Category: History

The field had been shut down for a week and a half while these new facilities were tied in. When it resumed, daily production was up from about 100 000 barrels to 138 000. This was in line with a decision by the Storting (parliament) on 12 June, which set a new output ceiling for Draugen of 143 000 barrels per day on average.[REMOVE]Fotnote: Recommendation from the standing committee on energy and the environment on development and operation of the Njord discovery, determination of the state share in the Draugen and Brage fields and briefing on Norsok work. https://www.stortinget.no/no/Saker-og-publikasjoner/publikasjoner/Innstillinger/Stortinget/1994-1995/inns-199495-197/.

It was naturally good news for operator Shell, but with a bitter aftertaste – even with such a sharp increase, the company could not expect more money in the bank.

That was because Jens Stoltenberg, petroleum and energy minister in the Labour government, aimed to exercise the sliding scale provision on increasing state participation.

Put simply, Shell’s share of 100 000 barrels of oil per day was about 21 000 barrels. Once output passed that level, however, the government could boost the state’s holding in the licence.

This was done by taking over shares from licensees Norske Shell, Statoil and BP in June 1995 – which meant the operator still received only 21 000 barrels per day.

The government basically had the right to an additional 10 per cent share of the licence, but the principle of the sliding scale had become very controversial in the early 1990s. [REMOVE]Fotnote: Norsk Oljerevy Nr. 8, 1992, «Sannsynlig at glideskala faller, men: Ny type statsdeltagelse viktigste prinsipp-reform». 

After negotiations with the oil companies, who maintained that full exercise of the scale would make a production rise unprofitable, the proportion taken over was cut to eight per cent.

Shell’s holding thereby fell from 21 to 16.2 per cent, while BP lost 3.2 per cent and kept 10.8 per cent. Statoil and the state’s direct financial interest (SDFI) rose from 65 to 73 per cent.

As an international company on the Norwegian continental shelf (NCS), Shell had to be diplomatic in its language.

“I’d say we’re happy to have achieved a resolution,” operations head Knut Engebretsen commented in June 1995.[REMOVE]Fotnote: Bergens Tidende, 29 June 1995, “Kraftig økning på Draugen”. “We can live with this.”

But Shell was nevertheless far from satisfied. It had invested NOK 300-340 million to achieve the big output rise. Two-thirds of that went on drilling new production and injection wells.

To prevent this spending and the production increase from cutting its return, Shell had to reduce its operating costs by about 20 per cent.

Measures to achieve savings were already under way, so that spending was down to about NOK 600 million in 1995. A further cutback to NOK 500 million by 1996 would be pursued.

So the operator was uninterested in any further increase in production from Draugen in the immediate future. This would require such substantial investment that it would be unprofitable.

While Shell and Draugen had to struggle with the results of exercising the sliding scale, the government decided to drop this system for all future developments. That made application of the principle to Draugen particularly hard to swallow for Shell.[REMOVE]Fotnote: Bergens Tidende, 29 June 1995, “Kraftig økning på Draugen”.

The government proposed a new police reform in 2013 which included merging the Nordmøre and Romsdal district with Sunnmøre, with the commissioner moving from Kristiansund to Ålesund.

These plans prompted outrage in Nordmøre and added fuel to the flames of an old local government dispute which has created and continues to maintain dissension in Møre og Romsdal county.

Offshore preparedness

The presence of both Shell and Statoil has helped to propel Kristiansund to the status of the oil centre for this part of Norway. Responsibility for emergency preparedness in the area of the NCS lying roughly between Ålesund to the south and Brønnøysund in the north lay in the town for some three decades.

This region includes such fields as Draugen, Ormen Lange, Åsgard and Njord, as well as the Tjeldbergodden and Nyhamna gas facilities on land. Nordmøre and Romsdal was one on four police districts along the coast responsible for strategic and operational leadership of any incidents arising on an offshore installation.

