Friday, September 2, 2011

Norway Policy Tour - Draft Report

Notes cut and pasted from the Institute of North's Policy Tour webpage

Introduction

The rough notes below describe the information 45 Alaskans gleaned from five long, intense days of meetings, presentations and visits with a multitude of Norwegian agencies, industries, and government leaders. They do not in any way represent a comprehensive technical overview of Norway’s model, but do serve to illustrate the broad themes addressed during this experience.

The following is the Institute of the North’s Report to Alaskans – as we work to understand the reality, the richness and the responsibility of the North.

Recommendations – action items (to be developed – arrived at by facilitated process of brainstorming, dialogue and prioritization)

What can we do to maximize our wealth?

  • Wealth includes human capacity and quality of life
  • Take control over our own destiny; engage in our own destiny
  • Engage stakeholders
  • Build on education base
  • Stage development – based on long-term vision
  • Create in-state expertise
  • Define state’s interest
  • Establish long-term vision
  • More value-added
  • Study/strategize for 10 years down the road, then prioritize
  • Intergovernmental coordination
  • Bring in outside expertise and follow through
  • Optimize what we have through education new ideas
  • Inventory of resource to maximize exports
  • Talk about roles of government vs. private
  • Create an exportable service industry
  • Build infrastructure
  • Stabilize domestic energy costs
  • Discuss the issue of who owns the infrastructure
  • Proactive in development – investment of government dollars
  • Statewide infrastructure plan – areas where development is done
  • Oil taxes – what ideas have merit for Alaska
  • Can’t look at marginal rate
  • Norway invests in infrastructure, other factors – you have state interests aligned
  • Tax credits don’t drive long-term investments – eliminate tax credits
  • State must become a partner
  • Tax credits pick winners and losers; dollars flow
  • Equity investment
  • Fiscal structure – capital intensive high risk infrastructure
  • Tax ourselves
  • Oil wealth is the people’s wealth – max use of resources for all people of Alaska
  • Biggest industry to GDP are supply companies – the support industry
  • State be involved in development terms of private, big industry
  • Own equity shares in development projects
  • Legislature more versed on oil and gas issues
  • Leverage wealth to create more
  • Openness, ethics laws; history of public service
  • World class education
  • Citizens who are educated, economic freedom, economic independence
  • Revenue from Resources – SDFI on future leases
  • Competent tax administration
  • Education
  • Low cost power – lessen export of wealth from resources
  • All Alaska LNG export project umbrella for individual prosperity and state prosperity
  • SDFI coordination by state agency – funded by oil and gas wealth
  • Susitna – hydro development
  • Understand needs of industries that drive employment and address those needs
  • Education
  • Direct investment (SDFI) – link our resources to our people through employment
  • Permanent professional administrative bureaucracy
  • Maintain and recruit expertise in state government


What would we do with that wealth?


  • Reduce/stabilize energy costs
  • Create expectation and desire for longevity
  • Invest in both people and resource development
  • Maximize value everywhere
  • Build infrastructure – renewable energy and gas line
  • Organize and build leadership with the university
  • Outsider reality check-in
  • Become self-sufficient in basic resources including timber, food, etc
  • Bring expertise over to help us - Norwegians
  • Make sure everyone is contributing to ensure participation and buy-in
  • Diversify investments
  • Create policies to manage wealth
  • Engage all possible development sectors (State, Feds, Alaska Native orgs)
  • Confront transient nature of population
  • Create possibility for SDFI
  • Establish statewide energy policy
  • Establish long-term vision of what to do with wealth
  • Invest in alternatives
  • Focus on energy, more affordable access across state
  • Intertie – investment, ownership
  • Infrastructure – roads, ferries, bridges – comprehensive transportation system
  • Educate our citizens, encourage to stay in or return to Alaska
  • Educational training
  • Doctor in every village
  • Oil spill response in place along coast
  • Leverage better position in Arctic
  • Help Alaskans own fisheries
  • Better partnerships in the state
  • Treat the state equal in its entirety – politics vs. merits/spending decisions regional relevant
  • Make education a priority
  • Global look at state – better plan to build things
  • Save for the future, balance with infrastructure investment (will investments produce wealth?)
  • Law enforcement in every community
  • Hit the gas on big projects and how do we take our take?
  • De-centralize power centers – don’t keep all in the rail belt
  • Mindful of Alaska’s beauty – cultural values and natural values – tourism
  • Return on all dollars spent incorporated into long term investment
  • Make Alaska affordable to live
  • World-class free lifetime education
  • Ensure a high quality lifestyle for every individual
  • Equalizing energy costs across the state; distribute economic benefits of industry equitably
  • Balance investments within and without state
  • Scholarship/subsidized training in rural Alaska for oil and gas jobs
  • Invest reasonably in mega projects
  • Responsible resource development (fisheries, timber, mining)
  • Remove barriers to investment
  • Endow UA system/research
  • Invest in non-renewable resource extraction – state ownership of forests
  • Designate 5% to build and maintain world class infrastructure that promotes health society


How do we address stakeholder interests along the way?

  • Make economy more transparent
  • Go out and sell the concept
  • Organize our own house (e.g. energy development)
  • Hold summits (e.g. NANA’s regional energy summit – steering committee established)
  • Spend time together learning (like this trip)
  • Appoint and fund delegates to strategize
  • State government coordination
  • Use outside expert facilitators
  • Public communication of success stories
  • Use public/private NGOs
  • Find external driver
  • Incentivize participation through competitions, education, and threat of challenges
  • Improve relationships between rural and urban Alaska and the State
  • Improve health of all stakeholders
  • Show unity to stakeholders
  • Governor engaged Investment community
  • The public debate
  • Tell truth – level with people
  • Have regional meetings so that everyone is heard, stimulate collaboration, revenue sharing
  • Grow the pie – smaller state dependence on oil
  • Balance voices, more input from rural areas
  • Look at lands taken by feds – how has Washington been treating us
  • Examine where wealth comes from
  • State has to convey who Alaska is to Washington
  • Responsibility of citizens to build this state – educate kids why we are the way we are
  • Federal government is key stakeholder – feel they are an Arctic nation
  • Bi-partisan coalition, civil conversation
  • Honesty in government
  • Civics, curriculum
  • Do a better job of engaging business owners who aren’t part of large associations
  • Sell benefits of vocational education that will lead to employment in industry
  • Identifying common goals
  • Direct participatory democracy (webcams/push out decision-making process)
  • Campaign soliciting input from everyone
  • More transparent legislative process (accessibility)
  • Mutual respect/fewer stereotypes


REPORT TO ALASKANS

Country briefing – U.S. Ambassador to Norway Barry White
House designed by niece of Mr. Nobel; public house, at time of purchase most expensive real estate purchased by U.S. for this purpose; art in house part of Art in Embassy program – borrowed, chosen by Mrs. White

Once a week, bring in country team (heads of agencies here) to report on what they’re doing – this is similar to that meeting

Ambassador, deputy chief, heads of agencies

  • Public affairs
  • Political and economic relationships
  • Attaché – two Navy, one Air Force, one Army
  • Science, technology, innovation
  • Commercial section – promote US interests, connect Norway business to US

Building relationships (in the Arctic

Arctic – facilitate Arctic Council activities

  • High North low level tension – not one of conflict, but of cooperation; disputes that do exist are able to be addressed by existing laws/forums

