5 – Energy transition opens new opportunities

The NCS is well positioned to meet the energy transition. At the same time, opportunities are being opened to strengthen the value chains in the oil and gas industry as well as in new business activities such as carbon storage, hydrogen production and recovery of seabed minerals.

Energy-market conditions and Russia’s invasion of Ukraine have created a new position for production, import and use of energy in Europe. The EU countries have an express goal of making themselves independent of a large proportion of Russian gas exports by the end of 2022. At the same time, Europe faces a challenging energy transition where the EU, like Norway, has ambitious climate targets for 2030 and a goal of climate neutrality by 2050.

At a meeting between Norway and the EU in June 2022, it was emphasised that the NCS will remain a stable and long-term supplier of oil and gas to Europe. The joint declaration on energy collaboration emphasised Norway’s special position and the need for both oil and gas deliveries also after 2030: "Recognising that Norway has significant remaining oil and gas resources and can, through continued exploration, new discoveries and field developments, continue to be a large supplier to Europe also in the longer term beyond 2030. The EU supports Norway’s continued exploration and investments to bring oil and gas to the European market" [19].

The joint declaration also made mention of a long- term collaboration over hydrogen and CCS: "Noting (…) future potential for cooperation on offshore renewable energy and hydrogen, driven by ambitious EU objectives under RePowerEU Plan, and on carbon capture and storage (CCS)" [19].

Norwegian gas
In order to meet its climate goals, the EU has made a big commitment to such renewable sources as wind and solar power. That contributes to cutting CO2 emissions, but poses some challenges because this type of energy production is variable. The growth in renewable power calls for energy sources and storage which can interact with variable power supplies.
Norwegian gas and regulatable hydropower are highly efficient for balancing variable energy (fact box Energy production from different sources).

Fact box – Energy production from different sources

A combination of gas and wind power, a high CO2 price and energy-efficiency enhancements in the UK has led to a substantial drop in coal-fired power generation and cuts in CO2 emissions. Gas from Norway, Britain’s most important supplier of this commodity, has made a big contribution here.
Generally speaking, replacing coal with gas and renewable energy represents an efficient way of achieving large, rapid and reasonably priced emission cuts, since gas releases 50 per cent less CO2 than coal when burnt.

Norwegian gas could play a key role in Europe’s energy transition. Investment in gas, under certain conditions, has been defined by the European Commission as sustainable pursuant to the EU taxonomy, a position supported by the European Parliament in July 2022. The taxonomy is a comprehensive scheme for channelling investment in a sustainable direction so that the EU can reach its zero emission target by 2050. Its rules apply from 2023.

From natural gas to hydrogen
Both the UN intergovernmental panel on climate change (IPCC) and the International Energy Agency (IEA) have included hydrogen in their most ambitious scenarios for cutting GHG emissions. In the longer term, gas from the NCS could also be used in combination with CCS for commercial production of virtually emission-free blue hydrogen.

An existing natural gas value chain and a low-carbon value chain based on blue hydrogen have many similarities.

The most important differences are:

• converting natural gas to hydrogen will in many cases require supplies of electricity
  
  
• hydrogen plants must have a solution for capture, transport and permanent storage of CO2
  
  
• converting the natural gas transport system to hydrogen will eliminate the risk of methane emissions.

Studies are being conducted by the Norwegian government to determine whether the gas infrastructure on the NCS can, with some adaptations, carry both hydrogen and CO2 [30]. Reusing the gas infrastructure could help to make the transition to new energy forms cheaper. A coordinated development permits synergies between the various value chains to be exploited. The goal is to ensure that solutions

contribute to creating the highest possible value and do not have unfortunate consequences for resource management.

The industry is an active driver in achieving low- emission solutions involving gas, CCS and hydrogen. If these initiatives help to develop a value chain for virtually emission-free hydrogen, demand for gas as feedstock could increase. The government wants to contribute to building a continuous value chain for hydrogen produced with low or no emissions, where production, distribution and utilisation are developed in parallel [18].

