Shell’s refinery at Sola

The company had operated an import facility at the same site for many years, but could now produce aviation fuel, petrol, white spirit and various black oil products there.

Oil had gained a strong economic and strategic position globally after the Second World War. Norwegian heating oil and petrol consumption increased eight-fold and 3.5-fold respectively between 1938 and 1968.[REMOVE]Fotnote: Industridepartementet. (1965). Bygging av et oljeraffineri ved Stavanger. (St. meld. Nr. 95. 1964-65). Hentet fra https://www.stortinget.no/no/Saker-og-publikasjoner/Stortingsforhandlinger/Lesevisning/?p=1964-65&paid=3&wid=c&psid=DIVL1637

The postwar period in Norway was characterised by large-scale industrialisation, and the government was constantly eager to boost the pace of this development.

An active drive to inform and cultivate contacts was launched in 1959 under Labour politician and former UN secretary-general Trygve Lie to attract foreign industry to the country.

In this role, Lie had a number of meetings with Norske Shell and pressed actively for the Anglo-Dutch oil group to build its own refinery in Norway. The Norwegian Labour Party, which largely governed the country from 1945-65, had set a higher standard of living and greater social security as its most important goals.

Improved living standards for the population as a whole called for increased industrialisation and better access to foreign currency in order to afford more imported goods.[REMOVE]

Fotnote: Grønli, T. (1981), Den industripolitiske hovedlinje. I Pharo, Eriksen, Bergh, Pharo, Helge, Eriksen, Knut Einar, & Bergh, Trond. (1981). Vekst og velstand: Norsk politisk historie 1945-1965 (s. 101). (2. utg. ed.). Oslo: Universitetsforlaget.

Labour wanted a commitment to industries which used domestically-generated hydropower and Norwegian raw materials, and which also earned revenues from abroad. To achieve these goals, the party was willing on a number of occasions to give foreign capital better terms than domestic investors.

That was highlighted in 1956, when Esso sought to establish a Norwegian refinery which would allow it to import cheaper crude oil rather than refined products.

The government viewed this as such a significant national interest – including saving valuable foreign currency – that it was willing to make substantial concessions to Esso.  In the deal struck over building a facility at Slagentangen near Oslo, the US major received privileges with regard to corporate taxation.

Favourable depreciation rules as well as freedom from import tariffs on machinery from abroad and customs duties for the feedstock were also conceded.

The Labour government knew it was making a big commitment to establishing large-scale industry which could generate foreign exchange.[REMOVE]Fotnote: Industridepartementet. (1985). Om forhandlingene om bygging av et oljeraffineri i Norge. (St. meld. Nr. 17. 1957). Hentet fra https://www.stortinget.no/no/Saker-og-publikasjoner/Stortingsforhandlinger/Lesevisning/?p=1957&paid=2&wid=b&psid=DIVL901Opposition criticism that Norwegian capital was not receiving the same benefits as foreign sources were to no avail, since the government had a majority in the Storting (parliament).[REMOVE]Fotnote: Industridepartementet. (1985). Om forhandlingene om bygging av et oljeraffineri i Norge. (St. meld. Nr. 17. 1957). Hentet fra https://www.stortinget.no/no/Saker-og-publikasjoner/Stortingsforhandlinger/Lesevisning/?p=1957&paid=2&wid=b&psid=DIVL901

However, a significant point was made in the recommendation by the Storting’s standing committee on forests, watercourses and industry to the full assembly.

It noted that any future oil refineries built in Norway would have to receive the same terms as Esso on competition grounds.[REMOVE]Fotnote: Skog., vassdrags- og industrikomiteen. (1957). Innstilling fra Skog-, vassdrags- og industrikomiteen om forhandlingene om bygging av et oljeraffineri i Norge (Innst. S. nr. 72). (St.meld. nr.72). Hentet fra https://www.stortinget.no/no/Saker-og-publikasjoner/Stortingsforhandlinger/Lesevisning/?p=1957&paid=6&wid=a&psid=DIVL1328&pgid=a_0112: 4 Dette fikk stor betydning for etableringen av Shell sitt raffineri på Sola. That was to be very significant for the Shell facility at Sola.

