2030 2050 THE ENERGY INDUSTRY OF TOMORROW ON THE NORWEGIAN CONTINENTAL SHELF - STATUS REPORT 2021 - KonKraft report ...
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KONKRAFT
THE ENERGY INDUSTRY OF TOMORROW ON THE NCS - STATUS REPORT
REPORT 2021 2021-21
THE ENERGY
INDUSTRY
OF TOMORROW
ON THE
NORWEGIAN
CONTINENTAL SHELF
2030 2050
CLIMATE STRATEGY AND
TOWARDS
STATUS REPORT 2021
2 THE ENERGY INDUSTRY OF TOMORROW ON THE NCS - STATUS REPORT 2021
ABOUT KONKRAFT
KonKraft is a collaboration arena for the Norwegian Oil and Gas Association, the Federation of Norwegian
Industries (NI), the Norwegian Shipowners Association (RF), the Confederation of Norwegian Enterprise
(NHO) and the Norwegian Confederation of Trade Unions (LO), together with two LO members – the United
Federation of Trade Unions and the Norwegian Union of Industry and Energy Workers (Industry Energy).
Its role is to be an agenda-setter on national strategies for Norway’s petroleum sector and to work on
maintaining the competitiveness of the Norwegian continental shelf (NCS), so that the country remains
an attractive investment target for the domestic and international oil and gas sector, including supplier
companies and the maritime industry.
The council is KonKraft’s topmost body. In addition, it has an executive committee and a secretariat, which is
responsible for ongoing activities and day-to-day operations.
INDUSTRI
ENERGI
THE ENERGY INDUSTRY OF TOMORROW ON THE NCS - STATUS REPORT 2021 3
THE ENERGY
INDUSTRY
OF TOMORROW
ON THE
NORWEGIAN
CONTINENTAL SHELF
2030 2050
CLIMATE STRATEGY AND
TOWARDS
STATUS REPORT 2021
4 THE ENERGY INDUSTRY OF TOMORROW ON THE NCS - STATUS REPORT 2021
CONTENTS
1 SUMMARY 6
2 BACKGROUND 9
2.1 Climate work is important 9
2.2 KonKraft’s climate goals 9
2.3 Storting petition to raise the climate goal on the NCS to 50 per cent 11
3 STATUS REPORTING FOR THE CLIMATE STRATEGY 13
3.1 Updated opportunity space 13
3.2 Power from shore and electricity demand 16
3.3 Maritime goals 19
3.4 Government’s climate plan for 2021-30 19
3.5 New energy and industry policy platform 20
3.6 Support programmes 21
4 NEW VALUE CHAINS 22
4.1 Introduction 22
4.2 CCS projects 23
4.2.1 Longship 23
4.2.2 Carbon capture plants – Norway in the driving seat 24
THE ENERGY INDUSTRY OF TOMORROW ON THE NCS - STATUS REPORT 2021 5 4.3 Hydrogen 25 4.3.1 Establishing a hydrogen value chain for the maritime sector in western Norway 26 4.3.2 Hydrogen technologies offshore 26 4.3.3 Stella Maris 27 4.3.4 Potential for using hydrogen in Europe 28 4.3.5 The Northern Endurance Partnership 29 4.3.6 PosHYdon hydrogen pilot 30 4.4 Offshore wind power – natural step forward for NCS as an energy area 31 4.4.1 Ambitions for offshore wind power 31 4.4.2 Offshore wind power opens new opportunities 33 4.4.3 Hywind Tampen 33 4.5 Energy efficiency and low-emission technology 34 4.5.1 Low-carbon strategy is delivering 34 4.5.2 Petrocentre – Low Emission Centre 35 4.5.3 Compact steam turbines – Compacts2 36 4.5.4 Digital twin at Nyhamna 36 4.5.5 Reusing production tubulars 36 5 VALUE CREATION ON THE WAY TO A LOW-EMISSION SOCIETY 38 5.1 White Paper on long-term value creation from Norwegian energy resources 41 5.2 How are developments in Europe affecting Norway as an energy nation? 43
6 THE ENERGY INDUSTRY OF TOMORROW ON THE NCS - STATUS REPORT 2021
1
SUMMARY
Ambitious climate targets well as projects and feasibility studies. As described
The Norwegian oil and gas industry launched in the climate strategy, the opportunity space will
ambitious climate goals in January 2020 which be updated annually and this report will account for
called for greenhouse gas (GHG) emissions to be progress towards 2030.
reduced to near zero in 2050. The target for 2030 is
to reduce these emissions by 40 per cent compared The opportunity space at December 2020 shows an
with 2005. When approving temporary changes to overall potential for reducing GHG emissions in 2030
the Petroleum Tax Act, the Storting (parliament) by almost 50 per cent compared with the 2005 level.
requested the government to produce a plan together A large part of this potential includes very uncertain
with the industry for cutting GHG emissions by 50 measures in an extremely early phase. Experience
per cent in 2030 compared with 2005. This work is indicates that the opportunity space changes over
under way, and the government expects to present time – many measures are implemented, some drop
the plan during the spring of 2021 in its promised out for various reasons, and new opportunities are
White Paper concerning long-term value creation assessed and pursued. The overall potential has
from Norwegian energy resources. increased over the past year, and clearly shows that
the oil and gas industry is working systematically
All operator companies on the NCS and at the and purposefully to find and implement emission-
onshore plants have set climate targets and are reducing measures. Reviews with the operators
working actively to assess and implement climate demonstrate that it could be technically feasible to
measures. For a more detailed description of goals reach a goal of reducing GHG emissions by 50 per
and ambitions, see also KonKraft’s report on The cent in 2030, but that this will both be considerably
energy industry of tomorrow on the Norwegian more complicated in technical terms and demand
continental shelf. Climate strategy towards 2030 and significantly higher investment than reaching the 40
2050. per cent goal set by the industry itself for 2030.
