Barents Sea Oil – drilling could be a financial disaster.
“Investing in infrastructure to facilitate for fossil fuel exploration in the Barents Sea will double your trouble,” said industrialist and investor Jens Ulltveit-Moe during the armchair discussion opening this year’s Arctic Frontiers conference.
He points to the fact that investments will not only be a waste of money as no large-scale oil extraction will come, but it will also take focus away from other infrastructure investments that would be more needed.
Norway is soon to announce new licenses in the Barents Sea. Meanwhile, tumbling oil price scares investors from entering the Arctic shelf.
“Those licenses will be licenses to losing money,” argues Ulltveit-Moe and continues:
“It is obvious that nobody will start now. We have seen it with the Shtokman field; it’s huge, but it’s not economical profitable. The Castberg field has a breaking price of $80 per barrel. … With production start in the late 2020’s, breaking price will be $120 per barrel, that is three times today’s level.”
Jens Ulltveit-Moe painted a dark future for drilling in northern waters, pointing to a European Union that will reduce its demand for natural gas, a China that takes climate issues more and more serious and a world were oil consuming cars will drastically be replaced by electric or hydrogen powered vehicles over the next few decades.
“If some companies will enter the Arctic, go ahead, but for Norway as a nation it will be a financial disaster. State investments for infrastructure in the north aimed at oil and gas activities in the Barents Sea will be like investing in a white elephant. The infrastructure will not be needed.”
“You should be a very optimistic if going into that business,” Ulltveit-Moe argued in front of a fully packed auditorium at the Fram Centre in Tromsø Sunday evening.
Arctic climate and energy will be on the top of the agenda for the 1,400 participants at Arctic Frontiers, likely the most important event for anyone interested in climate and business on the top of the world in 2015.
Nina Jensen, head of WWF-Norway said oil from underneath the Arctic seabed should remain where it is.
“The Arctic is currently literally melting under our feet. We will probably be the first generation to experience an ice-free Arctic Ocean,” she said.
“We are the last generation that can do something about it,” Nina Jensen argued and encouraged for investments into renewable energy sources.
That is exactly what Jens Ulltveit-Moe has done. From owning some 40 oil tankers and oil related services, his investments are today into renewable energy.
Kjell Giæver, director of Petro Arctic countered the negative picture painted by Ulltveit-Moe and Jensen in the debate.
“The world needs oil. If looking at Europe, the Barents Sea and the Arctic is the only place to find new resources. It is the oil that has created modern Norway,” Giæver said arguing that Norway is world leading in both carbon-capture technology and electrification of offshore oil installations.
“Breaking price for production depends on the size and the fields locations. Some fields might have a cost as low as $50 per barrel,” said Kjell Giæver.
He also argued that natural gas will be an important part of the solution as the world will have to move away from coal to reduce emissions of climate gasses.
Source: Barents Observer