From: Reuters
Published January 5, 2008 02:19 AM

Clean power for Norwegian oil and gas rigs seen costly

By Alister Doyle, Environment Correspondent

OSLO (Reuters) - Norway's hopes of supplying cleaner electricity to offshore oil and gas platforms to help fight global warming suffered a setback on Friday when an official report projected higher-than-expected costs.

The study estimated it would cost at least 1,600 crowns ($299) to cut a ton of carbon dioxide emissions by shutting down offshore power generators run on fossil fuels and laying cables from the mainland, where most power is hydro-electric.

By contrast, rights to emit carbon dioxide, the main greenhouse gas, cost about 24 euros ($35.33) a ton in a European Union market.

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"I can't hide the fact that I would have preferred a report with a different content," Norwegian Oil and Energy Minister Aaslaug Haga told a news conference, expressing disappointment with the cost conclusion.

"But I have to make it crystal clear that emissions from the Norwegian continental shelf will fall. And I'm sure that electrification will be a part of the answer," Haga said. Norway is the world's number five oil exporter.

The offshore oil and gas sector is a big consumer of electricity, for everything from pumping gas to heating and lighting floating hotels for oil workers, and it emits about a quarter of all Norway's greenhouse gas emissions.

Under two scenarios for retrofitting existing offshore fields with electricity from the mainland, total costs would be about 50-75 billion crowns.

The report, by state-run groups including the Petroleum Directorate (NPD) and the Norwegian Pollution Control Authority, would be the basis for debate in coming months, Haga said.

HIGH COSTS

"It's technically possible to electrify the continental shelf," said Bente Nyland, head of the NPD. "The drawback is that the costs are high...it's labor intensive and it will take time."

Norway is seeking ways to cut greenhouse gas emissions to meet climate goals under the U.N.'s Kyoto Protocol. Emissions are over target.

Friday's report, focused on overhauling existing platforms, estimated that costs for cutting a ton of carbon dioxide emissions would range from 1,600 crowns in the southern part of the North Sea to 4,750 crowns in the middle North Sea.

Norway separately obliges companies developing new oil and gas fields to consider electrification from the mainland. "Costs for future fields will be considerably lower" than retrofitting, Haga said.

She declined to say whether the report signaled the end of Norway's dreams of overhauling existing offshore platforms and the start of far more modest schemes for laying cables to some new fields.

-- For Reuters latest environment blogs click on:

http://blogs.reuters.com/environment/

(Editing by Anthony Barker)

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