Norway Debates the Promise, Costs of New Drilling
Oil Means More Revenue But More Climate Change

By Juliet Eilperin
Washington Post Staff Writer
Tuesday, August 21, 2007

TROMSO, Norway This small country, which has a vast treasure of undersea oil and an intense civic concern about global warming, is struggling with a dilemma -- but it is one that most nations would envy.

In little more than two generations, oil and gas have transformed Norway from a country recovering from World War II occupation into an economic powerhouse. But now its citizens and politicians are debating whether it should take advantage of Earth's warming to drill for more oil above the Arctic Circle, knowing that consumption of that oil will accelerate climate change.

Energy experts estimate that as much as 73 billion barrels of oil and natural gas could be trapped in a 1,220-mile-long stretch of the Arctic seabed. Complicating the argument further, those resources would be easier to tap in a warmer environment.

Given the value of Norway's existing oil and gas -- the country ranks as the world's third biggest gas exporter and fifth largest oil exporter, and petroleum accounted for 36 percent of the government's revenue last year -- its political and business leaders are increasingly focused on the opportunities in what they call "the High North." They know that if Norway holds back, Russia, Denmark, Canada and other countries with Arctic claims could well vie to exploit these resources. (This month, a Russian mini-submarine planted the Russian flag, encased in a titanium capsule, on the seabed at the North Pole in a symbolic gesture to underscore its claims to the Arctic's underwater resources.)

This has left policymakers and scientists pondering a difficult question: What should Norway do about the fact that global warming will make their climate more hospitable and enhance their financial situation, even as it inflicts damage on other parts of the world?

"The paradox is this part of the world is the most fortunate when it comes to climate change," said Jan-Gunnar Winther, who directs the Norwegian Polar Institute in the Arctic city of Tromso. "It's very challenging for a very wealthy nation, knowing this will be a positive change, to then take a very responsible action."

At Statoil, the Norwegian oil company whose majority owner is the government, Trude Sundset, senior vice president for the environment, said its officials view global warming as a problem, but they also feel a need to supply international markets.

This fall Statoil will begin production in the Barents Sea, where the Norwegian Petroleum Directorate estimates that 8 billion barrels of oil and gas lie.

"As long as the world wants to have oil and gas, you need to go where the oil and gas exists," Sundset said.

Government officials say they are committed to reducing Norway's greenhouse gas emissions, both at home and by purchasing carbon offsets abroad. The country is on track to reduce its emissions to 10 percent below 1990 levels by 2012, despite the fact that it was allotted a slight increase under the Kyoto Protocol, the 1997 treaty that seeks to curb global warming.

In late June, the government announced a further plan to cut emissions by 30 percent by 2020 and to make the entire economy carbon neutral in 2050, though it did not detail how it would do so.

Jonas Gahr Store, the minister of foreign affairs, said that while changing climate conditions will make it easier to extract oil and gas from beneath the Barents Sea, his country is pioneering carbon-capture and storage technologies that will help mitigate its emissions.

"Where Norway can make a huge difference is what we can do in terms of our research of new technology in oil and gas," Store said.

But even some backers of carbon-capture and storage strategies -- Norway has already buried more than 1 million tons of carbon dioxide under the sea -- say the government is making a mistake in pushing aggressively for energy exploration in a melting ecosystem.

"We have a responsibility to manage the Arctic, not based on local and regional welfare, [but] for managing this important ecosystem in an environmental way," said Frederic Hauge, who heads the environmental group Bellona.

Norwegians' domestic activity releases 17 to 18 tons of carbon dioxide per person annually, Hauge said, but that figure balloons to 124.7 tons if it includes emissions from all the petroleum shipped overseas.

"In my opinion, that is the right way to look at the moral commitment we have," he said. He added that Norwegians have become dependent on money from energy exploitation: "We are a country of petroholics. A nice, little, selfish country of petroholics."

In a nation that prides itself on its commitment to social responsibility at home and abroad, that sort of rhetoric stings.

This is a country, after all, that has diverted a significant chunk of its oil profits to create a $300 billion pension fund that seeks to invest only in overseas enterprises that do not conflict with its values. A philosopher advises Norway's central bank, which manages the fund, on how to steer clear of morally questionable investments, and an independent ethics commission recommends when the fund should divest itself of objectionable holdings.

The fund divested stock in Lockheed Martin on grounds that the company makes cluster bombs and land mines, and in Wal-Mart because of the retail chain's controversial labor practices.

"What we've done, in one generation, is remove value from under the seabed and put it into the bank," Store said. "We did not end up in the 'oil curse' " -- the web of corruption and economic inequality afflicting many oil-rich nations.

But some Norwegians still fear that the government does not recognize the moral implications of its activities. Aili Keskitalo, a leader of the indigenous Sami people (also known as Lapps), said the "oil rush in the Arctic" may have an environmental impact that far outlasts the drilling.

Keskitalo, who is president of the Samis' parliament and lives in the High North, said indigenous leaders have not had as much input as they would like into national policy, and Samis do not receive oil and gas royalties because the resources lie under the sea.

They have begun to lobby oil companies directly to try to extract concessions. While they have had some success, she said, that does not compensate for the fact that Samis' traditional knowledge about fishing and reindeer herding is becoming obsolete as the climate changes.

"We all know it [drilling] will last for 20 to 50 years, and then we will still be here after our guests will leave," Keskitalo said. "And we will have to live with the consequences."

In late June, State Secretary Liv Monica Stubholt, whose portfolio includes energy and environmental issues, traveled to Tromso to meet with scientists at the Norwegian Polar Institute and observe how global warming is reshaping the region.

"We will be producing and selling oil for a long time yet," she predicted, but she said Norwegians are aware that they will ultimately be judged both by how they contributed to climate change and by how they sought to stop it.

"It is the yardstick by which we will be measured in the future," Stubholt said.