    • Science cooperation is a priority; climate, fisheries, energy research
    • Search and rescue protocols established; now moving into disaster preparedness, especially in response to resource development
    • Oil spills – research harsh conditions, bacteria in water
    • How do you surge resources into remote area? Port facilities/hotel rooms, etc.
    • Black carbon, ecosystem based management

    Search and rescue

    • Arctic Zephyr – hosted by European Command, which has inherited this issue
    • Series of conferences that could turn into international exercise
    • Alaska National Guard participated – showed the rest of the world how to do it (including how to cooperate with Russia, because they’ve already done it)

    Effort to avoid militarization of Arctic Council – move beyond military stakeholders to training, changing environment, fisheries, natural resource management, UNCLOS, search and rescue, shipping efforts, oceanography (multi-disciplinary)

    UNCLOS – US only major nation not a member of it; all defense agencies would like US to join; difficult to explain to Norwegian counterparts reasons we’re not; losing out on benefits of ratification

    Public affairs – focused on connecting citizens and public groups to one another between countries – use press, education, sports, cultural exchange

    Norway is a country that is plugged in to media networks – typically read three newspapers a day. Country is very wired (wireless) country as well.

    *Need to get more Norwegians studying in US (which has always been high); and Americans studying in Norway – this builds relationships
    • Fullbright scholarships – two-thirds of which covered by Norwegian government

    Sports exchange – international language – teams back and forth; grants to support this (soccer/football among other things)

    Culture – 100 year anniversary of this building, use that to share with

    Politics/economics

    • Norway has great economy both long-term and short-term
    • Direct exposure to international crises very low
    • Long-term savings based on resource wealth
    • Major national oil company – Statoil – global offshore expertise
    • Petroleum – quarter of GDP; half of exports; third of government revenue
    • Oil and gas not in terminal phase, bright future

    North Sea well-developed; Barents to some extent; middle area in between may have deposits – major fishing area/environmentally sensitive – but makes sense to connect north and south via pipeline/natural gas development

    *Withdraw 4% of value of Government Pension Fund to support government – right long-term fiscal policy

    Red/Green coalition right now in government – labor/environment

    Interesting politics – all seven parties would be considered left/progressive in the US

    Minority politicians in parliament feel like they have less influence; change in coalition government vs. coalition agreement on issues

    Commercial
    Exports key driver of US economic growth; though only 1% of US companies export; half to only one country (Mexico/Canada)

    $16 billion Norway trade – $11B in goods, $5B in services

    Support national innovation strategy; plus doubling of exports goal

    Ambassador active in promoting business – visited all 19 Norwegian counties in first year

    *Host promotional events – including CEO roundtable discussions once a month to hear about issues

    Other
    Tragedy of July 22 huge impact; also coming up on 10th anniversary of 9/11
    • Maintain democracy and freedom but increased security discussion

    Q&A

    How to be sensitive to this tragedy? What should we know about? Discussion in Norway has focused on this as a Norwegian issue to be addressed internally – security measures, response, immigration and integration of diversity – “everyone is equal” law (Yanto?) rights, responsibilities, general welfare and public support. Offering of condolences but people may not want to talk about it right now.

    Norwegians work to live; rather than living to work. People are productive but want to enjoy life.

    Do US Ambassadors communicate regularly, including on issues like Law of the Sea? Yes, stay in communication but not their role to actively advocate for this kind of issue.

    Balance of trade between US and Norway? Current deficit in oil and gas; service more balanced

    Education? 10% of adults can’t read “real well;” people complain but really it’s very good. Support remote communities; free education; international students come here; joint research between countries. Education is no barrier to growth here. Keeping boys in the system has been a challenge. Male/female balance hard to achieve. Students go through middle and high school; depending on your grades you can get into first choice school (mostly urban/Oslo). Not streaming like Germany has. Private sector companies may not be providing enough apprenticeship opportunities; though this should be promoted/supported by government. Discussion around whether students are competitive enough.

    Comment on state investment in energy development – does the government assist in exploration and development? Absolutely – government ownership stake in companies. Vis a vis Iceland, which is almost entirely driven by the private sector. The Norwegian government is on all sides of the table – regulator, owner, service, safety and taxation – people move between these sectors. There is no “leakage” between these. Norway invests heavily up front (78%) and costs independent explorers very little; then get bought up by larger companies.

    Large oil companies have good relationship with government and Statoil; don’t have anything bad to say about that process. Government does well to assure their active participation. Phillips drilled 38 wells, almost pulled out, government paid for two more and was successful.

    Fundamentally different – government support – at all sides of the table but it’s a reasonable table with reasonable discussions and decisions. Look at world differently.

    Please expand on the Norwegian Sea tension between development and fishing/coastal sensitivity. It’s a discussion that’s being ignored right now. With elections coming up, it has been decided (by labor party, current majority) not to address it right now and will wait until after elections to discuss/debate. People in the area are interested in development; people in Oslo/urban interested in locking it up; fishing interests open to discussion/mutual benefit; environmentalists committed to no development.

    Government Pension Fund – infrastructure projects vs. individual residents – is that a discussion being held right now? Name a misnomer – will be used in future to continue support of citizens. Very conservative about how they spend their money. Don’t plow streets (often/well) as an example. No one is advocating for paying it out to people; some might be talking about spending it more on fixing things up. Right wing conservative party is actually interested in spending more (they are the populist party).

    Social welfare - free education (all the way through PhD), free healthcare (unsure of quality), retirement, maternity leave (women get year at full pay; men 12 weeks paternity leave).

    Speak to oil export vs. internal costs of energy. Unsure of policy, but make sure pricing is the same all over country – everyone entitled to electricity (98% of electricity hydropower). It’s a part of the social contract – the government/people support the right to live in remote communities and maintains those benefits/rights.

    Is there much of a rural/urban divide – central issues and how are they addressed? Money levels the playing field – funding supports people’s ability to live in either. Most people have a country cabin/hut; most have “rural” connection. Hospital consolidation is a big question though.

    Transportation is excellent. Two air companies compete; very little private aviation.

    People are happy/content. We have to change our mindsets to accommodate a different way of looking at things. (Fun fact - kids up to 12 years old not allowed to keep track of score in football games).

    Competitiveness – are there one or two areas we should be paying special attention? US not losing competitiveness. Norway worried about competitiveness post-oil. Some lessons in social welfare, perhaps.

    Shouldn’t begrudge people working together to solve problems. Promote this approach. This includes the importance of a trip like this, where people come together from different backgrounds and learn new approaches while building strong relationships with one another.

    Ministry of Foreign Affairs – Norway’s representative to the Arctic Council

    Oslo same latitude as Juneau; Hammerfest same as Barrow; Gulf stream warms it up

    Arctic – huge area, almost 30 million square kilometers; 4 million people; huge natural resources, most of which belong to Russia. When continental shelves are claimed, 90% of resources will have been claimed by nations

    Climate change results in a more accessible Arctic. 80% of Arctic is accessible this year. Substantial consequences as this continues. Access to oil, gas and mineral resources; fishing – though no current stocks exist; shipping; and research.

    There will be no “race to resources.”

    Arctic “ocean surrounded by land,” which means it falls under national jurisdictions. Even that part not claimed will be under jurisdiction of International Seabed Authority, based in Kingston, Jamaica.

