Innlegg på OG21-Forum

Olje- og energiminister Tord Liens innlegg på OG21- Forum 4. desember 2013

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Introduction

• Gunnar, Terje, thank you very much for the introduction. It is always nice to get applause before a speech.

• Before taking office as minister of petroleum and energy, I spent two terms in parliament:

• The first four years as member of the standing committee on Energy and the Environment, the second in the committee on Education and Research.

• Needless to say, I care about both energy and research, and I find them inseparably connected!

• The petroleum industry in Norway is currently facing many challenges, such as high costs, decreasing oil production, and exploration and field development in arctic areas.

• How can we best address these challenges?

• That was a question directed to you in the audience. I know that right now, in front of me, I have some of the most skilled people in Norway when it comes to finding solutions to such complex challenges.

• Don’t worry, I don´t expect you to provide solutions right here and now, but I am confident that the continuous efforts you are doing on a daily basis will deliver results!

• In short, research, technology and innovation are the keywords when addressing these challenges. That is on our agenda today.

 

 R&D – a Government priority

• Energy resources have been the backbone of the Norwegian society since the late 19th century. 

• For more than a hundred years these resources have provided secure and flexible energy supply, public revenues, employment and economic growth.

• However, – and this is important – it did not come by itself!

• To take advantage of these natural resources, sound public policy and management, and the availability of an industry that can produce them are fundamental.

• Production must be sustainable – more specifically cost- efficient, safe and with a minimal environmental footprint.

• This can only happen with true dedication to research and technology development.

• And that is exactly what this Government is – dedicated to R&D! In our policy platform, R&D on both renewable energy and petroleum are given priority.

• I have read today´s newspapers, so this is something I want to address specifically:

• In the state budget for next year we added 36 million kroner to petroleum research in order to strengthen both the PETROMAKS 2 and DEMO 2000 programs.

• 36 million doesn’t sound too much, but 2014 will be the first of the last nine years with increased funds for petroleum R&D. That was what we managed in 14 days.

• Of course, industry has the main responsibility for developing new technologies and solutions. There can be no doubt about that.

• However, the Government has an important role in providing appropriate incentives for the industry to undertake research and development.

• And our ambitions and goals can only be effective if they are aligned with those of the industry.

• This is why OG Twenty One is so important to the ministry and to the government.

• OG Twenty One, combined with the efforts of the Norwegian Research Council, represents a solid framework for R&D priorities as well as implementation of strategies.

• Both OG Twenty One and the Research Council enjoy recognition internationally. This tells me that we have a good system in place, on which to build future common endeavors.

• In particular, I would like to take this opportunity to thank the Research Council for the excellent job they do in managing the R&D activities. You are a strong partner for the Ministry, and I believe also for the industry.

 

Why? - Industry and resource development

• I would like to underline a very important point: Petroleum and energy research is not only about energy production.

• It is also about industrial development.

• In Norway, many of the discoveries have been made in remote areas with no infrastructure.

• Technological development has been absolutely essential to make fields economically viable, or even possible to develop at all.

• In this environment Norwegian industry has developed cutting edge technology: Advanced offshore supply vessels, subsea production systems, safer and more efficient drilling equipment and multiphase flow over long distances, are just some examples.

• The resources on the Norwegian Continental Shelf laid the foundation for a highly competent and internationally competitive oil and gas supply and service industry.

• It is indeed a great national advantage having such an outstanding industry:

• In 2012 they employed roughly 162 000 people and gained a revenue of 461 billion NOK [USD 75 billion]. About 40 percent of the revenue was generated in international markets.

• Worldwide, offshore petroleum production is expected to rise in coming years. With more than 40 years of offshore experience in Norway and abroad, Norwegian companies are well positioned to contribute.

• I am an historian by education, so let me mention an example. Correct me if I am wrong, but our first installations at Ekofisk – the first oil producing field on the NCS, were constructed without even as much as Norwegian nuts and bolts.

• 40 years later Norwegian technology is in place everywhere in the world. For example, the Roncador installations off the coast of Brazil have a very high content of advanced Norwegian technology.

• About a week ago, my deputy minister, Kåre Fostervold, was in Brazil, to sign an agreement on R&D co-operation in the petroleum sector.

• Brazil is about to become the largest offshore market in the world, and has, just like Norway, demanding conditions that can only be tackled with continuous innovation.

• In an entirely different context, former US president Franklin Roosevelt said “look to Norway” in a famous speech.

• Without sounding too confident, when talking about offshore expertise, it is quite natural that the Brazilians do just that – look to Norway.

• However, we also have a lot to learn, and international cooperation is fundamental in order to secure access to cutting edge technology and to develop our human capital.

• The competition for competence is global and it is growing. It makes sense to partner with Brazil. But this agreement is just one example.

• Recently, I also visited my colleague, the American secretary of energy Dr.Ernest Moniz. We agreed to cooperate to strengthen the test center network on Carbon Capture and Storage, CCS. This is another example of how we work internationally.

 

Arctic areas

• Brazil surely faces some demanding conditions when developing their offshore fields.

• Our own activities in the High North are also demanding, but with slightly different challenges in the Barents Sea compared to Brazil.

• Handling these challenges requires knowledge, creativity and innovative skills from the petroleum industry at large.

• A commitment to research and development is vital to ensure that we succeed in the north. 

