8 Development plan for Northern Lights
8.1 Plan for development, installation and operation
On 30 April 2020, the Ministry of Petroleum and Energy received a combined plan for development and operation (PDO) and plan for installation and operation (PIO) for the Northern Lights project. On 6 May 2020, the Ministry received a letter stating that the companies had made a positive investment decision and a request for approval of the PDO/PIO. The investment decision has been made among other things on the condition that the Storting makes a positive investment decision for the whole project without stipulating costly conditions and that the state aid agreement is completed and approved.
Northern Lights will receive captured CO2 that is transported on ships and delivered to an onshore reception facility in Øygarden municipality. The CO2 will be stored there temporarily before it is pumped through a pipeline to an injection well on the seabed.
The subsea reservoir where the CO2 is to be stored is covered by exploitation licence 001, which was awarded to Equinor ASA by the King in Council on 11 January 2019. This is the first licence for carbon injection and storage on the Norwegian continental shelf awarded under the CO2 Storage Regulations. The area covered by the licence is south-west of the Troll field and east of the Oseberg field in the northern part of the North Sea.
Equinor has entered into a cooperation agreement with A/S Norske Shell (Shell) and Total E&P Norge AS (Total), and it is these three companies that are behind the Northern Lights project. The intention is that Equinor, Shell and Total will together establish a general partnership with shared liability, which will be responsible for the development and operation of the project. The company is in an establishment phase and will go under the name Northern Lights DA. A participants’ agreement has been drawn up between the three companies in the project, which regulates the establishment of Northern Lights DA and ownership and operation of the project. This agreement shall be approved by the Ministry of Petroleum and Energy; cf. the CO2 Storage Regulations Section 4-1 sixth paragraph.
Equinor will be licensee and operator until the new company has been formally established. An application will then be submitted to transfer these responsibilities to Northern Lights DA.
8.1.2 Development solution
The development solution comprises ships to transport CO2, an onshore facility for reception and temporary storage of the CO2, transport by pipeline, and an injection well and permanent storage in a reservoir on the continental shelf.
The shipping solution for transporting CO2 is not part of the PDO/PIO; cf. the CO2 Storage Regulations Section 1-6 (i) and (t). The solution is nonetheless part of the total scope of the project and is included in the support agreement with the state. It is therefore briefly outlined in the PDO/PIO.
The plan is initially to build two dedicated tankers to transport liquid, cooled CO2. The ships will be owned by Northern Lights DA. The carbon capture actors will deliver liquid CO2 from tanks at the agreed quay. The ships will be 130 metres long. If Northern Lights secures more CO2 storage customers, more ships will have to be built.
Onshore facility for reception and temporary storage of CO2
The onshore facility will be established at Naturgassparken in Øygarden municipality. The facility will have a quay with loading arms for unloading ships, 12 storage tanks for temporary storage of CO2, a process system for heating and increasing CO2 pressure prior to transport by pipeline, quality control of CO2, buildings for electrical equipment and control systems, an administration building with a control room, office and visitor facilities, and a workshop and storage building. The control room at the onshore facility will be used during the start-up period, while the plan is to use the control room at the Sture terminal during the operational period to reduce operating costs and staffing needs.
The storage tanks’ capacity will correspond to the ships’ capacity, such that they have the capacity to store the CO2 discharged from one ship. The capacity will enable a continuous flow of CO2 from the onshore facility to the storage reservoir.
The area where the onshore facility is to be built will be blasted and levelled before construction commences. It will be possible to expand the onshore facility if the need arises in the future, including an additional quay.
Pipeline and installation on the seabed
A 100-km pipeline will be installed from the reception facility out to the installation on the seabed with pertaining injection well. The pipeline will be constructed to enable a branch pipe to be established to alternative storage locations in the future in the area east of Troll and for pipes to be connected from the industrial area at Mongstad.
A well, Eos, has been drilled, and is intended to be used for injection of CO2. Parts of the installation on the seabed were established in connection with the drilling of this well. The control cables for the well will come from the Oseberg A platform. The well will be managed and monitored from the Oseberg A platform, from the control room at the onshore facility and from the Sture terminal. The control rooms will have different tasks, but they will all continuously monitor the well. It will be possible to trawl over the installation and control system on the seabed.
