Norway Energy Minister: Arctic Reserves Key for Energy

OSLO Jan 22, 2007 (AP)

Vast petroleum reserves in the Arctic are a key source of world energy, but development must also protect the fragile cold-weather environment and curb greenhouse gases, Norway's oil minister said Monday.

"If the U.S. Geological Survey is right, 25% of the world's undiscovered petroleum reserves could be found in the Arctic. Thus, the Arctic region could be part of the solution to the growing energy needs of the world," said Oil Minister Odd Roger Enoksen in opening a conference on the northern region.

Norway, the world's third largest oil exporter, allows oil development in parts of the Arctic Barents Sea, which it shares with Russia. Enoksen said the Norwegian sector alone could have 6 billion barrels of oil equivalents.

"The Norwegian Barents Sea is still largely a frontier area," said Enoksen. He said the government has offered key exploration areas so oil companies can learn more about the region's potential.

The first Barents field, the Snoehvit natural gas project operated by state-controlled oil company Statoil ASA (STO), is due to begin production in December. The Italian oil company Eni SpA (E) has discovered oil off Norway's northern coast, and in the Russia sector, the vast Shtokman gas field is being developed.

Enoksen said challenges in the far north include technology, protecting the environment and limiting climate change, and are so great that petroleum projects require international cooperation.

He said Russia's decision last year to develop the Shtokman field without involving foreign oil companies, including Statoil, "shows, in my opinion, a lack of perspective."

The oil minister said Norway wants to cooperate with Russia on developing the region to the highest environmental standards.

Norway's own plan for the far north includes a ban on any emissions from drilling and production rigs into the water, as well as no drilling near the coast and other protected areas.

Enoksen said global demand for fossil fuels will continue to grow, as will emission of gasses that contribute to global warming unless steps are taken to limit them.

One option, he said, was capturing carbon dioxide, and injecting it into offshore oil reservoirs for permanent storage, as Norway has done at the North Sea Sleipner Vest offshore field since 1996.

The International Energy Agency estimates that carbon capture and storage could contribute 20 to 28% of total emission reductions by 2050.

Enoksen was speaking at the Arctic Frontiers Conference in Tromsoe, the main city in Norway's Arctic. About 450 experts were gathered this week to discuss the challenges and opportunities of the far north.

Copyright (c) 2007 Dow Jones & Company, Inc.