Opportunity space This opportunity space was established before the
An important part of the work on this status report presentation of the Norwegian government’s climate
has involved updating the opportunity space for plan for 2021-30, which announced a graduated rise
reducing GHG emissions, which shows how we can in the CO2 tax. That would raise the overall CO2 price
reach the climate target for 2030 on the NCS. The in 2030 (tax plus emission allowance price) to NOK
updated opportunity space reflects the potential at 2 000 per tonne. The corresponding price paid by the
December 2020, and sums up the effects of the most companies today is about NOK 850 per tonne.
important measures decided upon in the licences as
THE ENERGY INDUSTRY OF TOMORROW ON THE NCS - STATUS REPORT 2021 7
Power from shore operation parameters are weakened or significantly
Power from shore is an absolutely key measure for altered. Strengthening and further developing
reaching the ambitious climate goals set by the oil government support programmes will be important
and gas sector. Assessments of developing resources for reaching the 2030 and 2050 targets.
on the NCS and implementing climate measures must
be made from a holistic perspective, where the need Parameters for offshore wind farms
for electricity supplies and competitive power costs A lot has happened since the climate strategy
is taken into account for both onshore and offshore was presented in January 2020. The Storting has
industries. approved investment in the Longship project to
support the implementation of carbon capture,
Industry policy parameters transport and storage in Norway. Several industry
The NHO has initiated work on a new energy and players, including NorSea, Equinor, Wilhelmsen and
industry policy platform, with participation from the BKK, have launched a plan to establish a maritime
relevant employer associations and unions as well value chain for hydrogen in western Norway. In
as a large number of companies. KonKraft has been addition, the government has opened two areas of
invited to take part as an observer. The goal is to the NCS for applications to develop both fixed and
develop a unified industry policy position concerning floating offshore wind farms. Norway’s supplier
which measures best realise various potentials and industry has a big potential to secure a substantial
requirements for an energy transition in Norway, share of a floating offshore wind power market,
how critical infrastructure should be further both nationally and internationally. This potential
developed, and what industry policy parameters are can best be realised if provision is made to establish
needed to realise the potential. This is an important a domestic market on terms which ensure the
job for taking care of and agreeing on the conditions development of large-scale floating wind farms on
which must be put in place to secure a successful the NCS.
transition.
50 per cent reduction in maritime offshore The supplier industry has a big
During the autumn of 2020, the KonKraft partners potential to secure a substantial
worked to develop the base data for concretising
a 50 per cent reduction in GHG emissions by 2030
share of a floating offshore wind
compared with 2008 for the maritime segment of the power market
petroleum sector. Efforts are under way to produce
indicators for following up this goal.
White Paper
Long-term perspectives The government is due to present a White Paper in
Achieving the climate goals requires that the the spring of 2021 on long-term value creation from
companies have a long-term perspective on Norwegian energy resources. In this context, the
their activities in Norway. Competitive operating KonKraft partners have emphasised the importance
parameters which ensure profitable operation of maintaining the competitiveness of the NCS so that
and production on the NCS, and which encourage Norway remains an attractive area for investment by
technology development and innovation, will the domestic and international petroleum industry,
be crucial for ensuring the industry’s future including supplier companies and the maritime
competitiveness. Realising GHG-reducing measures segment, if the country is to succeed in developing a
will be demanding if the basic production and new and forward-looking offshore energy industry.
8 THE ENERGY INDUSTRY OF TOMORROW ON THE NCS - STATUS REPORT 2021
THE ENERGY INDUSTRY OF TOMORROW ON THE NCS - STATUS REPORT 2021 9
2
BACKGROUND
2.1 Climate work is important 2.2 KonKraft’s climate goals
Climate change is one of the biggest challenges of our Norway’s oil and gas industry set ambitious goals
time. As Norway’s largest industry, the petroleum for emission reductions in The energy industry of
sector has a social responsibility. It will do its part tomorrow on the Norwegian continental shelf. Climate
of the job in ensuring that the world can reach the strategy towards 2030 and 2050.
goal of net zero emissions by the mid-21st century.
Emissions are to be reduced at the same time as The Norwegian petroleum sector will reduce its
the industry produces energy and sustains value absolute GHG emissions in 2030 by 40 per cent
creation, jobs and revenues for the welfare state. compared with 2005, and continue cutting them
Reaching the world’s climate goals while maintaining to near zero in 2050.
high value creation from the NCS is fully possible.
Together with shipping companies and rig
Norwegian oil and gas production has one of the owners, the Norwegian petroleum sector
lowest carbon footprints in the world, and it will be will be a driver for vessels involved in
reduced even further with the new climate goals. offshore maritime activities to make an active
A united petroleum sector has set itself ambitious contribution to achieving the goal set in the
targets on cutting emissions to near zero by 2050. government’s action plan on green shipping,
That is historic. Competitive operating parameters which involves a 50 per cent emission reduction
will be crucial for implementing commitments by 2030 in domestic maritime transport and
to low- and zero-emission technologies, such as fishing.
carbon capture and storage (CCS), hydrogen and
offshore wind power. Expertise and technological In order to realise these goals, the industry will work
innovativeness in the industry is part of the solution to foster a culture where good ideas are welcomed,
to the global challenges, and will help to reach the picked up and adopted. Oil and gas produced with a
goals set in the Paris agreement. low climate footprint in Norway will provide a future
competitive edge, and its ambitious climate goals
The petroleum industry is working to ensure that will help the petroleum sector to continue creating
the world’s energy consumption from this source has substantial value for Norwegian society.
the lowest possible emissions. To manage to limit
global warming in line with the Paris agreement, In addition to cutting emissions from its own
we must develop and adopt low- and zero-emission operations and from associated offshore maritime
technologies. Exporting Norwegian solutions of this activities, Norway’s oil and gas sector has ambitions
kind will be an important contribution to reaching of gradually creating a new and forward-looking
global climate goals. energy industry on the NCS. This includes offshore
10 THE ENERGY INDUSTRY OF TOMORROW ON THE NCS - STATUS REPORT 2021
wind power, hydrogen and CCS projects which continental shelf. Climate strategy towards 2030 and
facilitate major emission reductions in Norway, 2050.
Europe and the rest of the world. A more detailed
description of goals and ambitions is provided in This status report describes progress made in the
The energy industry of tomorrow on the Norwegian various areas.
