cod stock.

In the latest salvo, an eco group this week asked safety authorities to reject drilling requests by Statoil and Italy’s ENI in a developed area of the Barents Sea, taking the fight to a region previously cleared for exploration.

“After such a catastrophe in the Gulf of Mexico, it’s sensible to press the brake in these vulnerable areas,” said Lars Haltbrekken, head of Friends of the Earth Norway.

On the other side, the head of Norway’s influential LO union and ally of the Labor party in government said that failure to open up the Lofotens and other prospective Arctic areas would have a profound impact on Norwegian society.

“Not doing the (Lofoten) study would mean breaking with the political tradition that has turned Norway into the welfare state that it is today,” Roar Flaathen told the daily VG.

The country’s oil industry said a BP-type oil spill is highly unlikely offshore Norway because of tougher safety rules.

But even as Norway remains one of the least polluted oil and gas producing regions in the world, the risks of offshore drilling, especially in deep waters, have now been fully exposed to an environmentally-sensitive Norwegian electorate.

“(The U.S. spill) was a reality check, an awakening for Norwegians that accidents happen and that production in deepwater is dangerous,” said Point Carbon’s Brochman.

Norway’s energy policy remains friendly for industry, however, with the latest offshore licensing round announced in June including all 12 previously envisaged deepwater blocks.

The total number of blocks on offer was cut by just six to 94 following the spill, while Oslo’s halt on drilling in new deepwater areas is seen as largely symbolic.

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