    No need for new treaties; though possibility of new rules and regulations.

    Arctic Council a consensus body that specifically addresses arctic issues; members cover much of the world and account for much of the global economy.

    Traditionally, Council not a political decision-making body but has been a decision-shaping organization. Produces recommendations for eight Arctic nations to act upon.

    New direction to make more binding agreements in the future. Search and rescue; Secretariat in Tromso. Process for allowing new observers established.

    Arctic belongs first and foremost to Arctic states; fully capable of handling issues. At the same time, other countries may/do have legitimate interests.

    Russia has as much icebreaker capacity in the Arctic as the rest of the world combined (China is building seven new icebreakers). Russia will have half continental shelf, more than half the resources. They have also committed to following existing treaties and international law; which means that competing claims are settled reasonably [through bi- (tri-, multi-) lateral negotiations].

    *Russia recently hosted tour of Northern Sea Route on Yamal (75,000 hp), the world’s largest icebreaker. It was completely ice-free. Mapping was fantastic of route; navigation systems top of the line (GPS and Glosnost). All vessels must have icebreaker assistance, oftentimes tied to back of icebreaker (at 20 knots). Russia is strongly promoting use of this route (implications for Bering Strait and Alaska coastal zones).

    Q&A

    Possibilities for taking oil/gas from Prudhoe Bay? Certainly possible, though US regulations may not allow, may have to go through Russia waters. Would also need icebreaker, which Russia would be happy to rent.

    Fisheries? Research currently suggests it

    Arctic Council may become decision-making – other examples in world? It will never take a role held by national governments (would need a convention voted on by US Congress). The Council facilitates agreement between coastal states on soft, non-binding issues.

    How does Canada view Northwest Passage? Canada will use national and international regulations to ensure very strict rules for its usage. Route much more complicated

    Are there any benefits to a country’s Chairmanship of the Council? Not really benefits, only obligations. Permanent Secretariat will alleviate some of this extra work.

    Will there be any economic opportunities for small communities along shipping routes? *Opportunities will be very limited, except for search and rescue infrastructure. Russia is building eight search and rescue stations to place along route.

    Kristian Jervell – Arctic Maritime Delimitation

    Coastal State jurisdiction –

    • start with base point, final point of land where it meets the sea; straight baselines mean full jurisdiction
      territorial jurisdiction
    • continental shelf (200 nautical miles, maybe 250, other considerations – must submit to) – 1945 – Truman declared all resources on natural prolongation part of national territory – living resources, free navigation international waters
    • exclusive economic zone (200 nautical miles) – distinguish between sovereignty and sovereign rights (extended into zone)

    In the 1960’s Norway settled negotiations with Denmark, UK over territory lines – equidistant

    Began negotiations with Russia on continental shelf – 40 years of negotiations

    • Norwegian claim – median line
    • Russian claim – sector line

    Continental shelf made things more complicated legally

    Development moratorium in disputed areas since 1980s

    Final agreement reached in 2010

    • Agreement has provisions regarding fisheries and hydrocarbon resources
    • Continuation of cooperation
    • Possible hydrocarbon deposits – utilized as a unit

    Ole Anders Lindseth – Director General - Ministry of Petroleum and Energy

    Petroleum activity not mentioned in press except in pejorative context; environmentally contentious and urban sensitivity; not recognized as key factor of Norway economy/success.

    Export value of goods and services of petroleum support sector is second to actual development of those resources.

    If you’re going to develop, make sure you can stand the quality test of international measures.

    Norway is a petroleum nation – only half developed. Politicians have done a good job of not using this resource immediately, and limiting themselves.

    Early doubts about expanding exploration in Barents Sea. It is possible to have sustainable petroleum development. Continued belief in this has meant large recent find. Norway has reserved some areas as environmentally sensitive areas.

    Stable and long-term production expected and planned for. Third largest exporter of oil; second largest exporter of gas. Contributing heavily to security of supply.

    Incredible network of seabed gas pipelines. As long as from Oslo to Anchorage.

    *Good governance – some countries where contact between industry and government is forbidder, others where it’s more mingled. In Norway, commercial activities respond to policy, legislation and administration. But Norwegian politicians understand what make commercial activities tick.

    The global need for energy continues to rise – fossil fuels remain dominant in the energy mix. A renewable world is not just a few easy political decisions away.

    Need to have more than one strategy:

    • Produce and consume fossil fuels in more environmentally friendly way
    • One barrel of oil developed in Norway has half as much pollution as the world average
    • Too little emphasis has been placed on energy conservation and efficiency (should include energy development as corresponding community development)
    • Increase renewable energy development – must stand test of life-cycle analysis

    The Arctic presents an important part of the future. Politically stable. Increasingly accessible. Coastal states agree that the area governed by Law of the Sea. No need for new treaties. Absolutely no reason to lock it up as common heritage/protected environment site.

    30% of world’s undiscovered natural gas and 13% of its oil are in the Arctic – to support Arctic peoples.

    Not “can we go ahead with this?” Rather, on what terms?

    Aim for Norway is sustainable development – don’t confuse it for conservation or preservation. Development requires economic activities in order to address social dimension, while also taking care of environment. Implies taking risk – must also ask about probability and possible damage. You need a good cost/benefit analysis – that examines both, rather than focusing on one.

    How do you fight emotionally charged conversations? With facts.

    We know that oil and gas is in the ground now, and that there is a commercial demand, so develop, but don’t spend the money on this generation.

    States should make sure they get the value from the resource, rather than trying to get it all right at once. Many places don’t have the capacity/knowledge to do it all.

    Industry will always think that taxes are too high; made a strong push years ago to reduce and Norway said no. Exploration covered by big incentives. Did not result in decreased production.

    28% company tax, 50% tax on production. Deductions available.

    Introduced royalty system before SDFI. Dropped royalty in favor of system that focuses on raw income. SDFI is investment fund – renders larger revenue to the government.

    Didn’t want Statoil to be too big; cut in half. Government investment limits too big a company.

    Rebuilding Norway after war done with state funding, state owned companies. Same approach to Statoil at that time.

    *Look at gross vs. net, does royalty result in investment?

    *Explore option of government investment, as silent partner.

    No property taxes on oil and gas facilities.

    Not everything owned by government, state invests 46% in pipeline facilities. 7% return. Transportation not supposed to be a high profit enterprise – public utility. Many oil companies selling to equity investors as good long term rate of return.

    100% of development costs are deductible.

    Do you compare tax system to other states? Don’t spend time looking at other countries to compare – if it’s working here then no need.

    Would companies change their global budgets based on Alaska’s tax situation? Or are there other factors? Don’t overdo the political risk, but still it has to be profitable. If you have investment, then don’t change things. If you don’t…

    Norway doesn’t have auctions, or signature bonuses. No advantage to being Norwegian – each deal is negotiated. Can’t discriminate based on nationality – illegal under European law. You want the best. They’re there to perform resource management – How good are you? How extensive is your knowledge? How competitive are you in this area?

    Six years to fulfill work quote – drill or drop deal (two or three years). If you don’t perform, licenses are automatically relinquished. Area “smashing” is not allowed, not in our interest.

    What are the criteria/priorities in license given? Basics - qualifications, skills, knowledge, an actual oil company. How do you compare/compete? Very individualized.