01 THE NORWEGIAN OIL AND GAS INDUSTRY’S GOAL OF A 40% EMISSION REDUCTION BY 2030
FIGURETHE ENERGY INDUSTRY OF TOMORROW ON THE NCS - STATUS REPORT 2021 11
2.3 Storting petition to raise the The background for this decision is that Norway in
climate goal on the NCS to 50 per February 2020 reported a more ambitious target
cent under the Paris agreement, involving an emission
reduction of 50-55 per cent compared with the 1990
When the Storting approved temporary tax changes level. The Storting noted that the government will
for oil and gas companies during 2020, it signalled a help to make provision for applying the instruments
desire for tougher climate goals in 2030. A petition in the national climate strategy, but that its goals
resolution requested that the government presents could be even more ambitious than those KonKraft
a plan together with the industry which shows how had already adopted in its own climate strategy.
emissions from petroleum production on the NCS can
be reduced by 50 per cent in 2030. These cuts must Work has already begun in the industry on mapping
be achieved within existing government support and assessing measures, costs and consequences of
programmes. The plan must also take account of meeting the Storting’s request, and on collaborating
the need for cost-effective emission reductions. with the government to present a plan during 2021.
That includes further adoption of power from shore This status report is a first important step in this
on existing fields and in new developments, along effort.
with low- and zero-emission technology, while
paying regard to the electricity generating system
on land. This work must be completed during 2021.
The Storting also asked the government to present
proposals which ensure low- and zero-emission
solutions for offshore vessels in the oil and gas sector.
02 EMISSION REDUCTIONS PURSUANT TO THE STORTING’S PETITION RESOLUTION ON REDUCING EMISSIONS FROM
FIGURE
OIL AND GAS PRODUCTION ON THE NCS BY 50 PER CENT IN 203012 THE ENERGY INDUSTRY OF TOMORROW ON THE NCS - STATUS REPORT 2021
THE ENERGY INDUSTRY OF TOMORROW ON THE NCS - STATUS REPORT 2021 13
3
STATUS REPORTING FOR THE
CLIMATE STRATEGY
Emissions from Norway’s oil and gas industry various stages of maturity in the companies. Annual
amounted in 2019 to 13.7 million tonnes of CO2 updating of the opportunity space will provide a
equivalent (mtCO2e), or just over a quarter of total gradually improving overview of progress towards
Norwegian emissions. This figure includes total achieving the reduction target.
emissions from operations on the NCS as well as from
the processing plants at Kårstø, Kollsnes, Nyhamna, All the operator companies on the NCS and at the
Melkøya and Sture. In addition come amounts onshore plants have established climate goals
released by mobile rigs and ships beyond the scope and are working actively to assess and implement
of the Norwegian Petroleum Tax Act. climate measures towards 2030. In December 2020,
Endrava provided Norwegian Oil and Gas with
From 2018 to 2019, emissions fell by a little over an updated opportunity space and an overview
one per cent. Final figures for 2020 emissions are of the effects of sanctioned and non-sanctioned
not yet available, but this was a special year with measures for reducing GHG emissions up to 2030.
Covid-19, production cuts, a temporary shutdown at This analysis is based on reviews conducted by
Melkøya and the implementation of energy efficiency Norwegian Oil and Gas with all the operators on
measures which will probably lead to larger emission the NCS. The figure below illustrates the combined
reductions than the year before. Given sanctioned effect of sanctioned and larger non-sanctioned
activities and stabilisation of the position during measures. These are categorised in various stages of
2021, amounts released are expected to show a maturity, from “screening” with very considerable
short-term bounce-back to a slightly higher level in uncertainty to “sanctioned measure” for the most
2022 before being substantially reduced up to 2030. mature. The projections also include planned new
Because it will take time to mature the major power- field developments and updated assumptions about
from-shore projects, the big emission reductions will residual service life.
emerge gradually and a little later in the period.
Measures with a low abatement cost and limited
complexity are given first priority, and many of
3.1 Updated opportunity space these are therefore already sanctioned or mature.
Measures in the screening phase are often more
An important part of the work on this status report complex and have a higher abatement cost.
has involved updating the opportunity space which Preliminary analyses indicate that raising the level of
shows that the 2030 climate goal for the NCS and ambition for emission cuts from 40 to 50 per cent in
the onshore plants can be reached. This update 2030 could increase the necessary investment by up
reflects the potential at December 2020 and sums the to 50 per cent.
effects of the most important sanctioned and non-
sanctioned measures as well as feasibility studies at14 THE ENERGY INDUSTRY OF TOMORROW ON THE NCS - STATUS REPORT 2021
03 UPDATED OPPORTUNITY SPACE, DECEMBER 2020 :
FIGURE
(MILLION TONNES EMISSIONS OF CO2E/YEAR)
Increasing Sanctioned measures
uncertainty
Mature but not sanctioned
and
abatement Concept
costs
Screening
Remaining emissions
The updated opportunity space in December 2020 with projections for emissions and the estimated effect of major sanctioned climate measures
and action under assessment. Note that emission figures for 2020 are based on a rough analysis, and final figures will be published later in 2021.
The projections also include planned new field developments, which means that the total effect of emission-reducing measures at the different
levels of maturity will vary a little over time.
The updated opportunity space at January 2021 Experience shows that the companies continuously
shows a total reduction potential of 49 per cent implement many operational steps which enhance
in 2030 compared with 2005. This updating was energy efficiency. A lot of these measures are not
conducted before the government presented its quantified in the opportunity space, but they add up
climate plan for 2021-30 to the Storting on 18 to a significant future effect. The proposed increase
January 2021. In the time to come, the companies in the CO2 price will also mean that even more
will review possible measures in the light of the such energy efficiency improvements will become
proposed increases in CO2 prices up to 2030. profitable.
Gas turbines are the main source of GHG emissions The projections cover only sanctioned climate
from the NCS, accounting for 84 per cent of the measures and ones being assessed. More measures
total. Power from shore is the measure with the will be identified in the future. Experience shows that
biggest effect in the opportunity space up to 2030, a large proportion of the measures get implemented,
and a large proportion of the projects are in the some drop out for various reasons, and new steps
screening phase. Energy-efficiency improvements are assessed and adopted. The overview clearly
and power from offshore wind turbines also shows that the oil and gas industry is working
contribute additional emission cuts. Some operators systematically to identify and implement the
are assessing combined cycle power generation and necessary emission reductions. The Low Emission
offshore CCS at the concept and feasibility level. Centre and other research initiatives will also play a
Other measures, such as closed flaring or reductions key role in continued development of technologies
to cold venting and fugitive emissions, have a more and in expanding the opportunity space for emission
limited effect up to 2030 since they account for only a cuts towards 2030.
small part of the total GHG emitted.THE ENERGY INDUSTRY OF TOMORROW ON THE NCS - STATUS REPORT 2021 15
04 ABATEMENT EFFECT IN 2030 :
FIGURE
(MILLION TONNES OF CO2E/YEAR)
7
6
5
Screening
4
3 Concept
2
Mature but not sanctioned
1
Sanctioned measures
0
Power from shore Energy efficiency and Wind power CCS offshore Combined cycle power
reduced flaring
Categorisation of sanctioned climate measures and measures under assessment, with expected effect up to 2030.