The others were Rogaland for the NCS south of the 62nd parallel, Helgeland between 65°30’N and 68°30’N and Troms above 68°30’N and the seas outside Svalbard’s territorial waters. Rogaland police district, embracing Stavanger, has also been required to provide assistance in investigating major oil-related incidents above 62°N.[REMOVE]Fotnote: National Police Directorate (2011): PBS 1. Politiets beredskapssystem, del 1. Retningslinjer for politiets beredskap, 103.

Police responsibility

The commissioner is responsible for the exercise of all police powers within their offshore area, and for the commitment of resources required to discharge duties on the NCS. They are also responsible for any post-response investigation.

In addition to preparing an updated plan for offshore emergency response, the offshore police district collaborates with the armed forces in exercises. It maintains contacts with the operator companies and sees to it that they also understand their functions during an actual incident.

The police are also charged with established reception facilities on land in the event of a possible evacuation following an offshore incident. They must keep in regular contact with the Petroleum Safety Authority Norway (PSA), and have investigating officers with expertise on matters relating to petroleum operations.

Finally, each offshore police district must have service personnel with specialist knowledge for taking over an installation after a possible action phase.

Police reform

The number of Norwegian police districts was reduced from 27 to 12 on 1 January 2016 in what has been called the “close policing” reform.

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After Nordmøre and Romsdal was merged with Sunnmøre, as noted above, the National Police Directorate (NPD) wanted the headquarters of the Møre and Romsdal district moved to Ålesund. That came as no surprise. This is the county’s largest town and lies midway between Bergen and Trondheim. The NPD also maintained that it also had the biggest recruitment base. But the question then was where responsibility for petroleum-related incidents off the Møre and Trøndelag coasts should lie.

The government wanted the NCS split between two police districts – south-west run from Stavanger and north from Tromsø – but failed to secure Storting (parliamentary) support.

Offshore responsibility was to continue to be divided between four police districts. But would this remain in Kristiansund or follow the police commissioner to Ålesund? Kristiansund and its hinterland mobilised vigorously to retain the police commissioner and responsibility for offshore emergency preparedness.

A number of consultation responses emphasised the extensive response collaboration built up in the town over 30 years, which made it easy to mobilise resources and expertise. In the event of accidents, moreover, Kristiansund had offshore expertise, a heliport and plans for taking care of possible injured personnel.

This interaction with the offshore industry’s emergency response resources was regarded as significant for the police’s ability to discharge its NCS duties.

In the event of an incident, the companies could quickly install their liaison officers at the police station. This physical presence was important for optimal coordination.

Although the police had and have specialised expertise on petroleum activities, they depend on supplementary knowledge from the industry when accidents occur offshore or at land plants.[REMOVE]Fotnote: Consultation: Norwegian Official Reports (NOU) 2013:9 Ett politi – rustet til å møte fremtidens utfordringer. Comments from Kristiansund local authority and KOM Vekst (Kristiansund and District Industrial Forum) of 3 October 2013; Nordmøre and Romsdal police district of 4 September 2013; Orkide (assembly of council chair and local authority chief administrators in Nordmøre) of 2 October 2013.

The fear was that moving the police commissioner and thereby offshore responsibility would mean a critical loss of special expertise, reduced efficiency, loss of time and increased costs.[REMOVE]Fotnote: Inderhaug, Erik (2016): “Hvordan skal politiet sikre denne?” Politiforum. https://www.politiforum.no/artikler/hvordan-skal-politiet-sikre-denne/386956 (published 27 January 2016, downloaded 9 January 2018).

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A transfer to Ålesund might sunder strategic and operational leadership in the police from the other response teams for offshore operations.

Staying in Kristiansund would mean that, within a few minutes of an incident on Draugen, the police could be physically present in the second-line response at Norske Shell’s Råket facility. For their part, Ålesund’s supporters argued that emergency response would related in most cases to a serious event which required the police to establish a crisis team.

Where this was led from would be a secondary consideration. The specialist team in Kristiansund could deal with offshore emergency preparedness regardless of where the commissioner sat.

Norske Shell wanted the police in Kristiansund to retain responsibility for offshore preparedness, and responded to the consultation even though it was not formally invited to comment. The company stressed the good collaboration its emergency preparedness team had with the Nordmøre and Romsdal district’s offshore division, and the importance of maintaining this.