    Not really any contingency plans – cumulative effect of many Plan As – find new fields and increase recovery rate (58%).

    Import workers – encourage to bring families; balance to find in economy/community of scale. Support education, university attendance – work to get students to go back to

    Only 3 of 440 communities are not affected by the oil sector.

    Norway has done its share with renewables – 95% hydro. Focus on efficiency.

    Statoil

    Head of International Affairs

    • Short introduction to Statoil and oil and gas business overview

    20,000 employees in 34 countries

    Political decision to headquarter Statoil and other oil companies in Stavanger, oil capital of Norway (spread concentration of activities between cities in Norway)

    Running of Norwegian continental shelf, some of international projects, from Stavanger; rest of international/Arctic increasingly based out of Oslo

    68% of shares owned by state (can buy or sell like any other shareholder); but Statoil is a private company – traded on NYSE – enjoy some political benefit from relationship

    Most crude produced is sold – small volumes go to refineries but not big part of portfolio

    Second largest exporter of gas to Europe; first is Russia – feeling that most people would prefer Norwegian gas

    Almost don’t use any gas internally, since all electricity produced by hydro

    Largest operator in waters deeper than 100 meters

    Goal to be world leader in CO2 capture and storage (including Snohvit, which some in the group will visit)

    Ambitions for international growth, including in Russia, which is challenging (who to talk to and when, but major investment expected)

    Safety – change mindset when operating offshore

    Strategy – Safe and efficient operations; Maximize the potential

    In Norway – 34 offshore installations; 18 mobile rigs; and then vehicles (vessels, helicopters, chartered planes)

    People working offshore – two weeks on four weeks off (47% higher salary for offshore workers) – single rooms, like hotel (at one point largest “hotel” in Norway – most rooms, employees)

    Norwegian Continental Shelf - started with Ekofisk in 1979

    Original expected recovery of 46% oil taken from field, continuously trying to increase – now at 75%

    Offshore production – delivery of oil/gas straight to markets through pipelines (gas)/tankers (oil)

    Seabed pipelines – approximately 1 meter diameter

    Snohvit – taken off by tanker; meant for US market – which no longer exists due to shale gas

    For oil and gas business – short-term is 10-15 years; long-term is 20-30 years

    For each project, Statoil solicits inquiries and builds partnerships with other companies (Shell, BP, ConocoPhillips, etc.)

    *Don’t pay anything for license; rather, commit to drilling wells in certain amount of time – don’t pay (taxes) until producing

    Board of Directors (Norwegian except for one; selected more or less by government) sets strategy – not directed by government – strict lines in decision-making

    Use gas to increase recovery – but then sell that when done – plus water-flooding (90% water/10% oil)

    Have to design platform to be able to use carbon – not done currently

    Reservoir management key to high recovery

    Gas and oil taxed at same rate (75%)

    Statoil works with other tax regimes around the world – all kinds of different processes –production agreements, leases/signing bonus

    Snohvit is world’s northernmost LNG operation (which is sent to Japan); no platform, 300 meter depth

    Oil – because of different qualities produced – is taken to underground storage areas where different oil can then be drawn out for the right oil quality asked for by market

    Research into gas hydrates but no production yet – unstable and uncertainty

    Pipelines owned by producers (Gassco) but owners are beginning to sell off to others, including US pension companies (see Day One notes re: 7% long term, stable return)

    Competencies – Harsh environments, Deep water, Heavy oil (most easy oil owned by state-owned companies in other countries – no access), Gas value chains

    234,000 people work in the oil and gas sector in Norway (5,000 in fishing; 50-60,000 in agriculture – but people don’t see oil and gas and think fishing/farming to be very important)

    Statoil will go where they have better competence than competitors – competing against very big oil and gas companies – and where there is a market (Europe or East Asia)

    Alaska activities – Ella Ede, Stakeholder Engagement Manager, Statoil Alaska

    Norway and Alaska at 60 degrees north

    Corporate culture – 50% of performance is based on how you did things vs. what you did

    Second seismic/geotechnical boring studies launched this week

    Gearing up for permitting process, also hiring land manager

    Seismic used to make decisions on plan forward; evaluate data

    Community meetings held in late October/early November

    Permitting process remains challenging – uncertainty and multiplicity of actors

    Northern development – Hans Gjennestad, Senior Advisor – Strategy

  • Oil and gas in the High North

    People don’t understand the magnitude of the acreage of the arctic and northern continental shelf

    Statoil has transitioned over 40 years from shallow to deep water; from oil to oil and gas; simple to complex reservoirs; fixed platforms to sub-sea; south to north

    7,000 kilometers of pipeline system

    Snohvit is complete sub-sea network – 130 kilometer sub-sea pipeline with multi-phase flow – take gas from reservoir to platform, remove CO2 and send to separate reservoir – then gas sent to onshore platform – this is a great example of the technology for arctic development

    Two challenges in arctic – ice and distance (two solutions to ice – withstand or avoid – and sub-sea network avoids ice)

    Key realities outside Norway

    • Continued and increased European demand
    • IEA estimates production decline – will have to come from Russia, Norway or Algeria
    • Barents Sea gateway to the Arctic

    Increasingly good understanding of arctic sub-sea geography and oil/gas reservoirs

    Big projects – Shtokman – not cost effective yet – find ways to address this technically or through Russian tax regime

    Initial seismic is done by Norwegian government – broad analysis (2D or regional mapping) – funded by general taxation (budget of 80million NOK)

    Oil sub-sea pipelines smaller distance from platform to onshore facility – maybe 50-60 kilometers – vs. gas – which is more like 150-200 km

    Experimenting with compressing gas at wellhead – same technology could be used for longer distances

    Aiming eventually at sub-sea platforms

    Some projects where main play is gas, with small oil column that has to be left/stranded (depending on approach). New approach to come in horizontally to reach lower oil column.

    Companies then do more detailed seismic to determine where to explore

    Research and development budget? Enormous amounts of money – unsure of amount. Financed by Statoil

    Comparison between Shtokman and Snohvit – challenge is distance to shore, Shtokman more exposed to sea ice but has larger reservoir

    Successful development north of Norway – where it’s not exposed to ice – is a small step toward developing in ice

    The High North – a natural meeting area for long term cooperation

    Development in the arctic will be extremely difficult – there will be delays, there will be disappointment, but with patience and persistence there will be success

    With deep water you can have sub-sea development and avoid ice; shallow water more problematic.