05 TOTAL ABATEMENT EFFECT IN 2030 :
FIGURE
Sanctioned measures
16%
Screening 7 547 727 Mature but not sanctioned
48% tonnes of 14%
CO2e/year
Concept
22%16 THE ENERGY INDUSTRY OF TOMORROW ON THE NCS - STATUS REPORT 2021
3.2 Power from shore and industry policy platform, with participation from the
electricity demand relevant employer associations and unions as well
as a large number of companies. KonKraft has been
Demand for power in Norway will rise because invited to take part as an observer. The work includes
society needs to make more extensive use of studying and periodising power needs related
electricity to reach the national climate goals. to using electricity from land in the petroleum
sector, both offshore and onshore, together with
Utilising power from shore on new and existing the requirements of other sectors. The goal is to
oil and gas facilities is absolutely essential for develop a unified industry policy position concerning
reducing emissions in order to reach the ambitious which measures best realise various potentials and
climate goals set by the industry for 2030 and 2050. requirements for an energy transition in Norway,
According to government guidance, power from how critical infrastructure should be further
shore and/or offshore wind power must be assessed developed and which industry policy parameters
for all new developments and major modifications on are necessary for realising the potential. This is an
the NCS. important job for taking care of and agreeing on the
conditions which must be put in place to secure a
It is important that assessments related to successful transition.
developing NCS resources and implementing climate
measures are made from a holistic perspective, At present, 16 NCS fields have adopted or are due to
where the power requirements of onshore and adopt power from shore. All these solutions are due
offshore industries and the need for competitive to be in operation from 2023-24. Fields with power
electricity prices are taken into account. from shore will then account for 45 per cent of total
NCS oil and gas production. Emissions avoided as a
The NHO has initiated work on a new energy and result of these solutions are estimated at 3.2 million
06 BASE FORECAST FOR POWER CONSUMPTION ON THE NCS 2020-40 Source: Norwegian Oil and Gas
FIGURE
(GIGAWATT-HOURS)
24 000
22 500
21 000
19 500
18 000
16 500
15 000
13 500
Identifiserte/større
Identified/more uncertain
12 000
usikkerhet
10 500
9 000
Mulig/omtalt
Mentioned
7 500
6 000
4 500 Besluttet/planlagt
Sanctioned/planned
3 000
1 500
0 I dag/ i drift operation
Current/in
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040THE ENERGY INDUSTRY OF TOMORROW ON THE NCS - STATUS REPORT 2021 17
07 STRENGTHENING LONG-TERM POWER-GRID PLANNING Source: Statnett
FIGURE
tonnes of CO2 per annum by 2023. (Power from shore the gas network, updated analyses from the field
to the NCS 2020). operators for delivery requirements to power-from-
shore projects being matured, and the expected
Facilities where power from shore has already been development of Norwegian gas exports.
sanctioned for adoption over the next two-three
years are supplemented by a number of projects The forecast is based on expected power
where this is considered a possible solution. consumption by facilities which are 1) on stream
According to the Norwegian Petroleum Directorate today, 2) sanctioned/planned, 3) mentioned and
(NPD) in 2020, this involves the following projects: 4) identified/more uncertain. The gas processing
Troll B and C, Oseberg Field Centre, Oseberg South, plants at Melkøya, Kårstø and Kollsnes are included,
Sleipner East, the Halten area and Draugen. In but not the petrochemical plants/oil refineries at
addition comes grid power for the Melkøya gas Tjeldbergodden, Mongstad and Slagentangen. As
liquefaction plant. with all forecasts, uncertainty increases with time
and particularly after 2030.
Norwegian Oil and Gas published a forecast at the
end of January 2021 for future power-from-shore Looking only at the first three categories, the
consumption on NCS oil and gas facilities. This has forecast shows that power consumption is expected
been prepared on the basis of detailed analyses of to increase gradually to around 20 TWh in 2030.18 THE ENERGY INDUSTRY OF TOMORROW ON THE NCS - STATUS REPORT 2021
Grid operator Statnett’s base prediction for the the petroleum sector reduces the amount it emits,
development of consumption in the petroleum the result is real emission reductions beyond the
sector shows a corresponding figure for 2030. This national targets because the industry is part of the
also includes other petroleum activities, such as ETS.
Tjeldbergodden, Mongstad and Slagentangen at
around one TWh. Norwegian gas exported to Europe is utilised far
more efficiently than by burning it on the NCS. About
Power from shore provides real emission cuts, which 30 per cent of gas used in the EU and the UK provides
are crucially important for meeting the climate goals. fuel for power stations, which are more efficient than
The bulk of emissions from oil and gas are included gas turbines on the NCS. While the latter basically
in the EU emission trading system (EU ETS). A have an efficiency of 25-35 per cent, depending on
market stabilisation reserve (MSR) was introduced to type, age and how the facility is operated, the figure
the system in 2019 to delete surplus allowances. This for gas-fired power stations – particularly combined-
mechanism works by removing available allowances cycle plants in Europe – lies at around 50-60 per
for sale and placing them in the MSR when the cent. Direct use in households and commercial
surplus goes over a certain level. If allowances in buildings accounts for about 40 per cent of European
the MSR exceeds the number being auctioned, the and British gas consumption, where this commodity
surplus will be permanently removed from 2023. The is again used over 80 per cent more efficiently than
MSR thereby helps to reduce the allowance ceiling in offshore gas turbines. In total, this makes gas
and raise the price, which gives an added incentive consumption on the continent substantially more
within the ETS to cut emissions even further. When efficient than on NCS facilities.
