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.