    Seismic (2010 acquisition offshore Alaska) – Ingolf Soreide, VP, Geophysical Operations

    Marine seismic acquisition – pressure wave generated by compressed gas, bounce off bottom and hit hydrophone (10 cables of solid streamer, 6000 meters long, 100 meters apart) where data is collected; time + velocity can figure out depth = mapping of sea floor/reservoir level

    Chukchi Sea lease sale in 2008 – first sale since 1991

    16 leases, 14 of which were joint bids with ENI; 50 more with Conoco

    Seismic vessel (12,000 tons; 5 MMO) + supply vessel (for fuel/crew; 1800 tons; 3 MMO) + monitoring vessel (197 tons; 3 MMO) to conduct seismic acquisition (all with marine mammal observer on board)

    12 streamers used, which is more than historic usage in Alaska by other companies (8)

    • 2600 sq. km surveyed

    Key focus should be on risk and environment, as well as stakeholder management

    Lack of infrastructure in Alaska was challenging – crew change, response capacity

    Operations phase included marine mammal observation, shallow water, limited open water season, harsh environment

    Permitting required begun 12 months before operations – good dialogue with authorities

    No safety incidents

    Environmental analysis

    • Survey immediately stopped (halt pressure release) when marine mammals observed
    • No oil released

    Acquisition resulted in excellent data quality

    2011 Site survey program – scope of work – validate sea floor location

    How does permitting process compare to Norway? Alaska’s is very “comprehensive.” A lot of work, several instances where Norway’s is much easier (five weeks) to one agency (fisheries department also involved)

    Technology depends on water depth – 150 meter perhaps a fixed platform, maybe combined with process unit on board; 300 meter perhaps a floating platform

    Environment

    Details from Chukchi Sea – baseline study – cooperate (shared program with Conoco and Shell, also share with community) with other companies who are doing this research as well – acoustics monitoring, fisheries ecology, benthic and plankton ecology, mammals, seabirds, physical oceanography

    Marine Mammal Observer program (based on visual observation)

    • Use of towed and fixed passive acoustic monitoring (hydrophones or streamers)
    • First industrial test of IR camera for detection

    IR proved whale and walrus tracking – walrus had avoidance technique (200 counts)

    Stopped seismic for three days during walrus migration – “heads popping up like mushrooms”

    Rules and regulations are there to be followed – no further discussion

    Permitting in Alaska very focused on marine mammals; in Norway its fisheries

    How does seismic affect marine life? Complicated, depends on context.

    • $35 million research study by International Association Oil and Gas Producers
    • People concerned about behavior disturbance – effects on population

    Temporary threshold shift (TTS) – UC Santa Cruz study on trained seals that respond to sound

    Work with University to some extent, generally work with those who are working on similar issues – there aren’t any boundaries in this regard

    Could formalize traditional knowledge incorporation

    Corporate/social responsibility

    Spend a lot of time listening to concerns/input from community

    Norwegian Act that requires Norwegian companies to act a certain way

    Values-driven

    Norwegian Petroleum Directorate – Johannes Kjode, Deputy Director General

    • Describe domain of NPD

    Subordinate to Ministry of Petroleum and Energy

    • Exercise management authority in areas they were delegated

    Mission – create the greatest possible value for society from oil and gas activities by means of prudent resource management

    Companies care for themselves; NPD cares for society

    Technical experts at NPD vs. policy/political employees at MPE

    *NPD - communicate reliable information to build confidence in oil industry among public

    Tracks data for resource estimates – forecasting (government wants one answer; NPD accounts for uncertainty/complexity – 10% chance of getting it incorrect)

    Ownership of remaining reserves – Statoil and SDFI together approximately 50%; big international 36%

    SDFI – State Directed Financial Interest – owned and operated by state, retains 100% of profit – Petoro – don’t operate anything, just “create value” through investment

    Statoil very dominant in currently producing fields; more diverse in future (side conversation noted that Statoil will increasingly not get as many bids)

    NPD finds more

    • Data gathering and mapping of unopened areas
    • Opening of new areas
    • Award of exploration licenses (NPD can grant)
    • Award of production licenses (rests with MPE, NPD advises)

    “Mature for opening” is a political decision; which are open first are technical, where good technical knowledge, high expectancy of success, and infrastructure contribute

    Predictable licensing system

    • Company covers administration costs (100,000 NOK) of license
    • Licensing rounds – mature for opening – annual round (deliver or drop, DPO or drop – if dropped they go into next round)
    • Companies are not allowed to sit on these without commitment
    • Frontier areas – biannual rounds

    Process – nomination by companies of which blocks they would like to see in round; NPD incorporates into decision; MPE announces; companies apply, followed by negotiation period – NPD goes through application and gives ranking (criteria varies based on project) based on technical expertise; negotiation includes commitment, working for state interest (state always interested in getting something back); final award (not often that companies refuse – can’t appeal)

    Strict application of deliver or drop though there are sometimes good reasons and an extension given, maybe a year. Some drop and then rebid.

    State doesn’t compete on talent, but people move to government for good reasons (back and forth)

    How is SDFI level chosen? Recommendation by industry and NPD – if there is high potential in prospect, state should be involved (also risk involved)

    More than half of oil left to be developed right now; NPD tracking of what is easy to get out (water/gas) vs. what might be more dangerous (chemical injection)

    NPD works to keep companies from only exporting gas and leaving oil; working with industry to get both out

    Data management is important – all data comes to NPD from all sectors, especially industry – receive all by-logs, core data, seismic data – all data goes on their website – companies can also come in and see core samples (2000 NOK covers admin costs)

    Increasing CO2 emissions from petroleum industry has meant increased attention to carbon capture and storage – working on larger scale too

    Diverse kinds of gas – go to refinery for separation – produce various things with byproducts

    Conflict between seismic and fishing – allocated areas that take into account spawning/migration seasons

    Mandatory course for fishery experts; system for reporting and tracking seismic operations

    Petroleum Safety Authority – Paul Bang – Senior Advisor

    Used to be part of NPD – split by political decision in 2003

    Gulf of Mexico has had a huge impact on how people are thinking; Norway has wealth of experience

    Newest find – complex geology and latest technology (couldn’t see that deep earlier)

    130,000 employed in sector; 15,000 km of subsea pipelines

    Safety, Health and Environmental impacts

    Norway most transparent country in the world – sharing information!

    Stakeholder identification/management (associations, workforce, authority)

    Adverse interest when making regulations in US – not the case in Norway (also meaning of compliance is different in Norway)

    Ekofisk, for example, designed to last 20 years, just reinvested in for third time, which will mean 60 years of production (ConocoPhillips is operator 60 billion NOK investment; TOTAL bigger owner)

    Complicated industrial environment – can’t afford to have anything go wrong

    Need purpose for regulator (so client understands and believes is important as well – creating alliance between industry and regulator) – Common understanding of approach/cooperative interest

    • Develop regulations, produce framework for regulatory environment

    Huge technological advances to be incorporated into process; ongoing changes in business (parts of production moves onshore, integrated onshore/offshore with intelligent fields – ICT, video conferencing)

    Need preconditions for sound petroleum management – build capacity in the public sector

    Need fully competent companies – companies that move to the left (understand Nordic model of welfare; move beyond just business model; never underestimate culture of what you’re doing)

    Evaluation of newcomers – prequalification (NPD audits)

    • Financial capacity
    • Technical competence
    • HSE – management system

    Safety purpose stated in law – personnel, environment, financial value

    Safety gives us increased income – create alliance

    Governance – separation of roles and responsibilities

    • Ministerial level – national plan, legal basis ,licensing
    • Oil companies – field development, contracting, operations, marketing
    • Agencies/authority/NPD – detail regulations, guidelines and standards

    Who bears the burden of stringent regulations? Move from many different regulators to multipurpose regulations/regulators under one agency. Government bears burden of cost and communication. Stand up to industry as one body.