Norwegian gas exported to Europe is used
far more efficiently than by burning it on the
Norwegian continental shelfTHE ENERGY INDUSTRY OF TOMORROW ON THE NCS - STATUS REPORT 2021 19
3.3 Maritime goals Many ships have a long remaining service life, which
means modifications must be made to the existing
Extensive measures to reduce GHG emissions have fleet along with developing new vessel solutions.
already been initiated in petroleum-related maritime That could mean changes to charterparties between
activities. shipping companies and operators. Examples
include more longer-term charters, mechanisms
According to the government’s action plan for green for risk-sharing, common industry requirements
shipping, domestic maritime transport and fishing and environmental standards for procurement.
are to cut emissions by 50 per cent up to 2030. Furthermore, collaboration is required on logistics/
That includes offshore-related operations. Equinor digitalisation as well as to international cooperation
presented its specific climate ambitions for this on harmonising climate measures so that vessels
segment in the spring of 2020, and intends to halve do not end up confined to the NCS. At the same
GHG emissions related to the maritime part of its time, being well in the forefront of technological
business in Norway by 2030 compared with 2005. developments in this area could be a competitive
The Norwegian Shipowners Association (RF) also advantage for the Norwegian supplier sector.
launched its climate goals for 2030 and 2050 earlier
this year (Climate targets for Norwegian shipping). Indicators will be developed in connection with
following up the climate goal of a 50 per cent
The KonKraft partners worked during the autumn reduction for maritime emissions in the petroleum
of 2020 on the base data for concretising the goal industry by 2030 compared with 2008.
of reducing maritime emissions in the petroleum
sector by 50 per cent compared with 2008, the 3.4 Government’s climate plan for
reference year adopted by the International Maritime 2021-30
Organisation.
A five per cent annual increase in CO2 tax was agreed
DNV GL has conducted a study for the RF and as part of the 2019 Granavolden policy platform for
Norwegian Oil and Gas to establish base data Norway’s current non-socialist coalition. In January
for 2008 covering maritime operations on the 2021, this government presented a White Paper
whole NCS. Statistics from various sources use on its policy for reducing GHG emissions during
different calculation methods, and the quality of 2021-30 in line with Norway’s climate targets
the input varies. Good base data are essential for and in collaboration with the EU. This plan shows
quantifying what a 50 per cent reduction compared how Norway will fulfil its climate target while also
with the reference year in maritime emissions creating green growth. The main emphasis is on non-
from the offshore sector represents in tonnes of ETS emissions, but it also deals with the ETS – which
CO2. According to the recent DNV GL analysis, covers the bulk of emissions from petroleum and
domestic maritime emissions from the petroleum other industries.
sector totalled about 2.1 million tonnes in 2008.
This estimate may vary a little as a result of The government has announced a gradual stepping-
methodological changes, scope and future reporting up of the CO2 price from about NOK 850 per tonne
guidelines. Some uncertainty also prevails about for the oil and gas sector at January 2021 to NOK
calculating emissions from automatic information 2 000 in 2030. Today’s price includes the Norwegian
system (AIS) data and how information on emissions CO2 tax of NOK 543 per tonne and the EU ETS price,
and activity is correlated. Given this uncertainty, the which was above EUR 30 per tonne at January 2021.
estimate must be regarded as a preliminary figure
with room for improvement through more detailed Under these proposals, CO2 tax on emissions from
calculations. oil and gas production subject to the EU ETS will rise20 THE ENERGY INDUSTRY OF TOMORROW ON THE NCS - STATUS REPORT 2021
in line with the tax paid by non-ETS emissions, so 3.5 New energy and industry
that the overall carbon price (CO2 tax plus the cost policy platform
of allowances) in 2030 will be about NOK 2 000 per
tonne of CO2 in 2020 value. Norway reported a more ambitious climate target
to the UN in February, which involves cutting GHG
KonKraft proposes that the increased government emissions by at least 50 per cent and up towards 55
revenues from the significant rise in CO2 tax should per cent in 2030. At the same time as the country
be earmarked for measures which contribute to a cuts emissions, it must create industrial growth and
faster reduction in GHG emissions. Establishing an jobs based on the energy shift. A number of sectors
action fund to dispense revenues raised by the higher will utilise more electricity, and power supply will
CO2 tax, on the model of Norway’s Business Fund be a key to success. The NHO’s roadmap for future
for Nitrogen Oxides, could help to reduce emissions industry and green electricity value chains identify
from the sector subject to the EU ETS while also the green transition as one of the growth areas with
supporting the development of new low- and zero- the biggest potential in coming decades. Success calls
emission technologies such as CCS, hydrogen and for a successful transfer of technology and expertise
offshore wind power. between industries and companies.
The proposed tax hike will mean a substantial rise It also requires larger supplies of green power and
in costs on the NCS and could weaken Norwegian access to acreage for developing more energy and
competitiveness. Norway’s petroleum sector is other industrial commitments.
among the industries which currently pay the highest
overall CO2 price globally though a combination of Against that background, the NHO has taken the
tax and allowances. It is important to avoid the NCS initiative on a process which aims to bring together
being outcompeted by special Norwegian charges, industry interests in establishing a common energy
so that investment moves elsewhere. A higher policy platform. Providing a starting point for
CO2 price could also have an effect on fields in the contributions to relevant political processes, this
tail production phase, and lead to lower resource will be based on established climate goals and an
utilisation through their earlier shutdown. In that aggressive industrial commitment, which will require
event, companies and the government would lose greater use of electricity in a number of sectors.
revenues from the oil and gas left in place.
The relevant employer associations and unions as
A positive aspect is that the climate White Paper well as large number of companies from several
affirms that the main aim of petroleum policy is to sectors are taking part. KonKraft has been invited
make provision for profitable production of oil and to participate as an observer. The goal is to develop
gas in a long-term perspective, and that climate a unified industry policy position concerning
policy will made it profitable to develop and adopt which measures best realise various potentials and
technologies and solutions which reduce emissions. requirements for a Norwegian energy transition, how
Furthermore, it notes that the petroleum sector critical infrastructure should be further developed,
has been a cornerstone of the Norwegian economy and which industry policy parameters are necessary
for several decades and will continue to play an for realising the potential. This is important work for
important role in the years to come. That depends taking care of and agreeing on the conditions which
not only on competitive operating parameters for must be put in place to secure a successful transition.
the NCS, but also on good collaboration between
industry and government on instruments for
reaching the climate goals.THE ENERGY INDUSTRY OF TOMORROW ON THE NCS - STATUS REPORT 2021 21
3.6 Support programmes Strengthening Enova so that it can support the
implementation of measures based on existing
Achieving the climate goals requires that the technology for ETS emissions. This will reduce
companies have a long-term perspective on risk and help to cost cuts for technologies with
their activities in Norway. Competitive operating transfer potential. The support will thereby help
parameters which ensure profitable production on to ensure wider implementation of technologies
the NCS as well as technological development and which have completed the qualification process
innovation will be crucial for ensuring the industry’s but cost too much for individual companies.
future competitiveness. This is very important in
providing the assurance required for making long- Ensure the continuation of the Business Fund
term climate and technology investments related to for Nitrogen Oxides beyond 2025.
recovering oil and gas, installing CCS and producing
hydrogen from natural gas and offshore wind power. Ensure further development of technology for
and the roll-out of CCS in order to cut costs.
