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(Bloomberg) — On a platform 140 kilometers (87 miles) off the Norwegian coast, Crown Prince Haakon holds two cables connected to scale models: the first a wind turbine, the second an oil rig.
Behind him, the world’s largest floating offshore wind farm looms on the horizon, an engineering marvel that cost more than $660 million and took five years to build. “By connecting these cables, we connect the future,” the prince said before connecting the plugs and sockets. Tiny lights flickered inside the micro-oil rig, marking the official start-up of the first wind-powered offshore oil platform on Earth.
Each wind turbine at the Hywind Tampen offshore wind farm weighs as much as the Statue of Liberty and is attached to the seabed by powerful suction anchors. For Equinor ASA, the state-owned oil and gas giant that built them, they are part of a larger plan to use electricity to reduce the carbon footprint of its products.
Yet pioneering modernization is a clinging to the past. Norway argues that reducing emissions from oil production to zero will help it meet internationally agreed climate goals while future-proofing an industry that has made it one of the world’s richest countries. But even if it succeeds, Equinor’s oil exports will continue to have a devastating impact on the planet — the emissions from burning those hydrocarbons overseas alone are five times the amount Norway emits domestically.
This is the vision for a greener world being proposed by the global oil and gas industry. Saudi Aramco is investing in low-carbon hydrogen, and US oil companies such as Occidental Petroleum claim they can produce “net zero oil” through carbon capture. This approach will be heavily discussed at the COP28 climate summit later this month in the United Arab Emirates, itself one of the world’s largest oil producers.
“If you can operate without producing emissions, then you have a long-term view,” Norway’s Oil and Gas Minister Terje Ausland said in an interview. “We have to meet the climate challenge and we can do it if we get the oil and gas industry involved.”
The idea of letting companies that are responsible for much of the greenhouse gas emissions in the atmosphere lead the green transition has been heavily criticized by diplomats, experts and activists who want to move away from dirty energy sources as quickly as possible. However, Sultan Al Jaber, the UAE minister and oil executive who chaired the COP28 talks, made it clear that he wants to work with fossil fuel producers, not against them. The world will still need some oil and gas for decades to come, so it makes sense to make those supplies as low-carbon as possible.
Norway, a progressive Scandinavian country where electric cars dominate the roads even as oil profits sustain the welfare state, is a case study in industry-led green transition.
Norway has been steadily electrifying its oil production for years. Troll A, an oil rig east of Hywind Tampen, has been drawing power from land since at least 1996. Today, about 20 oil fields along the Norwegian coast run on the same electricity, a shift that replaces a source that emits more than 3 million metric tons of carbon annually. Equinor is developing a $1.2 billion plan to electrify the Hammerfest LNG facility, one of the largest in Europe.
Initial skepticism at Norway’s largest oil and gas companies, Equinor, Aker BP ASA and Var Energi ASA, has dissipated. “The fact is that using shore power makes facilities cheaper to run, more efficient and easier to maintain,” said Karl Johnny Hersvik, chief executive of Aker BP. “From a very basic industrial perspective, it’s just common sense.”
About 90% of Norway’s electricity comes from hydropower, which enables the country’s companies to produce oil. The oil has the lowest carbon intensity in the world, emitting only about 7 kg of CO2 per barrel, according to Oslo-based Rystad Energy. The international average is 16 kg of CO2 per barrel. The Johan Sverdrup field emits only about 0.67 kg of CO2 per barrel, thanks to two undersea cables that keep it running. Last May, Equinor added an emissions listing line to cargo certificates for its Mongstad refinery to show its fuel was greener.
Knut Simon Helland, who leads Equinor’s emissions reduction efforts, says his job is as important as Norway’s transition to electric vehicles. In addition to a big push for electrification, his team has made some small changes: changing the way drinking water is produced at sea, reducing the amount of water injected into wells, and looking at how to minimize flaring. This amounts to saving about 2 million tons of carbon over 10 years. In 2022, Equinor emitted more than 11 million tons of carbon dioxide.