    Delegation of power to professional independent body – separate from political decision – to ensure continuity, effectiveness, powers aren’t overstretched

    Clear lines of reporting to ministries; clarified lines of responsibility (historical review – early years in late 70s had over 200 people killed in industry accidents – had to respond with risk based thinking, coordination between agencies, new system/regulation making)

    Consent – new companies must apply for formalized PSA approval (note, company like Statoil doesn’t need to do this – experienced operator)

    If you want stakeholder involvement, you have to put in place systems for that engagement – monthly meetings, working groups, training, regulation review

    To be competent regulator, you need competence – experts in their fields

    PSA teams of supervisors/experts manage various groupings of industry (Statoil one group; explorers only in one group; big international one group; etc.)

    Teams can conduct on-site audits of rig operations

    Stortinget – Norwegian Parliament

    Ms. Line Hjemdal (41 years old), MP and Vice President of the Storting (one of five)

    Member of Energy Committee – has visited Alaska

    Tragedy of July 22 – commitment to open society, connection between government/public officials and citizens

    Constitution adopted in 1844 – ideals similar to US Declaration of Independence

    Entered into agreement with Sweden until 1905

    169 members in Storting (40 female) – 7 parties represented

    Four year terms; 18 and over can vote and eligible to be elected

    One president, five VPs, 12 standing committees (all members serve)

    Budget is priority

    Storting’s view of oil and gas issues

    • Energy and environmental issues are at conflict in Norway – work to find balance
    • Energy committee travels to other countries to learn best practices (2007 to Alaska)
    • Alaska onshore /Norway offshore
    • Involvement of local communities – Local gov’t. vs. Alaska vs. federal government
    • Norway national authority that is in driving seat
    • Parliament adopts whatever government recommends (?) – uses agency technical expertise
    • Parties approach issues differently though
    • Fierce debates in Parliament; but make sure it’s open and transparent so public can see this dialogue
    • Storting decides which areas are open for development
    • Goal is maximizing utilization/production of oil/gas resource
    • Recognize peak oil
    • Important to create good conditions for oil companies in search of resources
    • Storting member participates in Arctic Parliamentarians (Alaska’s is Sen. Murkowski) – good example of cooperation

    Bjorner Hotvedt and Kjell Myhre-Jensen – Storting’s International Department

    Balance of development and environment – coexisted for decades, without any significant incident

    Strict safety standards – no tolerance for oil spills

    Experience has shown Norway that oil development can occur at the same time as successful fisheries (North Sea example)

    Small mining industry – increasing recently with demand from East Asia

    Coal in Spitzburgen, Svalbard – started as private enterprise, bought by government (running small profit) – government wanted people there and heavily subsidized to begin with

    Infrastructure paid for by government – roads, energy for local use, schools, university, hospital, research station (shared by eight countries)

    Process for local input in oil development – hearing process (local authorities/organizations asked to submit comments) + participation in parliamentary committee meetings

    Research dollar commitment by oil companies as part of development license – requirement by Norwegian government

    Greatest challenge – how to meet high expectations of people

    • So much success – people don’t have a good understanding when they don’t see “success” and demand more from government to ensure the quality of life they are used to

    Two other challenges – 1) post-oil future and 2) increasingly multi-cultural society

    Is Alaska a growing destination for Norwegians? Why or why not?

    • Anecdotal – some go for wilderness/hunting experience
    • Love the idea of Alaska
    • Have seen fishing opportunity advertisement/press
    • Have also seen cruise ship tax mentioned in press

    Until recently wild fisheries larger than aquaculture – this has changed, with increasing volumes/profits from fish farming (pressure to create jobs/income for local communities)

    National energy strategy – political decision

    • Adhere to European community’s decision to move to renewable by 2020
    • Difficult question when almost all hydropower already
    • Considering investment in other countries, to help them reduce their emissions, shift to renewables

    Unicameral parliament

    • As of 2007 there are now two bodies (composed of same people?), with the second there to audit system, make sure there are no mistakes [should check on this, may have misheard]

    Tragedy – increased security, possibly increase sentences, review of process for response

    • Commission set up to look at these issues

    Commitment to equity in energy costs has developed over time (“we are all social democrats”)

    • Provision in law – extra weight given to rural areas/rural voters

    Norway before oil and gas was a fully developed society/economy (different than Alaska)

    • Trending now toward people moving to regional centers/Oslo
    • Use money, information and policy to keep people in rural areas

    All communities connected to grid – some farms perhaps run on generator

    Ministry of Finance

    Deputy Director General Ms. Lone Semmingsen

    Government Take System for Petroleum

    Minister of Finance answers to Parliament – 300 civil servants (economists and lawyers) work for MOF, managed by Director General

    Seven departments within MOF – Administrative affairs, economic policy department, asset management, financial markets, tax policy, tax law, budget

    Petroleum industry - 27% of Share of Investments, 46% share of exports, 22% share of GDP, 28% share of state revenues

    Taxing natural resources – the starting point is that when oil companies look for resource, should recognize that it is immobile, finite, and belong to people (good and legitimate and stable tax base for government)

    But also recognize tax regime should attract investment – extra weight on stability, simplicity, competence and predictability (has stayed the same since 1992)

    Government take is only on upstream activity

    State revenue - direct taxation, indirect tax (CO2 tax, area fee, state-owned enterprises)

    Why phase out royalty? Royalties de-incentivize investment, because it’s a gross-based tax. Investment maximized by net profit. Self-assessment – companies report production, what they’re selling for, what they make, etc. Audit of self-assessment in second round. (30 staff for this in oil tax department)

    Marginal tax rate on direct production – 78%

    Out of $1million profit, government gets $850,000, company $150,000

    SDFI took a loss in four early years – capitalization cost – but then strong gains since

    Oil and gas taxed separately – split offshore and onshore, comingled offshore

    [Note – it is extremely hard to take notes with all the tax jargon – apologies for missing things, getting things wrong]

    All information gained is publicly available – ITI report (aggregate)

    Only take SDFI shares in most promising fields (20% investment most recently)

    • Objection by company when they re-license, having found a field to be more promising than originally planned, then to have government come in

    Average SDFI investment is 44%

    Everything from petroleum sector goes to Government Pension Fund

    Mainland activity – retail Statoil – not taxed in this same way

    Tax on super-profit – resource rent – extra-ordinary profit achieved by developing a finite natural resource – this is the 50%

    Corporate income tax is the 28% - combined for marginal tax rate

    Companies must report profits – details confidential to government – aggregate is public

    • Challenge on details – how much OH to include from parent company, for instance

    Companies claimed they wouldn’t invest during royalty period

    SDFI also plays a role in asking good/hard questions of owner/operator

    [*What are the differences between investment credits and SDFI?]

