The lights of Melkøya with the gas-flare to the right seen from the centre of Hammerfest. Photo: Odd Iglebaek
The extraction of oil and gas on the coast of Norway began in the 1970s, in the southwest of the country. Since then, the growth in welfare, jobs, housing, transport, research and education related to this discovery has been formidable. Exploration drilling and the development of new fields depend heavily on the expectation of future price levels for oil and gas.
With continual rises in the estimates of future prices as the new economic powerhouses of South and East Asia increase their demand for hydrocarbons combined with ongoing technological improvements petroleum activities have thus moved further and further north.
The latest production plant on the Norwegian continental shelf is the Snø-hvit (Snow-White) field in the Barents Sea.
The operator of the field is the Norwegian 67% state-owned company StatoilHydro. Snøhvit provides "LNG", as the locals say. The gas is brought in tubes on the seabed to Melkøya, in the harbour of Hammerfest. Total investment in these facilities runs close to 60 billion NOK – easily the largest ever industrial investment in North-Norway.
At Melkøya the gas is processed, before being exported in sphere-shaped containers on specially constructed tank-ships. The United States and Spain are the most important destina-tions for this product. Production began last year. It is planed to continue for the next fifty years.
In respect of new fossil fuel developments the greatest level of expectation in the High North has been placed on the Sthokman-field in the Russian sector of the Barents Sea. Potentials here are estimated to be 10-20 times those of Snøhvit. Sthokman is the world's second-largest, perhaps even the largest, gas-field.
- Before the development at Snøhvit and Melkøya we were in reality bankrupt, but now the future looks comfortable, notes Kristine Jørstad Bock, mayor and key politician in Hammerfest. As almost the rule in Finnmark, it is the Social Democrats who have the majority in the municipality.
Income directly controlled by the municipalities in Norway is mostly generated as a share of personal income, usually around 20% of the take. The other main source is tax on property. This again is related to the investment value of the specific unit.
- When we understood what was coming we increased the property tax for everyone, from 5 to 7%. In total the municipality's tax intake has grown from approximately 500-600 million NOK seven or eight years ago to, hopefully, 800 million this year. Of this, 125 million will come from Melkøya and another 25 million from all other properties in the municipality. I must however mention that this means that Hammerfest no longer qualifies for the state regulated municipal tax-transfers, says Mayor Jørstad Bock.
In both Kirkenes and Hammerfest the value of houses has doubled, perhaps even tripled in just a few years. – In Hammerfest the number of inhabitants is growing rapidly, particular in the 20-40 years age bracket. Many of them are highly educated returnees with spouses. But we want more people to come, extra labour-force is needed in all sectors of society. This is indeed a very unique situation in ´District-Norway', she explains.
She also points out that the town is still a major fishing society: - We have three trawlers, six-and-a-half quotas and 120 workers onshore. And, in fact, no fish-factory has ever gone bust in Hammerfest, she underlines. At its peak in the 1970s, 1200 people worked in the fishing-industry.
In Hammerfest, as in the majority of Finnmark's fishing societies, the industry is not locally owned. Previously, the Norwegian west-coast company Aarsaeter (Ålesund) and multinationals like Findus-Frionor dominated. Today it is Norwegian multinational Aker Sea Foods which holds the majority of shares in Finnmark's fishing industry.
Hammerfest's neighbouring municipalities have also benefited from the new development. The new house of culture is a joint venture between Hammerfest and the two adjoining municipalities of Kvalsund and Hasselvik. According to the Norwegian Ministry of Regional Development, there are many companies, often quite small, involved in the oil and gas industry in all three counties of Northern Norway. Many companies from southwest Norway have established branches here. One third of all North-Norway's municipalities are in one way or another involved in the new industries.
Soon the adjacent, though much smaller, field to Snøhvit, Goliat will begin production. The 30% state-owned Italian company ENI are the operator here. Their representative in Hammerfest is Ms. Sylvi Jane Husebye: - We are the sixth largest oil-company in the world and like StatoilHydro we take our obligations to the local community seriously. Unlike them, however, we plan not to contribute the building of the new housing. Rather we hope to develop a partnership with the local fishing-fleet to improve maritime security. They have extremely valuable knowledge on, for example, how the local currents shift and the winds blow.
Hammerfest's mayor Kristine Jørstad Bock has very clear ideas about the future: - We have not yet really established a sound base for oil- and gas-production in our town. In order not to stagnate, it is therefore very important that the explorations in the Barents Sea continue. In fact, I think it is possible that four to five communities in the High North can develop and grow like Hammerfest. But note; the Norwegian state should not interfere and regulate in detail, like they have done in our fisheries. Rather they should treat us like the rest of Norway and let the industry develop itself!
By Odd Iglebaek