A system will be implemented to identify any leakages in the entire storage chain, from the onshore facility to the injection well. An overarching monitoring plan has also been drawn up for the whole project, which, among other things, describes the monitoring of the storage complex. This will take place by monitoring pressure and temperature in the well and by active and passive seismic monitoring.
The CO2 volumes will be injected into the Johansen formation and be stored there and in the Cook formation above it. The shale in the formation above will act as a sealing cap rock. Data from the Eos well confirmed the presence of high-quality sandstone in the reservoir. The well hit a 75-metre layer of sealing shale above this with sufficient integrity for CO2 injection. The well results support previous assessments that the volumes of CO2 included in phase 1 of the project can, with high probability, be injected into the reservoir.
8.1.3 Volume, timeline and development phases
The plan is to develop Northern Lights in phases.
Phase 1 is planned with an estimated capacity of 1.5 million tonnes of CO2 per year. The completion of phase 1 is scheduled for 2024, and it will have a planned operational period of 25 years. The facility will then be able to receive CO2 from Norcem and, if applicable, Fortum Oslo Varme, totalling around 0.8 million tonnes of CO2 per year. The residual capacity may be sold to other carbon capture actors. If the entire capacity of 1.5 million tonnes of CO2 is filled per year throughout the planned operational period, the total amount of stored CO2 for development phase 1 will be 37.5 million tonnes.
The potential of the storage complex is assumed to be much greater. The operator considers it probable that up to 100 million tonnes of CO2 could be stored inside the exploitation licence in a potential second phase of the project, but the uncertainty in the build-up of pressure and the lack of well data mean further maturation is required. Experience from the operation of phase 1 will be decisive in determining how much CO2 can be stored in total in the reservoir.
It may be relevant to drill an additional well during phase 1. This will depend on how the injection in the first well performs and how the CO2 is distributed in the reservoir. The cost allocation and criteria for triggering state aid for an additional well are regulated in the agreement on state funding for investment and operation. A potential additional well will require consideration by the authorities subject to the CO2 Storage Regulations Section 4-5 last paragraph.
A potential second phase of Northern Lights, with increased treatment and storage capacity of 5 million tonnes of CO2 per year is discussed in the plan, but a decision has not been made to implement phase 2. This will not therefore be included in the authorities’ consideration of the PDO/PIO for Northern Lights.
8.1.4 Investments and economics
The operator estimates the total investments under the development plan to be 5,975 million 2020 NOK. The estimate includes one injection well. An additional investment for an additional well may be necessary during phase 1, estimated to cost 1,140 million 2020 NOK.
The average annual operating costs are estimated to be around 370 million 2020 NOK.
The state’s share of investments, operating costs and any additional investments is regulated in the funding agreement, cf. sections 4.2. and 6.2.
The project currently has no expected income. Any income will derive from commercial customers with third-party volumes that buy CO2 storage capacity from Northern Lights. A potential income stream will depend on when contracts are entered into, the amount of CO2 transported and stored, and the level and nature of tariffs paid for third-party volumes.
Intergovernmental agreements will have to be entered into on CO2 received from other countries, which, among other things, set out the division of responsibility in the event of CO2 leakage, and responsibility for monitoring the storage facility after it shuts down, cf. section 4.3. The project is making active efforts to market the storage facility to potential customers.
Delivery agreements cannot be entered into before the Storting has reached a positive investment decision and the funding agreement has been signed.
The operator estimates the pre-tax present value, without the state’s contribution to be -7,941 million 2020 NOK, and the internal rate of return to be negative. The potential additional investment in an additional well is not included in the estimate. Nor does it include the potential income from third-party use of the facility.
8.1.5 Shutdown and disposal
Shutdown and removal costs are estimated to be 426 million 2020 NOK. This estimate will increase by a further NOK 179 million if an additional well is necessary.
Shutdown and disposal of the facilities, including the onshore facility, will be outlined in a cessation plan for Northern Lights, and will be conducted in accordance with the regulations applicable at that time. The final plan for the post-operational phase is scheduled to be submitted at the same time as the cessation plan. The equipment located on Oseberg A will be included in the platform’s cessation plan.
8.1.6 Impact assessment
An impact assessment (IA) has been conducted for the project. The proposal for the IA programme was distributed for public consultation on 5 February 2018 and the final date for consultative submissions was 9 April 2018. Since the storage location changed from Smeaheia to the Johansen formation, an addition to the IA programme was distributed for public consultation on 17 July 2018 and the final date for consultative submissions was 11 September 2018. The Ministry of Petroleum and Energy adopted the impact assessment programme on 13 August 2019 based on the consultation documents, the consultative submission received and the operator’s comments to the aforementioned.