After the Slagentangen refinery came on line in 1960, crude oil imports to Norway grew substantially. Approaches over similar projects were also made to the industry ministry by both Norsk Brændselolje A/S and Norske Shell.

The ministry replied that it was ready to start talks at any time on refinery construction. Norske Shell was even told on a number of occasions that the government would welcome this.[REMOVE]Fotnote: Industridepartementet. (1965). Bygging av et oljeraffineri ved Stavanger. (St. meld. Nr. 95. 1964-65). Hentet fra https://www.stortinget.no/no/Saker-og-publikasjoner/Stortingsforhandlinger/Lesevisning/?p=1964-65&paid=3&wid=c&psid=DIVL1637

An initial contact between the company and Sola local authority occurred as early as 1956, when Shell inquired about a possible site for establishing an oil refinery there.

As noted above, the company already had a depot facility at Risavika and was therefore not unknown to the local council. But it did not start a serious search for a site until 1960. A number of locations in eastern and southern Norway were assessed, with Brunlanes near Larvik and a site close to Kristiansand regarded as real options alongside Risavika.[REMOVE]Fotnote: Shell Internt (1993). nr. 4/93 april.

Alongside its assessments in Norway, Shell conducted similar evaluations elsewhere. The parent group decided in 1962 to build a refinery at Fredericia in Denmark.

While several factors underlay that choice, the company also said it would probably also invest soon in a Norwegian refinery if oil consumption continued to rise in Scandinavia.[REMOVE]Fotnote: Industridepartementet. (1965). Bygging av et oljeraffineri ved Stavanger. (St. meld. Nr. 95. 1964-65). Hentet fra https://www.stortinget.no/no/Saker-og-publikasjoner/Stortingsforhandlinger/Lesevisning/?p=1964-65&paid=3&wid=c&psid=DIVL16373.

The industry ministry received a formal application on 9 April 1965 from Norske Shell to build and operate an oil refinery at Sola. Risavika was chosen for several reasons, with optimum harbour conditions as the most important. Great weight was given to the guarantee of an ice-free port. Water and power supplies were no problem, either.

This was very welcome to both Rogaland county and Sola local authority. Their traditional fish processing and canning sectors were in decline, and the county was in great need of new industrial development.

Sola had little industry outside agriculture at the time. A few jobs were related to the armed forces and the airport. In other words, it needed industrial growth and a refinery would mean a substantial increase in activity for the region.

The number of new jobs would not necessarily be so great, but the spin-offs would come from using local suppliers. Shell could also guarantee that “in line with our normal practice, Norwegian citizens will be employed at the refinery to the extent that they can be obtained and possess the necessary qualifications […]”.[REMOVE]

Fotnote: Industridepartementet. (1965). Bygging av et oljeraffineri ved Stavanger. (St. meld. Nr. 95. 1964-65). Hentet fra https://www.stortinget.no/no/Saker-og-publikasjoner/Stortingsforhandlinger/Lesevisning/?p=1964-65&paid=3&wid=c&psid=DIVL1637: 3.

Shell negotiated reasonable land prices, while the local authority could offer exemption from port fees and water supplies at cost.

As determined in the Storting report on the Slagentangen refinery, Shell also received the same terms as Esso with regard to taxation and customs duties.

Local politicians in Sola were extremely pleased, and also got more than jobs in return. Facilities in both the local authority and Risavika were now to be upgraded.

As soon as Shell required it, the council would construct an asphalt road at the company’s expense from the national highway to the refinery. Shell would also pay for a parallel water main.

In addition, the company undertook to bear the cost of all facilities and equipment required to safeguard ship calls in its port area. For its part, the local authority promised to do its utmost to provide access roads.[REMOVE]

Fotnote: Rogalands Avis. (1964, 18. februar). Avtale mellom Shell og Sola om veg og vann til RisavikaThe most important component was a bridge over the Hafrsfjord.