The government’s support programmes will be
important when the industry is to reach ambitious Ensure further development of technology
goals for a 50 per cent emission reduction by and demonstration projects for hydrogen,
2030 and near zero in 2050. Strengthening this including early establishment/encouragement
backing will be even more significant in achieving of markets through public procurement as well
further emission cuts over and above KonKraft’s as quantified targets.
climate targets. The industry would highlight the
arrangements below as particularly important Strengthen R&D funding through the Research
for further progress with low- and zero-emission Council of Norway’s programmes for low- and
solutions. zero-emission technology and fuels.
Earmarking the increase in CO2 tax for a fund, Make provision for good support schemes and
on the model of the Business Fund for Nitrogen instruments for investment in developing,
Oxides, to support measures which can producing and implementing technologies for
contribute to faster and further reductions in low- and zero-emission vessels.
GHG emissions.
Ensuring sufficient electricity generation to
meet increased demand, given considerations
of national security of supply as well as the
industry’s power costs and value creation.
Strengthening government support programmes
will be important when the industry is to reach
ambitious climate goals22 THE ENERGY INDUSTRY OF TOMORROW ON THE NCS - STATUS REPORT 2021
4
NEW VALUE CHAINS
4.1 Introduction both fixed and floating technology. That corresponds
to the power requirements of more than a million
A lot has happened since the climate strategy was Norwegian households.
published in January 2020.
In September, the government presented a White
In June 2020, it was decided that the Utsira North Paper on the Longship project to realise carbon
and Southern North Sea II areas of the NCS would be capture, transport and storage in Norway. The
opened for applications to develop renewable energy government proposed to begin by realising a capture
offshore. This makes it possible to seek licences for facility at Norcem’s cement mill in Brevik, but also
large offshore wind power projects on the NCS. made provision to support carbon capture from
Fortum Oslo Varme’s waste incineration facility on
Utsira North must be developed with floating wind condition that the project secures external financing.
turbines, which is the most interesting technology
with the largest market opportunities globally from The climate strategy lays the basis for the way
a Norwegian perspective. The area is relatively large, petroleum technology and expertise are helping to
making it possible to balance several interests and to create a new and forward-looking energy industry
locate wind farms close to established infrastructure. on the NCS. Producing and utilising hydrogen will
Southern North Sea II lies close to the boundary with contribute to major emission cuts in both Norway
the Danish sector, and offers opportunities for both and continental Europe. Examples of projects related
fixed and floating turbines. It is particularly attractive to establishing new value chains for hydrogen and
for exporting power to continental Europe. CCS which stand on the shoulders of the petroleum
sector are described below.
Taken together, the two areas offer opportunities
for developing up to 4 500 MW of wind power with
Petroleum technology and expertise are
helping to create a new and forward-looking
energy industryTHE ENERGY INDUSTRY OF TOMORROW ON THE NCS - STATUS REPORT 2021 23
4.2 CCS projects to find climate solutions, and Longship is extremely
important for Norwegian industry.
4.2.1 Longship
CCS is a key technology for reducing emissions from This government proposal to realise carbon capture,
energy production and industrial processes based transport and storage in Norway was approved by
on fossil fuels. The UN’s intergovernmental panel on the Storting in December 2020. NOK 16.8 billion
climate change (IPCC) has noted that the amount of of public money will help to establish a capture
CO2 captured and stored annually must increase a facility at Norcem’s Brevik cement mill and a
hundredfold by 2050 to reach climate targets. That value chain for carbon transport and storage. This
will require much greater political attention and includes operating costs for 10 years. The Ministry
commitments, including from industry, to realise the of Petroleum and Energy (MPE) has entered into
CCS developments required to reach the climate and agreements with the Northern Lights partners and
sustainability goals. will formally approve the plans for development
and operation and installation and operation (PDO/
The Norwegian authorities have long been a global PIO) after the Storting’s final approval in January
driver for developing CCS solutions, supporting 2021. The government is also prepared to provide
technology advances and international collaboration NOK 3 billion for carbon capture from Fortum Oslo
in a number of arenas. It is therefore gratifying that Varme’s waste incineration facility on condition that
the government has resolved to appropriate funds the project secures external financing. Fortum Oslo
for realising an integrated CCS value chain in Norway. Varme has applied to the EU’s innovation fund for
That shows it is working long-term and seriously support to realise the capture plant.
08 LONGSHIP Source: Gassnova
FIGURE
Fortum Oslo Varme AS
Carbon capture from
energy recovery facility
Northern Lights
Receiving terminal for CO2
Northern Lights (Equinor, Shell
and Total) Geological storage in
Aurora licence via submarine
pipeline from land
Norcem AS, Brevik
Carbon capture from
cement mill
Northern Lights
Carbon transport by ship24 THE ENERGY INDUSTRY OF TOMORROW ON THE NCS - STATUS REPORT 2021
Financed by revenues from emission allowance sales, incineration and cement output worldwide. Carbon
the EU innovation fund comprises EUR 10 billion for transport by sea will give the Norwegian maritime
2020-30. It will support low-emission technologies sector an important new segment and an additional
related to renewable energy production, low-carbon cornerstone in demanding times.
solutions for energy-intensive industries, CCS, carbon
capture and utilisation (CCU) and energy storage. The KonKraft partners accordingly wanted a solution
where both capture plants received full state
Initial project evaluation is due to be completed in support in order to secure benefits for Norway by
the first quarter of 2021, and applications continuing establishing new value chains which provide value
from this round will be informed if they are accepted creation and jobs, as well as exports of technology
in the fourth quarter. The KonKraft partners are and solutions, while allowing climate commitments
pleased that the government is supporting Norcem’s to be reached. Europe has roughly 500 similar
full-scale plant and the Northern Lights transport waste incineration plants which could benefit from
and storage collaboration between Equinor, Shell lessons learnt with Fortum Oslo Varme. In addition,
and Total. Even though Fortum Oslo Varme failed other facilities of this type in Norway will need to
to receive full financing now, it is positive that the reduce their GHG emissions with the aid of CCS.
government wants to make a substantial contribution The KonKraft partners would therefore urge the
to the project. government to cover the difference if sufficient
support fails to materialise from the EU.