All of these efforts are aimed at making Norwegian oil more attractive in a world committed to reducing consumption of polluting fuels. “If you want to save the world, you need to have two things in mind: A. Reduce the use of oil and gas; and B. Increase production from the Norwegian continental shelf,” Holland said.
Equinor’s push for electrification has sparked controversy at home as Norway faces a looming power crisis.
The spread of electric vehicles, Russia’s invasion of Ukraine and growing ties to continental Europe’s power market have all driven up demand and prices for electricity. Last year, water levels in reservoirs that sustain Norway’s hydroelectric power fell to their lowest level in more than a decade because of a drought caused by climate change.
Building wind turbines on land, the most obvious alternative source of renewable energy, has sparked controversy. Many Norwegians consider the structures unsightly, while others say the developments trample on the rights of indigenous Sami reindeer herders. Oil and gas companies also plan to invest more than $30 billion in developing new sources of oil, which could monopolize manpower and resources in the coming years and make it harder to recruit engineers who can jump-start green industries such as batteries and hydrogen electrolyzers.
All of this raises questions about whether it makes sense to send power offshore. In 2022, the oil industry drew 9 terawatt hours of electricity from land, about 7% of the country’s total consumption, and that is expected to double by 2020. Statnett, Norway’s grid operator, predicts that power shortages could emerge as early as 2027.
In the run-up to municipal elections in September, leaders of far-left and far-right parties agree, for different reasons, that electrification is expensive and counterproductive to meeting climate goals. A government-appointed commission tasked with exploring options for Norway’s decarbonization recently concluded that Norway should avoid using onshore power to reduce emissions.
It also proposed a highly unpopular alternative: a moratorium on issuing production and development licenses until parliament approves a strategy to phase out the oil business.
All parties in Norway’s ruling coalition support continued oil and gas production, which accounts for 24% of GDP and is expected to add $81 billion to state coffers by 2023. It is the source of a $1.4 trillion sovereign wealth fund that many people rely on for healthcare and pensions.
The goal should be to “develop, not destroy” the industry, according to Norwegian Prime Minister Jonas Gahr Storey. Although Norway’s oil production peaked in the early 2000s and no one expects it to reach those levels again, the country has positioned itself as a stable, long-term source of fuel for Europe.
Even Bellona, a prominent environmental group, is working with the oil industry. The group is unhappy with the government’s approach, saying it is too focused on electrification and not doing enough to bury the carbon under the sea. “This is the reality we have to face,” said Christian Eriksen, a technical adviser at Bellona. Even if there is a possibility of power shortages, he said, “there is no political will for oil companies to invest in developing alternative solutions.”
In the control room at Equinor’s offices in Bergen, technicians manage the changes in the current from the Hywind Tampen together with those operating the unmanned oil platform.
Among them is Ole Arild Larsen, the facility’s project manager and Equinor’s first offshore wind employee in Norway. His father, an electrical engineer for the company, took him as a teenager to the same port where the foundations for offshore wind turbines would be built decades later. Final assembly was done in the village of Gülen, where his family is from and still owns a cottage.
Larsen used to manage the Snorre A platform, one of five now powered in part by wind. He knows all too well how tough the weather conditions can be. In the control room, video feeds from the top of the turbines show the North Sea pounding with waves and rain. “The platform has exceeded its design life,” Larsen said, but the wind project has bought it more time.
Although it is currently used to extract polluting fuels, the project is a chance for Equinor to test offshore wind technology, which the company hopes to promote in places like California and South Korea. “We are paving the way to prove that floating offshore wind is viable,” Prime Minister Stoll said in an interview. “It’s our contribution to lowering emissions.”
For many Norwegians, Equinor’s efforts to reduce its own emissions and develop technologies such as offshore wind and carbon capture are a way to absolve itself of its climate sins. But not everyone agrees.
“This is being used as an excuse to prolong the oil age,” said Gina Gilfer, director of the NGO Nature and Youth. “It makes up for our own emissions but fails to address the problems and costs to nature and indigenous peoples.”
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