 

Norway has injected CO2 for storage on the NCS for more
than 25 years

 

Carbon capture and storage (CCS)
In most of their scenarios, the IPCC and the IEA have included the need for many CCS facilities to meet the Paris goals. CCS involves capturing CO₂ from electricity generation and industry in order to transport and store it securely in deep geological formations.
Where Norway is concerned, that means in the NCS subsurface.

Norwegian players have long experience with and good expertise on secure storage of CO₂. This has been done on the NCS in connection with petroleum production since 1996. The intention has been to meet European specifications on CO₂ content in export gas. CO₂ is removed from the gas stream on Sleipner in the North Sea and injected into the Utsira Formation. Similarly, CO₂ from the Snøhvit gas is separated at the Melkøya gas liquefaction plant and returned to the field by pipeline. Figure 5.2 presents historical volumes of CO₂ injected from 1996 to 2020 and forecasts for such injection in 2021-50.

The Norwegian government aims to facilitate socioeconomically profitable CO2 storage on the NCS. Investigation, utilisation and transport activities for this purpose are governed by the storage regulations [31].

Areas suitable for storage have been mapped by the NPD, resulting in a CO2 storage atlas for the NCS [32]. The NPD’s mapping shows that large quantities of CO2 can be stored in the subsurface.

CCS on the NCS could contribute to considerably reduced GHG emissions in both Norway and the rest of Europe. CO2 storage is a precondition for

developing a value chain for hydrogen-based gas, which will strengthen the competitiveness of Norwegian gas.

 

Figure 5.2 Cumulative CO2 storage, based on historical figures to 2020 and forecasts from 2021 Includes Sleipner, Snøhvit and sanctioned projects at June 2022. 

Further development and demonstration of cost- effective technology for capture, transport, injection and monitoring of CO2 will be required. The main challenge is to develop profitable business models which can contribute to the necessary volume of CO2 being stored for continued operation of industry and the development of new industrial sectors. This will be demonstrated by Longship, one of the world’s first CCS projects developing a complete value chain for capture, transport and storage of CO2.

Offshore wind power
Developing offshore wind power could become an important market for the supplier industry and yards in Norway. Implementing a long-term Norwegian commitment to offshore wind depends on the availability of large areas at sea. That could involve conflicts of interest between offshore wind developers and the further development of other industries over utilising the ocean space.

The MPE has asked the Norwegian Water Resources and Energy Directorate (NVE) to identify new areas for renewable energy production offshore, and the NPD is participating in this work together with several other directorates. Assessments by this group will underpin proposals for areas which permit good coexistence with other industries, take care of important environmental values, and provide the basis for profitable development. This work is to be submitted to the MPE on 30 April 2023.

Seabed minerals
Globally, the energy transition requires further electrification of society [33]. That could lead to

increased demand for minerals required to manufacture such products as electric vehicles, wind turbines, batteries and electrical components. In coming years, greater interest is expected to be shown in exploring for and recovering minerals on the NCS. The NPD is responsible for mapping such seabed deposits.

The government has initiated an opening process for mineral activities on the NCS [34]. As part of this work, an impact assessment will be carried out to identify which effects such an opening could have on the environment and on industry-related, economic and social conditions. This assessment is being implemented in accordance with an established programme. The NPD is supporting work on the impact assessment and coordinating the technical studies.

Over several seasons, the NPD and its partners have acquired data from the deep sea (Figure 5.4), and a map application which shows where these expeditions have been conducted is available on its website. Digital data acquired by the NPD alone or with other institutions were made available in 2022. The published information has attracted great interest

Figure 5.3 Sulphide sample from the Mohn Ridge The green mineral is atacamite, which is rich in copper.

Preliminary results show that interesting deposits of manganese crusts and sulphides are to be found on the seabed. Findings from chemical analyses conducted by the NPD include a high content of copper, zinc, cobalt and rare earths (Figure 5.3).

During 2022, the NPD is involved in four Norwegian Sea expeditions to investigate the potential further, and work is under way on a resource estimate for seabed minerals. This could open very interesting future prospects for the NCS.

Figure 5.4 Areas investigated for seabed minerals.