Industry Groups Work Together for Better Energy Mgmt of NCS

Together with OLF (the Norwegian Oil Industry Association), Statoil, Hydro and ConocoPhillips, the Norwegian Petroleum Directorate (NPD) has prepared a report on the possibilities of more efficient energy supply on the Norwegian shelf.

The recommendations of the working group responsible for the report include a stronger focus by the industry on energy management, and that the industry develop joint guidelines for how energy management can be established and implemented.

The working group also recommends more state grants to research and development that is relevant for the offshore industry's climate challenges. State participation is also necessary in order to ensure a sufficiently long-term perspective and to spur commitments to larger, more risky projects.

The report was prepared on request from the Ministry of Petroleum and Energy, and is a follow-up of the Storting's consideration of Storting White Paper No. 9 (2002-2003) relating to domestic use of natural gas, etc.

In 2003, the petroleum activities accounted for 28% of Norway's emissions of CO2, and most of this (about 80%) comes from power production from gas-fired turbines on the facilities. The overall need for power is relatively stable at about 15 TWh/year, while the CO2 emissions per produced unit are expected to rise in the years to come. Both of these developments are due to the fact that the Norwegian shelf is transitioning into an increasingly mature phase. The most power-intensive operation on the shelf is compression of gas for injection or export via pipelines.

Measures to reduce emissions
A number of measures to reduce emissions have already been implemented on the shelf, resulting in a reduction in the order of 2 million tonnes of CO2 per year, in part due to the introduction of the CO2 tax in 1991. If we compare our situation with international petroleum activities, emissions to air from the Norwegian shelf are far below average.

During the course of 2003 and 2004, a significant database has been accumulated for implemented and planned measures to reduce emissions to air from the operating companies on the shelf. The reported measures are based on the best available technology and the focus is on measures that can be implemented during the course of the next 5-10 years. The emissions during this time period will largely originate from existing facilities, and this places limits on just how much emissions can be reduced beyond the current level.

The energy needs on the Norwegian shelf are largely met by gas turbines that produce electricity, and through heat recovery from the turbines' exhaust. The average efficiency for production of electric power on the shelf is about 30%, while the overall efficiency, including heat recovery, is about 40%.

Overall, measures have been reported that are related to energy supply and energy consumption that, technically speaking, can provide an annual CO2 reduction of about 1.7 million tons, or about 14% of the total CO2 emissions from the shelf. About one-fourth of the measures are regarded as being socio-economically profitable within the CO2 tax rate. Even though measures may appear to be profitable in the early stages, there will be factors in the ongoing decision process that can affect the final result. This can go both ways, so that seemingly profitable measures are never realized, while other measures that initially seemed unprofitable may well be approved. Therefore, there is not just one simple profitability calculation that determines whether or not a measure will be implemented. Reports from the operating companies show that measures to reduce emissions within the framework of the tax have largely been implemented.

Some measures that reduce other types of emissions/discharges, such as injection of produced water and use of low NOx technology, can result in increased CO2 emissions. It is important that both the operating companies and the authorities are aware of these paradoxes to ensure optimum management of energy and the environment.

Need for systematic review
Based on experience, the NPD's forecasts for CO2 emissions include an adjustment for improved technology which is equivalent to a more than 5% reduction in CO2 emissions in ten years. A realistic, although ambitious, estimate of potential reductions of CO2 emissions for the Norwegian shelf is in the order of 5-10% over a period of 5-10 years, which will also likely result in reduced NOx emissions. In other words, the potential reduction in emissions is already largely incorporated in the current forecasts. The working group believes that a stronger focus is needed on energy management if this potential reduction is to be realized. Energy management entails a methodology for how an organization can continuously work on all aspects of energy efficiency and energy consumption, and it should be an integrated part of the organization's general management system. This report also points out a great number of individual measures, but a more systematic review is needed of all factors that impact energy production and energy consumption so that relevant measures can be realized on the various facilities.

A shift in technology and energy supply concepts is needed in order to achieve additional contributions towards improved energy efficiency and lower emissions. This requires a long-term commitment to development, testing and implementation of new technology. Reduced emissions of greenhouse gases from offshore activities is a matter of national importance, and government participation and incentives are probably necessary in order to stimulate further development of technology and enhance interest in larger pilot projects.