23 December 2006Yahoo News! / Canadian Press
The Polar night cloaking wind-swept Hammerfest in northernmost Norway is pierced by glaring floodlights from a nearby island.
Construction machines roar and hum as workers bundled against whipping winds scurry among enormous storage tanks, gleaming towers and rows of red housing barracks.
The massive gas plant outside Hammerfest, once a lonely Arctic outpost known for fish, reindeer traffic jams and a dubious claim of being "The World's Northernmost Town," is now the base of oil-rich Norway's latest energy drive.
It's a pioneering venture to extract natural gas in the fragile Arctic waters of the Barents Sea, which the Nordic country uneasily shares with its powerful neighbour Russia - and may contain billions of barrels more of yet-to-be discovered oil and gas.
"We are opening a new oil province," said Sverre Kojedal of the state-controlled oil company Statoil ASA that is developing Norway's first Barents natural gas field, Snoehvit, which lies about 145 kiometres off the coast and is expected to come online a year from now.
With the world's known petroleum resources drying up, the inhospitable waters of the Barents Sea are a new frontier in the search for oil and gas. But exploration is controversial, as Norway and Russia weigh the odds of hitting paydirt against the potential damage to fragile Arctic ecosystems already under assault by global warming.
The area, named after 16th century Dutch explorer William Barents, is one of the world's cleanest and richest fishing grounds, and has fragile cold weather ecology - both of which environmentalists fear the hunger for oil could put at risk.
The World Wildlife Fund calls the Barents "Europe's last wild sea" and has warned that increasing oil activity, fishing, shipping, climate change and toxins "pose serious threats to the marine ecosystem and biodiversity."
The Norwegian government has slowly and cautiously opened up the remote Barents Sea to oil companies since the first exploration licence was issued in 1984. Now, with oil prices at near record levels, the option of drilling in the Arctic waters has become an almost irresistible lure for developers in an energy-hungry world.
Just the Norwegian sector of the 1.4 million-square-kilometre Barents could hide as much as seven billion barrels of oil equivalent, according to the Norwegian Petroleum Directorate. The Russian side may have even more, and in between is a vast area of disputed ocean the two sides have been bickering over for 30 years, since Soviet times.
Exploration has already started, with Snoehvit being developed in the Arctic in waters off the northern coast of Norway kept ice-free by warmth of the Gulf Stream. Snoehvit, which means Snow White, is also a technological pioneer, with all production equipment out of view on the bottom of the ocean, and remotely controlled from land.
The sprawling export terminal being built near Hammerfest, which is to come on line a year from now, will liquefy natural gas from Snoehvit and nearby finds to ship to markets in the U.S. and Spain from the first offshore field being developed in the Barents Sea.
There is more to come.
The Italian oil company Eni SpA discovered oil and natural gas at another field, called Goliat, off the Arctic coast. Russia is developing the world's largest offshore natural gas field, Shtokman, off its own Arctic coast.
Norway is the world's third largest oil exporter, but with North Sea resources dwindling, Norway hopes the US$9.25 billion Snoehvit project heralds a new era of energy wealth.
Even though ice is not a factor near Hammerfest, it is farther north. With the polar ice cap melting faster than scientists previously believed, the once ice-covered regions could also open up for the oil industry.
But the optimism that such prospects has created in places like Hammerfest also brings new worries of oil blowouts - the uncontrolled eruption of wells - or pollution to a region already under pressure from global warming and man-made toxins. PCBs, carried on winds and currents from distant factories to the Arctic, have been shown to have caused birth defects in polar bears.
Unni Berge, of the Norwegian environmental group Bellona, said the most ecologically important areas should be closed for good, and that there is no need to rush into the north because "there is more than enough to do in the North Sea, which will remain Norway's main oil province for a long time."
The regional Fishermen's Union has accepted natural gas fields, but is more skeptical regarding oil, fearing a spill could foul fish breeding grounds and spoil catches.
"The risk of a blowout is small," said Dag Vongraven, an environmental expert at the Norwegian Polar Institute. However, he said there is a risk of spills during transport, such as on oil tankers.
Kojedal, of Statoil, said the company expects to sell gas worth about $63.5 billion during the Snoehvit project's 25-30 year life span.