    SDFI share is talked with prior to decision, but then government (Prime Minister) decides share in each license- not negotiable once offered

    Marginal tax rate in Alaska (78.3%) and Norway (78%) is the same (average lower because of deductions)

    Can never be sure what exact resource rent should be? Otherwise would take 100% of that rent; return to company would be risk-free rate of return (this is perfect world)

    In determining taxes, capital investment in is recovered through depreciation over 6 years

    • An additional “uplift” deduction is included in order to compensate the producer for the time value of the delayed recovery of its capital investment; in Norway, the uplift is not intended to provide an additional incentive for capital investment
    • The intended effect of the uplift is to create the same result as if 100% of the capital investment was recovered in one year; in the Norway model, any additional “uplift” would result in the recovery of more than capital costs

    Personal income tax – 28% general tax, 7.8% in social security, surtax on top (total roughly 50% for highest income, employer then takes some too)

    VAT is general 25%; 12% for food; 7% for culture/transportation

    Gas/fuel – VAT + CO2 + use of road tax

    Historic perception that sovereign wealth fund should use money from fund for infrastructure, but nothing’s materialized

    Municipal funds from property tax; part of wage tax goes to local government – no company tax revenue goes to communities (national budget covers rest)

    Government Pension Fund
    Pal Haugerud, Director General, Asset Management Department

    Separate spending from current revenues – support long-term considerations; support future liabilities

    All revenues go to state budget, petroleum revenues go to fund from there (return on investments also go to fund) – transfer from fund (annually) to finance non-oil deficit (fiscal policy should only spend expected real return; est. at 4%)

    Do not hedge inflation – interested in purchasing power, international currency basket measure

    Have not always spent 4% - in good times spend less than 4%, in bad times spend more

    10% of government budget is covered by that 4% each year (100 billion NOK)

    Good governance system for big pile of company

    Government Pension Fund Act directs Fund to be managed by MOF; day to day management is the central bank of Norway (Norges Bank) – Bank reports back quarterly, MOF reports to Parliament

    Spend a lot of time educating Parliament and public about long-term strategy, risk

    Investment strategy derives from investment beliefs and fund characteristics

    • Clear owner and manager roles, responsibilities
    • Strong mandates of detailed benchmark (presented to, and discussed in, Parliament) to principal-agent
    • Exercise of ownership rights

    Ever since move to equity investments, there has been public debate about which companies to invest in – should produce return as well as ethical guidelines (by identifying overlapping consensus among Norwegian population) – have excluded 50 companies out of 8,000+ invested in

    Not invested at all in Norwegian assets

    Central bank goal – inflation target of 2%, currency management

    Fund will continue to grow for 20 years – up until 2030 it will have positive inflow (only 40% of expected oil revenue has been harvested)

    Investment allocations decided by regional market

    There is a Norwegian sister fund – much smaller - (original allocation invested in early 1970s) invested in Norwegian assets (“how to use this fund” debate went away when oil was discovered – use this wealth to improve Norwegian society)

    Ministry of Fisheries and Coastal Affairs
    Vidar Landmark, Director General, Department of Marine Resources and Coastal Management

    Smallest ministry in Norwegian government (110 employees)

    Depend on subordinate agencies, institutions

    • Fishery and Aquaculture Industry Research Fund (research grants funded by tax on export – industry run/industry financed)

    Starting point for modern fisheries management – eye-opener – Depletion of the largest fish stock in the North Atlantic (herring) in the 1960s – point of departure

    Have since come back to old heights, plus some – modern management of resources capable of protecting and enhancing species
  • When one is willing to make necessary changes

    Subsidies of industry cut off in 1990; export values increased – catch per fisherman increased (fewer fisherman)

    Build management around science (independent, international input)

    • Research and advice
    • Regulations
    • Control

    [Interesting theme of keeping politics out of it – even though government is everywhere]

    Use regulatory instruments and strict control measures (sophisticated management) to ensure sustainability; and draw on economic instruments (not subsidy or decommissioning; rather, user pays user gets) to enhance efficiency.

    Fisheries regulations enforced at sea when it is landed, and when it is exported

    Discard of fish, the most important challenge (waste of food and income)

    • Difference between what is landed and what is killed

    200,000 landings a year, most in small communities along coast

    Compensation for the landing of accidental “illegal” bycatches

    Joint management of shared stocks – 90% of catch is from shared stocks (with neighbors)

    • Stable and agreed quota allocation between states facilitates successful joint management schemes (based on UNCLOS)

    Cooperate with Regional Fisheries Management Organizations

    Aquaculture
    Thomas Andreassen

    Young industry, long coastal tradition

    20,000 jobs along coast, with export value of $5 million (salmon, rainbow trout and cod)

    Tradition of strong regulations

    Partnership between government, research and industry

    Case handling is one stop shop

    Relationship between environment and competitiveness – carrying capacity of the sea, public interest, long-term economic perspective

    Goal of government is to grow this industry

    Research

    Tore Riise

    Total research budget in Norway– 41.9 Billion NOK; 46% public
    Marine research – 64% public

    Each sector is responsible for research in its own area – but coordination/integration imperative

    Knowledge-based ocean management – best available science

    • Demands on science – emphasis on quality and relevance
    • Demands on authorities – know what to ask for

    Great cooperation between Alaska and Norway – joint programs, annual meetings, workshops, networking

    Q and A

    Declining fishermen – keep up with efficiency in rest of society – focus on earning money, not keeping jobs that don’t respond to efficiency – maintain competitiveness

    Threat of mining to sustainable long-term fishery – are you confronted with that choice? Ocean ends up being convenient place for disposal of tailings; so work to find place to dispose these in ways that don’t hurt environment. In Norway, many interests use coastal zones – manage when compatible, and say no when not possible

    Coastal administration – only manage harbors, boats, coastal affairs, but not resource conflicts (one developed over the other)

    King crab new to the area, share with Russia

    Norwegian fishing boat has to be owned 60% by Norwegian national

    No commercial fisheries for salmon and lunger (aquaculture only) – wild salmon for sport only

    Cod to be raised to supplement seasonality and fresh stock (clever escapists, by the way)

    NORAD
    Heidi Hegertun, Oil for Development
    Petter Stigset, Assistant Director (30 years in industry)

    Oil for Development Programme

    Taking the Norwegian experience – lessons learned over forty years – and giving it to developing countries

    Pure aid – capacity building, transfer of knowledge of institutional governance systems

    Budget of $50M USD

    Early years of program were managed by NPD – technical assistance

    Overall goal is poverty reduction

    Petroleum key sector in many developing countries – very problematic mostly (in Nigeria $500B USD missing – poorer than when they started)

    No export of “Norway” model – rather, share experience [what would it take to export Alaska model – is there an Alaska model?]

    Resource, revenue, environmental management – three pillars, with overriding theme of good governance

    University of Tromso – Dr. Jarle Aarbakke, Rector

    Rector an elected position by staff and students

    A big (lecture) room – where you can feel like you’re in a special part of the globe, where there is room to grow as a people

    “We” think that we are at the very center of the world – south of the world always complaining (always expect better conditions) – the north is content, and happy with what they have

    Aarbakke came to the North just for one year – has stayed now for thirty-five years, and will stay

    Center of the world is partly a joke, but also increasingly true (climate change, shipping, media, economics)

    In historical auditorium, where in 2006 the High North strategy was presented (prior to this the north was considered rural and remote, provincial, with little geopolitical interest)

    Some have said no-one cares about High North – it’s too secure, and the US hasn’t paid enough attention or given it resources to respond (but it is increasingly doing so, which means it’s more important) [US interest as a gauge of importance]

    Norwegian High North strategy – from our perspective

    • Task Force led by Aarbakke – instructive

    High North Strategy overall aim is to increase presence, scope of activities, knowledge

    Norway has long history of cooperation with Russia (not advertised) – last war in 1326 – history but also present/future

    Key drivers for renewed focus in High North

    • Climate
    • Russia
    • Energy
    • Arctic Dimension

    City has doubled in size since University established – initial reason for establishment was medical school to train doctors to keep them in rural communities

