Hammerfest Optimistic about Gas Despite Growth and Industry Challenges

During March 2002, the Norwegian parliament approved gas giant Statoil’s plans to develop the Snøhvit gas field outside of Hammerfest in the Barents Sea. Statoil began bringing gas from Snøhvit to the island of Melkøya in Hammerfest during 2007.

Hammerfest, a former struggling fishing community, is now a gateway to the world’s northernmost liquefied natural gas facilities.


On a Tuesday night in June, the handful of hotels in Hammerfest are filled. A dozen years ago, the High North town would not have had that issue. 

The former struggling fishing community is now a gateway to the world’s northernmost liquefied natural gas facilities. Despite the industry’s shifting prices and markets, local political and business leaders see gas as the reigning industry for Hammerfest’s foreseeable future. 

During March 2002, the Norwegian parliament approved gas giant Statoil’s plans to develop the Snøhvit gas field outside of Hammerfest in the Barents Sea. Statoil began bringing gas from Snøhvit to the island of Melkøya in Hammerfest during 2007. 

Hammerfest is located in the very north of Norway.

Since then, property taxes and jobs have dominated the narrative of Hammerfest’s growth. 

Before gas money came to town, property taxes in Hammerfest were only bringing in about NOK 5 million annually. The town now earns an annual NOK 155 million in property taxes, mostly from the gas industry, and there are almost 10,000 residents.

“Hammerfest was going down and then you have the decision to have the plant,” mayor Alf Jakobsen said to the BarentsObserver. 

Arvid Jensen, chairman of Petroarctic, a petroleum supplier network, said elderly residents would tell him the gas industry’s growth felt similar to the rebuilding process following World War II and its devastation of Finnmark. 

“Optimism came back,” he said to the BarentsObserver. 

Property Taxes and Jobs Change the Landscape 
Jakobsen said before the gas boom, Hammerfest was not able to guarantee full kindergarten to every student. Because of the town’s filled coffers from property taxes, there are now 16 kindergartens in town, including 11 public ones, and a new one being built. 

“Everybody is now supposed to get a place in the kindergarten,” said Unn Wenche Slettvoll, Hammerfest’s kindergarten coordinator to the BarentsObserver. “We couldn’t do that before for everybody.”

While the kindergartens are scattered throughout town, the large red-paneled Hammerfest cultural center is a more striking testament to the gas industry’s financial influence on the town.

The fashionable cultural centre.

Linda Hassfjord, the center’s leader, said the building, which was completed in 2009, hosts events that are sponsored by the gas and oil industry but the center is independent of those companies.  

Jakobsen said new kindergartens and the cultural center help the town handle the growth of its young population which are drawn to gas industry jobs. 

He said the jobs in town are abundant and a young person new to Hammerfest can earn between NOK 600,000 and 1 million each year. 

“I think it’s come too easily, but that’s my opinion,” Jakobsen said. 

The industry is also drawing new companies to Hammerfest from outside the industry.

Jakobsen said about 80 new companies are planning to move to Hammerfest with about ten beginning operations each year. 

Herold Paulsen, general manager for Polarbase, an organization which provides support services for the gas industry, said the number of jobs around Polarbase is ten times higher now than it was a decade ago. 

Jakobsen said the town is growing by about two percent each year and he hopes within 20 years there will be between 15,000 and 20,000 people living in Hammerfest.

Keeping Up With Rapid Growth 
One challenge for gas booms like the one in Hammerfest is that the industry requires a high amount of skilled professionals which a small fishing town might not have, said Bjørn Hersoug, a professor at the University of Tromsø who studies the oil gas industry, to the BarentsObserver.

“There is a mismatch between the new jobs coming in and the qualification the local population has at the moment,” he said. 

There are more than 10,000 inhabitants in Hammerfest today.

But Jensen said the high influx of people between 20 and 40 years old returning to Hammerfest from their studies and the gas industry’s training efforts have made that transition easier. 

“It’s quite difficult for our little city to grow as fast as it has, but Hammerfest has succeeded,” he said. 

Jakobsen said the population growth has also brought with it some elevated housing prices. 

“It’s a problem for us that we get bigger so fast and we need houses,” he said. 

In order to handle the growing demand for housing, the town had to use dynamite in the mountains to create flat areas for new houses. It now has new areas for about 1,800 new houses.

Slettvoll said another problem with fast growth in the gas industry was an influx of students from outside of Norway who didn’t speak Norwegian.

Slettvoll was a teacher when the gas industry began to emerge in Hammerfest. 

She said the growth posed a challenge for her because many students’ parents were short-term employees and were only in Hammerfest briefly. 

“Some of the kids also just stay for a while and then they leave again,” Slettvoll said. 

She said the problem has since tapered off and classroom environments are more stable than they were at the beginning of the boom. 

The Future of the Gas Industry 
Though gas is a finite resource, business leaders in the area like Paulsen and Jensen said they think resources in the Barents region will help sustain Hammerfest for several decades. 

“We are quite sure that we’ll be drilling for many many many years and that we’ll find a lot of gas and oil in the Barents Sea,” Paulsen said. 

Little fishingboat outside Hammerfest LNG, the world’s northernmost gas plant.

But the gas industry in the High North has not been immune to changes in the global market. Following the emergence of shale gas in the United States, the import plant at Cove Point in Maryland, which was once set to receive Arctic gas from Statoil, is becoming an export facility. 

Statoil has also come across dry oil wells in the Johan Castberg field north of Snøhvit. “We need more time to mature the concept,” Statoil CEO Helge Lund said to Reuters at a press conference this week. 

Despite these setbacks, this year has been one of the most productive for the gas industry, Jensen said. 

He and Jakobsen said they were also hopeful about a project in the Goliat oil field near Hammerfest by Eni, an Italian-based company. 

Eni was supposed to begin oil production last fall but technical problems with construction of a platform in South Korea delayed it by a year. 

Both Jensen and Jakobsen recognize that the gas and oil industries run on finite resources.

Jensen said he thinks the gas industry will continue to provide resources for at least 30 to 40 more years. He said he is optimistic that new industries, like wind and solar power, could help towns like Hammerfest. 

“Technological revolutions come often,” Jensen said. 

Jakobsen said he thinks tourism and fish farming could also be industries for Hammerfest to grow so that its economy is not entirely dependent on gas. 

“Sometime we know it stops,” he said.