• In the Barents Sea we have the same aspirations as for the southern part of the continental shelf:  The aim is to maximize the value creation – to the benefit of society as a whole.

• If that sounded vague, allow me to be more specific:

• Before, the people of our most northern county, Finnmark, were known to differ from the rest of the population. When asked about the future, they were among the most pessimistic!

• Now, the situation is reversed. Now they are more optimistic than the average Norwegian.

• This has largely to do with the increased opportunities connected to the oil and gas industry, and the development of the Barents Sea.

• In the 80s and 90s the city of Hammerfest lost about 1100 jobs as a result of lay-offs from their industrial cornerstone – a fish processing plant.

• The city mayor recently told journalists that the petroleum industry has replaced that loss with more than 1200 new positions. I believe that explains a lot.

 

Improved recovery rates

• Indeed, the petroleum industry is gradually moving north. However, we should not forget that most of current activity is still happening in our southern seas. 

• Particularly in the North Sea we face the challenge of mature oil fields. Today the recovery rate on the Norwegian continental shelf is about 46 per cent. This is high compared to world average.

• Still – a one percent increase in the recovery rate will lead to extra public revenues of more than 300 billion kr.

• I am sure that my colleague in the Ministry of Finance would very much welcome such an increased recovery rate too!

• Continuous development of new technology has been vital to maintain and improve recovery rates.
We need to make the most of our existing infrastructure and offshore installations.

• And it is possible! When the investment decisions for the Ekofisk field were made 40 years ago, the expected recovery rate was 17 per cent. Today the expected recovery rate has increased to more than 50 per cent!

• Let me illustrate this clearly. With current prices, this extra volume represents a gross income of about sixteen hundred billion Kr, or nearly one third of our sovereign wealth fund.

• Sixteen hundred billion. To put the number in perspective: (klikk for å få fram tallet) The amount equals no less than three-hundred and eighty-one Opera Houses as the one here in Oslo.

• New technology, subsea compression, is also about to be implemented on Åsgard. This will increase the recovery rate dramatically, and may be a game changer in the petroleum industry. 
 

Demonstration on the NCS

• With Åsgard Statoil also takes a groundbreaking step in demonstration. I cannot stress this enough: New technology must be demonstrated and put to use before it can provide payback.

• Qualifying new technlogy, especially by means of demonstration offshore, is both complex and financially risky.

• In order to get around these barriers, funding is not the only answer. There has to be close co-operation between technology suppliers, oil companies and the research environment. 

• Besides, the license partners must share and have the right incentives to make a pilot become reality.

• Unlike many politicians, I do not have all the answers to getting more pilot projects off the ground, but I know there is still a potential to be unlocked. I encourage OG Twenty One to look into this matter.

• There is reason to be optimistic: A few weeks ago, a new kind of oil and gas pipe was lowered into the fjord in Orkanger. This is the SmartPipe, developed in a project lead by SINTEF, and supported by Demo2000.

• The name is quite describing, it is just that - a smart pipe, equipped with sensors that continuously report the condition of the pipe. 

• I want to see more examples like this: technology being tested and demonstrated, and gradually making its way offshore.

 

Costs on the NCS

• Costs on the Norwegian Continental Shelf have been rising, and is a challenge we need to address if we are to make the most out of our hydrocarbon-energy.

• This is critical because opportunities may be lost if we are not able to control the level of costs.

• Last week I met with both the Petroleum Directorate and Petoro in Stavanger. There I got some interesting perspectives on this subject.

• Therefore, I look forward to the presentation by Grethe Moen in a few minutes about how technology can reduce costs on the NCS.

• In this context, a former minister of energy and petroleum referred to herself as a “technology - optimist”.

• I would like to call myself a “technology-enthusiast”. I am enthusiastic about the possibilities technology and research can deliver in order to reduce costs.
 
• Facing the challenge of rising costs, research and technology development are our main tools.

 

Conclusion:

• It is time to summarize and give the stage to the real heroes of this industry – the scientists.

• If Norway is to keep its leading position, the research communities must play a key role.

• The challenges in the High North, and the ambition to increase oil recovery are two major reasons for the increase in the State Budget for petroleum research. We also have to address the challenge of increasing cost levels.

• Another challenge is to provide the right education and competence level needed to tackle the challenges at home and abroad.

• Building competence and skills cannot be done in isolation. We both compete and co-operate on a global scale. This is why we seek partnerships with other countries.

• OG Twenty One brings together oil companies, academia, suppliers and Government, to develop and implement a national R&D strategy for Norway. It is a good example of how the major stakeholders in the industry work together with the government.

• It is a strategy that provides guidance for government R&D. And even more importantly: This stimulates cooperation also within the industry.

• I would also use this opportunity to thank you all for your hard work and your continuous efforts working with complex issues on a daily basis.

• In particular, I would like to thank the chairman of the OG Twenty-One board, mr. Hersvik, for all your efforts over the past two years. I wish you good luck with your new job at Det Norske.

• Let me finish with a quote. The famous playwright and political activist George Bernard Shaw once said: “The possibilities are numerous once we decide to act and not re-act.”

• That is well said, and with a dedication to research, technology and innovation, we definitely act and make a lot possible within the petroleum industry!

• Thank you for your attention and good luck with the rest of the forum!