A rail link from the refinery was also discussed, with Shell interested in distributing some of its oil products direct from the refinery in this way..[REMOVE]Fotnote: Stavanger Aftenblad. (1964, 11. november). Shell interessert i jernbane til Sola.

That project was quickly dropped.

Plans called for a “full range” facility, able to cover all products from aviation fuel, petrol and white spirit to various oil products. Owned by Norske Shell, it would have an annual capacity of two million tonnes of crude oil.

Construction began on 1 July 1965, Oslo tanker Rederinden delivered the first cargo of feedstock from Rotterdam on 24 October 1967, and production started on 29 December that year.

The official opening took place in 1968, and Shell could deliver petrol and other oil products to all south-western Norway. Heavy crude imported largely from Oman and Nigeria provided the feedstock.

Noise and fumes from the flare stack could be pretty unpleasant during the first few years. A new plant came on line in 1973 which reduced the noise, but the neighbours had to put up with sulphurous and acid fumes for a few more years.REMOVE]Fotnote: Stavanger Aftenblad. (1973, 23. mai). Lavere forurensning fra Sola-raffineriet.However, conditions eventually improved as the refinery converted to using lighter North Sea crude and a number of anti-pollution measures were introduced.[REMOVE]Fotnote: Gjerde, K., Grimstvedt, M., & Sola. (2003). I det regionale spenningsfelt: Sola energi 1913-1999. Sola: Sola kommune.: 89

The refinery project was unrelated to oil exploration in the North Sea.[REMOVE]Fotnote: Rogalands Avis. (1964, 10. juni). Oljeraffineri i Risavika kan dra nytte av oljefunn i Nordsjøen.

When Shell submitted its formal application for the plant to the government in 1964, the first licence awards on the Norwegian continental shelf (NCS) were still a year in the future.

What mattered to the company was securing its own refinery to meet demand. It had about a quarter of the market in Norway and expected consumption to grow substantially.

Nevertheless, the Sola facility could soon utilise feedstock from virtually its own neighbourhood. Ekofisk became the first commercial Norwegian offshore discovery in 1969, and Shell had the honour of refining the first oil produced from the NCS.

The initial consignment of North Sea crude arrived in Risavika from Ekofisk on 4 August 1971. Over the decade from the late 1970s, Statfjord was the main source of feedstock for the refinery and oil from Troll also began to arrive in 1995.

The Sola refinery was constantly modified to optimise the process and keep operating costs down. Annual capacity rose from 2.5 to three million tonnes of crude in 1973, for example.

In 1979, a new control centre was established and new plants for crude oil distillation and petrol production were upgraded in 1986 to save energy.

Product types changed, with new ones being added while others were dropped. The biggest changes occurred with petrol grades, particularly when unleaded varieties were introduced.

A new facility for the latter was built in 1990 along with other environment-related investments. Ever-tougher environmental standards in the 1980s and 1990s also called for new equipment.

As recently as 1995, Norske Shell invested NOK 200 million in the refinery to automate and simplify work processes and to reduce maintenance costs. Excess refinery capacity in Europe increased during the 1990s, while the EU tightened its environmental standards. Although the Sola plant was ultra-modern, profitable and efficient, Shell decided in 1999 to shut it down.

It was the group’s smallest European refinery, but also the most profitable. However, Norske Shell ultimately accepted a strong recommendation from the management of Shell Europe Oil Products (SEOP) to cease operation. The last tanker-load of crude oil arrived at the refinery in February 2000, and the flare was extinguished on 17 April that year.

Over its 32 years in operation, the refinery had received 60 billion litres of crude and produced 15 billion litres of petrol.[REMOVE]Fotnote: Gjerde, K., Grimstvedt, M., & Sola. (2003). I det regionale spenningsfelt: Sola energi 1913-1999. Sola: Sola kommune.