March 2, 2024

Aker BP has received approval from Norway’s legislature to proceed with development projects in the North Sea that have about 1.07 billion barrels of oil equivalent (Bboe) in combined reserves.

The green light paves the way for final approval by the Petroleum and Energy Ministry of the development plans for the Yggdrasil area and the Valhall field extension project, Aker BP said in a press release Monday.

The independent exploration and production company earlier announced a Yggdrasil discovery that raises the area’s reserves to over 700 million boe (MMboe). Estimated to add 40 to 90 MMboe, the Ost Frigg Beta/Epsilon exploration well was nearing drilling completion, Aker BP said May 25 announcing the discovery.

Meanwhile the Valhall PWP-Fenris extension project would add around 230 MMboe to Valhall’s existing reserves of approximately 137 MMboe, Monday’s announcement said.

The Yggdrasil and Valhall PWP-Fenris projects are both in the detailed engineering stage, the media statement said.

Aker BP plans to start construction for Yggdrasil in autumn.  Senior vice-president Yggdrasil Lars Høier said in the release “all major contracts” had been signed and thousands of orders have been placed by domestic and international buyers.

“Yggdrasil is the next major development on the Norwegian shelf, and along with partners Equinor and PGNIG Upstream Norway, we are now opening up a mature area in the North Sea”, Høier said.

Valhall PWP-Fenris is ready to begin construction before summer as scheduled, the company said. The Fenris field, which through the Valhall PWP-Fenris project will be connected to the Valhall field by a bridge, is being developed with PGNiG Upstream Norway AS, while Pandion Energy AS is a partner for Valhall.

Chief executive Johnny Hersvik commented, “Yggdrasil and Valhall PWP-Fenris alone constitute more than NOK 165 billion in investments. We are talking estimated tax revenue of more than NOK 120 billion for our nation”.

Norway will also get around 65 percent of deliveries from Yggdrasil and Valhall PWP-Fenris, which have a combined contribution of “130,000 full-time equivalents in Norway through the fields’ lifetimes”, Oslo-listed Aker BP said.

Gas for Europe

The Valhall extension project aims to boost gas exports to Europe.

“We are now also establishing Valhall as a gas hub. Production from Fenris will substantially increase gas export from Valhall to Europe and will more than double gas processing capacity”, said senior vice-president for Valhall Ole Johan Molvig.

Norway had been Europe’s number two source of natural gas next to Russia before the latter invaded Ukraine last year. Imports by the European Union and the United Kingdom from the Nordic country averaged nine billion cubic feet a day (Bcf/d) between 2010 and 2020, below Russia’s 2020 average of 13 Bcf/d “as development of new fields in the Barents Sea section of the Norwegian offshore Continental Shelf was insufficient to offset declines from mature fields in the North Sea”, the USA Energy Information Administration said in a report February 11, 2022.

Amid trade sanctions against President Vladimir Putin’s war, Norway overtook Russia as the EU’s top natural gas exporter 2022, accounting for 24.4 percent of the region’s imports compared to 15.3 percent from Russia, according to a bulletin update May 3 by the EU statistics agency Eurostat.

Climate Debacle

The Yggdrasil and Valhall PWP-Fenris projects had been endorsed to parliament by the government and approved May 25 by the majority of lawmakers in the Energy and Environment Standing Committee, Aker BP said in Monday’s announcement.

While considered a leader in climate action, Norway has faced criticism for continued fossil fuel development.

Last month the Petroleum and Energy Ministry opened the latest licensing round for petroleum production in the nation’s continental shelf, with an option for state participation in project rights. “At the time of the award, state participation may be stipulated in each production license. Petoro AS is the licensee on behalf of the State’s participating interest (the State’s Direct Financial Interest – SDFI)”, said the invitation for applications released May 11.

In 2020 the Supreme Court ruled against a suit by environmental and youth organizations to stop new oil drilling in the Arctic.

“It is absurd that our right to a livable environment cannot be used to stop Norway’s most harmful activities for our climate and environment”, said Frode Pleym, head of suit co-initiator Greenpeace Norway, in a statement by the watchdog December 22, 2020.

David Boyd, United Nations special rapporteur on the environment and human rights, had called on Norway to end further exploration for oil and gas reserves and expansion of hydrocarbon infrastructure.

“The Norwegian paradox is that its leadership on some aspects of climate action is undermined by its continued dependence on a large fossil fuel industry”, Boyd wrote in The Guardian on November 12, 2019 after an official visit to Norway.

“Norway, as one of the world’s wealthiest nations and a leading producer of oil and gas, has a responsibility to lead efforts in mitigation, adaptation and, to some degree at least, compensation for the loss and damage caused by those products”.

Aker BP claimed the Fenris and Yggdrasil fields are low-emission projects. “The development projects contribute to Aker BP delivering on the ambition of creating the oil and gas company of the future with low costs, low emissions, profitable growth and attractive returns”, it said in Monday’s announcement.

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