This CCS investment lays the basis for an industrial
infrastructure which will safeguard existing jobs and In addition to the positive investment decision
export earnings while creating new industries and for Longship, the project has advanced further by
revenues for Norway in the future. attracting new partners. The Northern Lights trio
already have letters of intent with seven European
Two capture plants are important for the industry, companies, which were supplemented in October
and will provide a better basis for success. Support 2020 by a similar agreement with Microsoft to
for both would create more new jobs and strengthen see how the latter can support the venture as a
Norwegian expertise and ability to build such technology partner. Microsoft is interested in and
facilities, while making the whole project more engages with promising CCS projects. The aim is
robust and cheaper per tonne of CO2 stored. The not only to contribute technology and specialist
two plants would provide a GHG cut corresponding expertise, but also to explore how new solutions
to annual emissions by 400 000 cars, while the such as Northern Lights can help the company reach
reduction from a single facility would equal the its own goal of becoming carbon neutral by 2030.
output from 200 000 cars per year. In addition, the partners will study and establish a
process to promote policies which speed up the role
These capture facilities also relate to two industries of CCS in reaching Europe’s climate goals.
which cannot be decarbonised by other means, and
have a substantial transfer potential for both wasteTHE ENERGY INDUSTRY OF TOMORROW ON THE NCS - STATUS REPORT 2021 25
Illustration: Aker Carbon Capture
4.2.2 Carbon capture plants – The company’s MTU has been used for more than
Norway in the driving seat 50 000 hours at various locations in the USA, the
Aker Carbon Capture pursued more than 20 UK and continental Europe to test with various
projects in 2020 related to both large and medium- types of flue gases. Results from these tests provide
sized capture plants. The high point was signing important information for the projects and help to
an engineering, procurement and construction reduce risk when scaling up to full-sized plants.
(EPC) contract for carbon capture, liquefaction and
intermediate storage at Brevik (Longship/Heidelberg Interest in carbon capture solutions as a long-term
Cement Norcem). A number of projects are under alternative to increased use of electricity is also
way to investigate the feasibility of installing being shown by the traditional oil and gas market.
compact capture plants – JustCatch™ – with several Extensive studies have been conducted both on
customer projects in Norway, Denmark, Sweden the NCS and for international operators of floating
and Switzerland. During 2020, Aker Carbon Capture production, storage and offloading (FPSO) units, and
tried out its mobile test unit (MTU) at the Preem JustCatch™ has been developed to operate on FPSOs.
refinery in Lysekil (carbon capture from a hydrogen Feasibility studies have been carried out for such a
production facility). solution as one of several options for oil company
Okea’s Draugen platform.
An extensive R&D programme is also underway with
the aim of reducing costs in the solutions by up to 50
per cent in the middle of the next decade, in addition
to further improvements and innovations.26 THE ENERGY INDUSTRY OF TOMORROW ON THE NCS - STATUS REPORT 2021
09 CLUSTER PROJECTS IN NORTHERN EUROPE Source: Northern Lights/Equinor
FIGURE
An overview of known cluster projects
in northern Europe. Stand-alone projects
are not included. Mature schemes such
as Northern Lights, Porthos and Acorn
show the potential for phases 1 and 2,
whilst others are listed with the potential
claimed for the various projects.
4.3 Hydrogen A condition for success with export ambitions for
hydrogen from Norway is utilising gas resources on
The EU presented its hydrogen strategy in the summer the NCS, including in the Barents Sea, and securing
of 2020, and has ambitions to increase the share necessary infrastructure solutions which lay the
of this gas in its energy mix from two to 14 per basis for continued sales to the EU and the UK. This
cent by 2050. While the strategy prioritises green calls for competitive operational parameters which
hydrogen, it recognises the need for the blue variant encourage development and innovation on the NCS.
– particularly while building up a market. Hydrogen
produced on an industrial scale from natural gas Equinor has initiated a feasibility study which
with CCS will be part of the solution, particularly includes an assessment of what would justify the
in sectors which are difficult to decarbonise. This construction of a new hydrogen pipeline to Europe,
provides a basis for Norwegian involvement in able to meet a considerable share of European
developing and delivering solutions for both green demand. Large-scale hydrogen production for export
and blue hydrogen which Europe will come to need. would require the construction of a high-capacity gas
reforming plant. Using hydrogen in Norway should
Norway’s oil and gas sector is participating in therefore be viewed in relation to exporting this
several large industrial projects in Europe to develop gas through a new pipeline to continental Europe. A
value chains for hydrogen. The industry has also hydrogen production facility must be large enough
defined specific ambitions for introducing hydrogen to create synergies between different sectors, to
produced from Norwegian natural gas with CCS as permit cost-effective output, to facilitate increased
a fuel in shipping, for gas-fired power stations in industrialisation in Norway and to avoid reducing
Europe and at European manufacturers. capacity for greater electricity use in society as a
whole.THE ENERGY INDUSTRY OF TOMORROW ON THE NCS - STATUS REPORT 2021 27
Norway joined the important project of common 4.3.2 Hydrogen technologies offshore
European interest (IPCEI) on hydrogen in late Tomorrow’s energy systems are about renewable
December 2020. The KonKraft partners take energy sources combined with solutions for storing
a very positive view of this collaboration, and and distributing surplus energy. Hydrogen will be
believe it could help to speed up hydrogen-related a key part of the solution. TechnipFMC is a global
developments and enable Norway to remain a stable leader in system integration of infrastructure for
energy supplier to Europe. producing and further processing of petroleum.