The operator has prepared an IA based on the adopted IA programme. It was distributed for public consultation on 22 October 2019 and the final date for consultative submissions was 15 January 2020. Twenty-five submissions were received.
A zoning plan process, including an IA, has been conducted subject to the Planning and Building Act for the onshore facility and the part of the pipeline covered by the scope of this act. The zoning plan was approved by Øygarden and Fedje municipalities at the end of September 2019.
The main features of the impact assessment are outlined below.
126.96.36.199 Main features of the impact assessment
The petroleum resources the area around in the storage location are highly valuable for Norway. It is likely that the CO2 will migrate over time into the production licence for the Troll field. However, it is highly improbable that significant volumes will migrate there as long as the Troll field is in production. The CO2 will in such case be captured in deeper formations and is not expected to come into contact with hydrocarbons in the field. It is deemed highly improbable that CO2 will migrate to other fields.
The pipeline from the onshore facility to the injection well will largely run through an area where there is limited fishing activity. In areas where the pipeline will lie in a fisheries-intensive area, it will be jetted into the seabed. The control cables will be ploughed or jetted into the seabed along the entire route. It will be possible to trawl over the installation on the seabed.
During the construction and installation period at sea, a restricted/safety zone will be established around the area where the pipeline and cables are to be installed. The operator does not consider it necessary to establish a permanent safety zone around the installation on the seabed.
The storage location will be monitored by means of seismic surveys. The plan is to collect seismic data immediately prior to the start-up of injection, and every few years during the operational period.
The onshore facility is located in an area with existing industrial and development activity. The biggest negative environmental impact, in the opinion of the operator, is linked to the consequences of the establishment of the onshore facility and tanks on land for people’s views and enjoyment of the area. To mitigate this, the project will ensure that parts of the outer section of the terrain and coastline remain untouched, to shield the area from the fjord.
The consequences are largely considered to be in the categories minor or no change for other environmental and culture-related assessment topics.
To ensure that third parties and safety are taken into account during the operational phase, zones requiring special consideration have been established in the zoning plan for the reception facility, based on criteria from the Directorate for Civil Protection, and dispersion and risk analyses.
CO2 and NOx emissions will be low during the development and construction phase; estimated at 0.04 million tonnes and 0.1 thousand tonnes, including drilling of the Eos well. Annual CO2 emissions during the operational phase are estimated to be under one thousand tonnes. An application will be submitted for an emissions permit under the Pollution Control Act in the ordinary manner for all planned, minor discharges to sea related to operations.
Coral deposits have been registered along the west side of Fedje in an area the pipeline must cross. To mitigate this, a survey of the seabed will be conducted in connection with the pipe laying operation, and the route may be altered to avoid conflicts with confirmed coral reefs in the vicinity. The impact is regarded as insignificant.
The development and operation of Northern Lights will generate activity for Norwegian suppliers. The Norwegian share of investments during the construction phase is estimated to be equivalent to 57 per cent. This is estimated to generate an employment effect at a national level of 2,100 full-time equivalents, including direct and indirect effects. This includes an estimated regional employment effect of 250 full-time equivalents during the construction phase. The operation of the facilities is expected to generate an annual employment effect of around 46 full-time equivalents at a national level, of which 9 full-time equivalents will be at a regional level and 18 at a local level.
The IA includes a summary of the mitigating measures built into the project.
8.2 Assessments of the plan for development, installation and operation
The operator has sent the plan for development, installation and operation to the Ministry of Petroleum and Energy (MPE), the Ministry of Labour and Social Affairs (MLSA) and the Ministry of Climate and Environment (MCE), with a copy to the Norwegian Petroleum Directorate (NPD), the Petroleum Safety Authority (PSA) and the Norwegian Environment Agency (NEA); cf. the CO2 Storage Regulations sections 4-5 and 6-1. The plan has also been sent to the Ministry of Justice and Public Security (MJPS) since the Directorate for Civil Protection (DCP) is the supervisory authority for large parts of the onshore facility.
The MLSA has submitted the plan to the PSA, which has considered the PDO/PIO within its area of responsibility and pursuant to the CO2 safety regulations. The PSA has also been in dialogue with the NPD and DCP during its consideration to clarify, among other things, interfaces, total risk analysis and regulations.