    • Climate and environment

      • Sea ice extent shrinking and increased shipping opportunities (40% reduction in time and cost; no pirates) – one of challenges though is mapping and incorrect data/depth
      • Need for search and rescue infrastructure, emergency/medical response
      • Center of Knowledge established – Fram Centre

      2. Resources

      • Development of petroleum resources in north a hot topic in Norway right now
      • New optimism – response to global need, new finds
      • Snohvit a beautiful example of what high oil prices can do, coupled with new technology (example also given of Chinese investment)
      • Nordregio – publication on resources in the Arctic
      • All indicators (including China) point to extreme interest in Arctic resources
      • Norway is the world’s second largest exporter of seafood (37 million meals served every day – 140 countries)
      • Bio-prospecting – finding new molecules

    • Research infrastructure

      • 5 PhD schools with a strong Northern focus

      4. Remote sensing

      • Centre for Remote Technology – satellites can send signals down 24 times a day
      • Sense and spot oil spill from tanker
      • Sense and spot changing environments – monitor ecology from space

      5. Demographics

  • Gender imbalance – 58% of students at UIT are women
  • People trend toward urban center
  • Northern Norway – one-third of males don’t fulfill high school
  • Many places in the north where you find women leaders, and men don’t do much (high unemployment/welfare)

    6. Circumpolar collaboration

    • Arctic Council participation + permanent secretariat
    • Ties to University system in north
    • Arctic Frontiers – January 22 through 27, 2012


    New government program (100 million NOK) for discovery of rare earth minerals

    Supply industry for petroleum industry very focused on research – have worked to increase production

    Statkraft – Renewable Energy Company
    Knut Fjerdingstad, Corporate Communications

    Norway’s largest hydropower and renewable energy company

    Number one company in renewables in Europe – in more than 20 countries worldwide (89% renewable energy, 283 power and district heating plants)

    Many international projects done through SN Power, majority owned by Statkraft

    Statkraft Group – 33% of power generation in Norway

    Began over 100 years ago – old hydro plants in fjords where industry was located

    Statkraft didn’t become private until 1992

    Focused on competencies – wind, international hydro, district heating, small-scale hydro, flexible European generation and market operations

    Innovation – research and development (hydro, osmotic, wind)

    Osmotic Power
    Stein Erik Skilhagen, Head of Osmotic Power

    Meeting future energy and climate needs requires high growth and investments in a broad range of renewables

    Global investment in renewables increased by 100% in last ten years

    In Europe – 600 TWh currently, EU goal of 1200 by 2020, and by 2050 adding 800 to 3000TWh (not accomplishable with technologies of today – osmotic power should be included here)

    Osmotic power part of the renewable energy portfolio, baseload energy with environmental impact

    Needed media campaign to launch idea – increase public education

    When fresh and salt water meet they have different salt contents – nature requires balance and works to equalize concentrations – releases energy during that process

    Capture this by placing membrane (that blocks salt) in between, with intent of water still to pass between

    Used to run a turbine that produces electricity – can use existing infrastructure

    Technology well-known of electricity production and transmission – new element is membrane and module

    Osmotic – constant power generation (“baseload”) – will run continuously so complements wind and solar, which are based on weather; small ecological footprint; decentralized source of energy, excellent for remote areas that don’t have access to other resources; proven technology – use technology in new way

    Resource is significant – global potential (map river location and flow) is 1600-1700TWh (about half of energy need of Europe)

    Prototype complete – system scale-up and proof of concept
    • Testing and optimization
    • Operation and maintenance experience
    • Meeting place for manufacturers and utilities

    Enormous interest from big stakeholders – “seeing is believing”

    Goal is to have 30 plants around the world by 2030

    To do list:
    • Continue testing technology
    • Site location
    • Local government concessions for development
    • Governmental support in short term (if renewable goal is to be met, and is important to government)

    Requires cost reductions, a conducive policy framework

    Competitiveness – see ppt comparing renewables forecast (work to do to bring down cost)

    A joint effort to build the industry – manufacturers, utilities and government partnership

    Q&A

    What are the environmental considerations? So far the pilot hasn’t seen big challenges but are monitoring closely.

    Is this something you could co-locate with a hydro plant? This is an attractive solution, but you lose flexibility of hydro plant; it also may be too easy a solution – still need to address difficult questions.

    Can you integrate into the Arctic environment? The plant will draw water from 30-50 meters, which shouldn’t be frozen; but higher temperatures means faster water flow (worked okay this winter).

    Does it interfere with fish? Not necessarily, it depends on withdraw point in river. Membrane is in the plant, not ocean.

    (Brackish) wastewater disposal? Depends on location, able to put back into sea so far.

    Silt a problem? Membrane requires clean water; the dirtier it is, the higher the energy concerns. Pilot based on clean water

    What is entailed in governmental commitment? Realization of pilot nature of program; bring tech back to Norway so may prefer to keep testing in Norway.

    Flexible Hydropower
    Jon Anders Holtan, Senior Advisor

    90% of Statkraft’s revenues

    Many (newer) stations built inside mountains – all you see is lake/river and transmission lines

    Municipal financing and benefit – Statkraft biggest property tax payer in Norway

    Important employer in small communities

    Storglomvann – underneath glacier that feeds mountain lake

    Norway success really founded on hydropower (Marshall Fund after war helped build many of the hydro plants)

    Norwegian consumption of electricity is 3x that of Europe, which is already high

    100% owned by government of Norway

    Snow is raw material – spend resources on measuring snow and water content with sophisticated methods

    A big share of the 98% hydro in Norway is from very large installments, many in remote, unpopulated areas

    Large reservoirs hard to fill up after a couple years of drought, so a lot of time spent on planning methods for doing this – all of this impacted climate variations, seeing new cycles (more rain in some areas, less in others – more variability)

    Until 1970 the goal was to build the country and hydro was used to modernize; pushback in 80s against large projects; no new investment in 90s; today we’re seeing very small projects made but even small projects have environmental challenges

    Not in North America – not sure what to contribute, good competence already, mature market

    (Offshore) Wind Power
    Bjorn Drangsholt, Managing Director UK Ltd. (based in London)

    Total Norwegian energy generation/use – 28,000 MW

    In Norway, 245 MW in operation (2500 MW under development) – all onshore (nothing offshore – no support scheme)

    Norway’s largest wind power portfolio (concession received from NVE [?] – 470 MW)

    Currently building the world’s largest offshore wind farm in UK (9 GW – 5 MW machines, 10 MW under development; GE just announced 15 MW under development)

    Statkraft trades 500 TWh in Europe – small fish in country generation, but huge total

    70% of current UK generation to retire by 2030 + reduce emissions + electricity demand to increase by 20% + stated commitment to increase renewable by 30%

    Government is currently working on extensive reform of regulatory framework and support scheme

    Crown Estate is the landowner of sea bed – Statkraft leases from government, which determines the sites that are available for leasing

    Offshores turbines + offshore substation, connected to onshore substation

    Complex contract structure offshore

    HSE challenge – wind doesn’t have a good history of addressing these issues so a large amount of research, study, education

    Conflicts of interest are possible to solve – i.e. military radar needing to see through wind farm

    Still incredible challenges in offshore wind – vessels, infrastructure, competency, high costs, etc.

    UK – Renewable Obligation Commitment (market mechanism but technology blind)

    Balancing power necessary – use of gas and hydro mean Alaska utilities should be able to integrate wind easily