It also complained over the lack of specific details on how important considerations were to be handled if the headquarters were transferred to Ålesund.

“Our experience is that the understanding of oil sector processes, planning, emergency organisation and industry terminology enshrined in the operations centre, staff functions and operative response leadership has been positive for handling and investigating incidents on the NCS,” Shell stated.[REMOVE]Fotnote: Inderhaug, Erik (2016): “Hvordan skal politiet sikre denne?” Politiforum. https://www.politiforum.no/artikler/hvordan-skal-politiet-sikre-denne/386956 (published 27 January 2016, downloaded 9 January 2018).

“Such expertise is built up through good communication and joint training. We would have wished to see a clarification of how this is envisaged in the future.”

Jobs too

Kristiansund has called on a number of occasions for more government and public sector jobs, and this was highlighted in the consultation response from the Kristiansund and District Industrial Forum (KOM Vekst).

The latter noted that Ålesund and Molde had received 190 and 139 new central government and county council jobs respectively in 2009-13, while the figure for Kristiansund was one.[REMOVE]Fotnote: Consultation: NOU 2013:9 Ett politi – rustet til å møte fremtidens utfordringer ­– KOM Vekst (Kristiansund and District Industrial Forum) of 3 October 2013.

When the town lost out to Molde in the fight over the Nordmøre and Romsdal hospital, the future for many expertise-based jobs vanished from the region.

Against that backdrop, the issue of the police commissioner’s headquarters generated strong feelings in Nordmøre. This involved not only emergency preparedness, but also local employment.

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The outcome was that the police commissioner post was transferred to Ålesund together with a substantial number of jobs. A government decision to locate the police pay and accounting centre, with 70 employees, to Kristiansund was therefore perceived as a form of compensation.

That was denied by justice minister Anders Anundsen, who claimed that the move formed part of a 2016 agreement with the Liberal Party on decentralisation of government employment.[REMOVE]Fotnote: Written question from Ingrid Heggø (Labour) to the minister of justice and emergency preparedness. Storting, document no 15:1539 (2015-2016), 9 September 2016.

It quickly became clear that the town would only be getting 50 new jobs, since another department located in Stavanger was taking over part of the police pay function.

To compensate for the “loss” of the 20 promised posts, an equal number of additional jobs were created at the Kristiansund tax office. According to the council, the extra employment more than compensated for the reduction in police posts.[REMOVE]Fotnote: Kristiansund – information publication from Kristiansund local authority. No 7, July 2017.

Shell was the first operator on the Norwegian continental shelf to introduce waste sorting when Draugen came on stream, closely followed by Conoco on the Heidrun field.

Green focus

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Norske Shell had long been paying attention to the environment. This concern focused in the 1980s on production processes and limiting waste, but a shift occurred in the following decade towards products and ways of reducing consumption.

Goals for the company were to ensure acceptable disposal, while also minimising refuse-related costs through optimal sorting offshore and contributing to a system for reducing, reusing and recycling waste.

Employees were asked to concentrate on three areas – avoiding hazardous organic solvents, reducing the use of one-off items and preferring products which left returnable waste where possible.[REMOVE]Fotnote: Shell Internt, no 1, 1994, “Fokus på miljø”.

Extensive use of environment-friendly products represented one aspect of this commitment, but reducing consumption was considered equally important. A simple system for sorting waste based on separating it into different containers was instituted by Norske Shell on the Draugen platform from the start.

kildesortering åp draugen, hagelin, avisutklipp, engelsk

This proved both protective of the environment and cost-saving. Waste sorting was also introduced to the Kristiansund operations office at Råket and to Vestbase. Separating refuse in this way was pursued in collaboration with Renovasjon Nord AS,[REMOVE]Fotnote: Renord AS was its official name initially. a new privately owned waste-handling company in Kristiansund. The latter became a Norwegian environmental pioneer in 1990 when it built a recovery plant for industrial waste at Hagelin in its home town.

While a number of countries in continental Europe had already begun sorting such refuse, the infrastructure for doing so in Norway was poorly developed.