The PSA has recommended approval of the plan, but has highlighted a few unclear elements in the development which may impact safety. The PSA will follow this up with the operator during the planning and implementation phase. The MLSA has stated that these are important factors that must be followed up by the operator. The MLSA otherwise refers to the PSA’s assessment and has no further comments.
The MJPS has submitted the plan to the DCP. The DCP provided input to the operator at an earlier stage of the process concerning the land use plan and the description of the DCP’s official responsibility. The DCP finds that this has been followed up expediently and that any other factors will be followed up in connection with processing of the application for consent for the onshore facility, which the project plans to submit to the DCP in the fourth quarter 2020. The DCP has no further comments. The MJPS endorses the DCP’s statement.
The MCE and the NEA have made no comments on the final version of the PDO/PIO. Pursuant to Section 13 of the Pollution Control Act, the pollution control authorities may order a party planning an activity that may cause significant pollution to conduct an impact analysis to map the impact of the pollution. The MCE concludes that the conducted impact assessment is sufficient and that further impact analyses pursuant to the Pollution Control Act are therefore not necessary.
The MPE has submitted the plan to the NPD. The NPD has considered the PDO/PIO within its area of responsibility pursuant to the CO2 Storage Regulations, i.e. downstream of and including discharge to temporary storage.
The NPD considers it highly probable that the CO2 volumes included in phase 1 of the project can be injected. The cap rock above the selected reservoir has excellent sealing properties and the risk of leakage to the seabed is deemed very low. The development solution is largely based on known technology and has been extensively assessed. The chosen solution has the flexibility to allow for subsequent expansion.
The NPD has considered the costs of the pipeline, installation on the seabed and well by comparing them with data from other development projects on the Norwegian continental shelf. The estimates are, in the NPD’s view, on a par with other projects on the continental shelf.
The petroleum resources in the area are highly valuable. The NPD assumes that the CO2 will migrate over time into the Troll field production licence. Like the operator, the NPD considers it highly improbable that significant volumes will migrate there as long as the Troll field is in production. The CO2 will in such case be captured in deeper formations and the NPD does not expect it to come into contact with hydrocarbons in the field. The NPD considers it highly improbable that CO2 will migrate to other fields.
The NPD highlights certain shortcomings in the reservoir model that are imperative to establishing a sound monitoring plan, predicting CO2 migration and instigating any mitigation measures in time. The NPD therefore recommends that an approval is subject to a condition that reservoir models are updated. The NPD also recommends that an effective information and cooperation platform is established between the companies and the authorities both during the development and operational phase.
The NPD recommends that the development plan be approved.
8.2.1 The Ministry’s assessment of the development plan
The Ministry has been in dialogue with the operator about the project prior to the submission of the development plan. The objective of this dialogue has been to ensure that the chosen solution leads to good resource management and that it meets the authorities’ requirements.
The Ministry makes references to the comments submitted by the MLSA, MCE and MJPS and recommends that the developer follow up the comments from the PSA, and that the operator incorporates the DCP’s input during the planning and implementation phase.
The Ministry also makes reference to the NPD’s assessment of the PDO/PIO. Since the project is covered by the state’s external quality assurance scheme, cf. section 5, neither the Ministry nor the NPD has conducted their own calculations of the profitability of the Northern Lights subproject. A more detailed assessment of the economy of the project is provided in section 6. The NPD has proposed making it a condition that an updated geological reference model and pertaining dynamic reservoir model are developed. The Ministry agrees with this, and will make this a condition in the event that the Storting gives its approval following consideration of this white paper and pertaining budget consequences.
The development is not expected to have significant negative impacts on the environment. The development itself will entail a relatively small increase in emissions to air, and, during the operational phase, the project will make it possible to reduce emissions to air from potential emission sources in Norway and abroad. Based on the impact assessment, the public consultation thereto and the operator’s comments to the consultative submissions, the mitigating measures are considered acceptable. No factors have come to light to indicate that the development plan should not be approved. The MPE deems the assessment obligation to be met. The principles of sections 8–10 of the Nature Diversity Act are reflected.
Based on the above discussion, the Ministry of Petroleum and Energy endorses the approval of the Northern Lights development. The project can be implemented within acceptable frameworks with respect to health, the environment, safety and fisheries’ interests.