To land or not to land Arctic oil

Statoil is on a possible collision course with the Norwegian government over whether or not to land oil from the Barents Sea.

The Norwegian energy ministry wants to bring oil from the Johan Castberg field to land. Licenseholder Statoil is skeptical.


Oil Minister Tord Lien during his visit to Hammerfest, northern Norway, this week clearly signaled that the Norwegian government wants oil from the Castberg field to be sent to a land-based facility on the country’s Arctic coast. “The landing of the oil will help establish the infrastructure needed also for other field resources in the area”, he told newspaper Finnmark Dagblad.

He is supported by the Norwegian Petroluem Directorate, which sees the Castberg field as part of a major development plan for the Barents Sea. Speaking at this week’s Barents Sea Conference, Directorate Leader Bente Nyland stressed that the big distances and complex conditions in the Barents Sea demand cooperation and joint solutions. “The big distances require that we think differently; it is all about logistics and preparedness”, Nyland underlined. She wants Statoil to cooperate with Lundin and OMV, two companies which have made other field discoveries in the area, reports.

Both Lien and Nyland want to establish a terminal facility at Veidnes near the North Cape.

Statoil, however, might want it otherwise. According to the company, the discovered resources in the area are too small for the development of land-based facilities. “The disappointing geological knowledge which we now possess indicates that such a solution will simply be one size too big for us”, Statoil’s regional director Erik Strand Tellefsen told “We need to adjust our coat to a small project”, he adds.

At the same time, Statoil is clear about its ambitions for the field. “There is not any doubt that this project will be developed”, Tellefsen underlines.

Statoil in 2011 discovered the field, then called Skrugard, and estimated resources to between 500-600 million barrels of oil. The license is operated by Statoil (50%) together with Eni (30%) and Petoro (20%).

The structure is located more than 200 kilometers northwest of North Cape.