Large-scale plants for hydrogen production from
4.3.1 Establishing a hydrogen value chain for natural gas rank today as an important part of
the maritime sector in western Norway its portfolio, and work is underway on offshore
A consortium of BKK, Air Liquide and Equinor production of hydrogen from renewable sources
was established in 2019 with the goal of creating through the Deep Purple initiative. Supported by
a hydrogen value chain along the west Norwegian Innovation Norway in collaboration with Vattenfall,
coast. Aiming to make liquefied hydrogen available Repsol, NEL, ABB, Umoe and Slåttland, its pilot
for commercial shipping in 2024, this has received project aims to develop technologies and solutions
substantial support through the Pilot-E programme. for large-scale production of green hydrogen at sea
The Mongstad industrial park, which lies close to from offshore wind power. The hydrogen produced
Equinor’s Mongstad refinery, has been chosen as will be piped to land or stored locally to supply stable
the possible location for a hydrogen production and renewable power to off-grid users. In its present
and liquefaction plant. Its first customer could phase, the project involves piloting the system on
be Wilhelmsen, which is planning to build two land. Preparations are also under way for full-scale
hydrogen-fuelled cargo ships with its Topeka offshore piloting of the Deep Purple technology.
concept to run every weekday between Stavanger
and Mongstad (with the possibility of including
Kristiansund and eastern Norway at weekends).
This includes moving equipment between offshore
bases in western Norway. The vessels would also
carry hydrogen to filling stations along their route to
supply local ferries and other ships. They can sail for
up to 750 kilometres without emissions thanks to
1 000-kW batteries and three-MW fuel cells driven
by hydrogen. The Topeka concept has received
support from both the EU and Enova.28 THE ENERGY INDUSTRY OF TOMORROW ON THE NCS - STATUS REPORT 2021
10 THE STELLA MARIS PROJECT :
FIGURE
4.3.3 Stella Maris Through this project, Altera Infrastructure and its
Altera Infrastructure conducted this study with partners sought to develop and scale up technology
participation from Gassnova, Sintef, TGE Marine for shipping large quantities of CO2 from various
Gas Engineering GmbH, Moss Maritime, Sevan SSP, European sources to a floating reception and
DNV GL and APL Norway. Backed by NOK 4 million injection facility in the North Sea. This should be
from Gassnova, it looked at how the oil flow could dimensioned to handle ships capable of loading
be reversed to transport CO2 back to the oil fields 50 000 cubic metres of CO2 under pressure and
for transfer to an installation and injection into an injecting up to 10 million tonnes of it per annum.
abandoned hydrocarbon-free reservoir.
Hydrogen will be a key component in
tomorrow’s energy systemsTHE ENERGY INDUSTRY OF TOMORROW ON THE NCS - STATUS REPORT 2021 29
11 ENDRAVA HAS IDENTIFIED 621 PLANTS WITHIN 10 KM OF A NATURAL GAS PIPELINE Source: Endrava
FIGURE
621
facilities 38M
tonnes hydrogen per year
Gas power plant
1
es
Facility type
tonnes hyd
38
Cement plant
Gas power plant
Iron and Steel plant Gas power plan
CCGT
FACILITYtype
Facility TYPE Distance to closest gas pipeline [km] (unc
CEMENT MILL
Cement plant 0 10
GAS-FIRED
Gas powerPOWER
plant STATION
©
© 2021
2021 TomTom,
TomTom, ©
© 2021
2021 Microsoft
Microsoft Corporation
Corporation
IRONand
Iron ANDSteel
STEELplant
MILL
EndravaID Facility type Facility Name Hydrogen potential Latest emission data Get details on selected fa
[tonnesH2/year] [tonnesCO2]
Steel1 Iron and Steel plant ThyssenKrupp - Duisburg-Bruckhausen 816000 7415000
Potential hydrogen use estimated b
4.3.4 Potential for using hydrogen
Integrated in Europe
Steel Mill industrial production be fully utilised, CO2 emissions
- CO2 emissions in 2019 or 2017 for
Endrava has
GasP6 beenplant
Gas power commissioned
Eems CCGTby Norwegian
Power Plant Netherlands would be reduced713041 by 100-260 million tonnes
5389580 gas power per
plants,
Steel2 Iron and Steel plant ILVA Taranto steel plant 680000 6360000 - production capacity for iron and s
Oil and Gas
GasP7
to map and quantify
Gas power plant
current hydrogen
Knippegroen Gas Power Plant
annum. That672599 is on top of the 5083889
roughly 10The million CCGT
total potential may vary compa
production
GasP8 Gasin Europe
power plant andDK6to Gas
identify possible users
Power Plant tonnes of hydrogen
609655 already used annually today. Distance
4608124 indicated in Endravas report, due to
to closes
approach (top-down vs. bottom-up
at facility level. Attention was concentrated on iron/
GasP496 Gas power plant Pembroke Gas Power Plant 566281 4280280
0
steel, cement and gas-fired power. Given substantial A geographical analysis utilising available data on
phasing-in as an emission-reduction measure in the European gas network shows that most of the
these sectors, future hydrogen demand could be possible future hydrogen consumers are close to this
©© 2021
2021 TomTom,
TomTom, ©© 2021
2021 Microsoft
Microsoft Corporation
Corporation
substantially larger than present consumption. infrastructure. Endrava has identified 621 plants
However,
Facility type it competes
Facility Name with other reduction measures within 10 kilometres
Hydrogen potential of a natural
Latest gas data
emission pipeline, which
Get de
such as greater use of electricity, CCS (synergy effect) [tonnesH2/year] represent 76 per cent[tonnesCO2]of the iron/steel works, cement
and bioenergy. mills and gas-fired power stations identified as well
Iron and Steel plant ThyssenKrupp - Duisburg-Bruckhausen 816000 7415000
Integrated Steel Mill as an annual hydrogen demand of 11-38 million Potential hydrog
- CO2 emissions
The EndravaEems
Gas power plant
analysis shows a future annual
CCGT Power Plant Netherlands
tonnes. 713041 5389580 gas power plants
hydrogen potential of 13-46 million tonnes in - production cap
Iron and Steel plant ILVA Taranto steel plant 680000 6360000
Europe. Producing this by electrolysis would require The total potenti
Gas power plant Knippegroen Gas Power Plant 672599 5083889
24-85 per cent of European electricity output in indicated in Endr
Gas power plant DK6 Gas Power Plant 609655 4608124
2019. Using natural gas instead would correspond approach (top-d
Gas power plant Pembroke Gas Power Plant 566281 4280280
to 11-40 per cent of all gas consumption in Europe.
Should the potential for using hydrogen in EuropeanYou can also read