The Renovasjon Nord plant accepted all forms of industrial detritus – paper, plastic, wood, glass, cardboard and metals – and was based on manual sorting. These materials were sent to various recipients in Norway, Sweden and Finland for recycling.

Although starting with industrial waste, the company entered into an agreement with Kristiansund local authority which allowed the latter to introduce waste sorting in the autumn of 1990.

The sorting project was tested out on West Vanguard, the rig drilling subsea wells on Draugen, before being adopted on the field. This trial proved a success. Underlying the move was the hope of saving NOK 1-1.5 million through waste sorting – combining environmental concerns with financial benefits.

kildesorteringen på draugen, engelsk

Good timing

With interest in waste treatment and sorting growing among ordinary people and politicians in the late 1980s and early 1990s, Norske Shell and the Draugen organisation timed this initiative well.

kildesortering på draugen, forsidebilde, avfallshåndtering, engelsk

“Sustainable development” entered common parlance in 1987 when it was introduced in a report from the UN’s World Commission on Environment and Development. This concept indicated that global development had to meet people’s current needs but avoid undermining opportunities for future generations.

The Norwegian government rose to the challenge and appointed a commission of inquiry to address such issues as how to minimise waste.

That covered reducing refuse at source as well as reuse and recovery of materials, while also minimising demands on society’s resources for waste handling and treatment.[REMOVE]Fotnote: Report no 44 (1991-1992) to the Storting: Om tiltak for reduserte avfallsmengder, økt gjenvinning og forsvarlig avfallsbehandling. Oslo, Ministry of the Environment.

A Norwegian official report (NOU) on waste minimisation and recycling appeared in the autumn of 1990.[REMOVE]Fotnote: NOU 1990: 28: Avfallsminimering og gjenvinning. Oslo, Ministry of the Environment, 3 December 1990. It marked the first overall assessment of these issues presented to the Storting (parliament).[REMOVE]Fotnote: Recommendation no 56 (1991-92) to the Storting: Innstilling fra kommunal- og miljøvernkomiteen om tiltak for reduserte avfallsmengder, økt gjenvinning og forsvarlig avfallsbehandling (Report no 44 (1991-92) to the Storting).

In 1990, the latter resolved that all local authorities in Norway would be required to draw up a plan for waste sorting by 1992.[REMOVE]Fotnote: Report no 44 (1991-1992) to the Storting: Om tiltak for reduserte avfallsmengder, økt gjenvinning og forsvarlig avfallsbehandling. Oslo, Ministry of the Environment.

kildesortering på draugen, kontor, engelsk,

Increased awareness of issues related to refuse, resource use and the environment was also reflected in the media, and leading Oslo daily Aftenposten ran a series on the “environmental office”.

Appearing in the summer of 1992, this tested attitudes and actions among chief executives in large Norwegian companies – what had they done or not done to make daily life more environmentally conscious at Norwegian workplaces. The sort of questions asked was whether waste paper was sorted, whether single-use or multi-use cups were provided for coffee and whether pens were throwaway or refillable.

Local authority plans for waste sorting were followed up by the Pollution Control Act of 1993, which again called for local councils to prepare waste plans by 31 December 1993. The government’s aim was that waste should cause as little harm and inconvenience to people and nature as possible, while costing a minimum to deal with.

When choosing between reduction choices, in other words, preventive measures would take precedence over recycling and environmentally acceptable final treatment.

The principal government strategy was to prevent waste arising, reduce the quantity of hazardous substances, promote recycling and ensure that ultimate treatment was acceptable.[REMOVE]Fotnote: Gjerde, Kristin Øye (2015): Sprenger grenser. Vann, avløp og renovasjon i regionens tjeneste: 105.

Resource

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So waste sorting was not an unfamiliar concept in the early 1990s, but Norske Shell and its Draugen organisation were nevertheless pioneering industrial adopters of this approach.

They can largely thank Renovasjon Nord for this. The company saw the potential of rubbish at an early stage and built land plants for its satisfactory treatment.[REMOVE]Fotnote: Shell Internt, no 2 1993, “Milliongevinst for Shell”. It was both the first and the largest Norwegian specialist in handing waste from the offshore sector.