Norway's Arctic oil ambitions threatened by oil price-slump.

Bloomberg: “Norway’s push to exploit Arctic waters for oil, already denounced by environmentalists, is now under threat from the slump in crude prices.”
The Arctic Barents Sea off northern Norway is reckoned to contain 40 percent of the country’s undiscovered resources and seen as key to extending oil output as aging North Sea fields decline. But operating there is expensive, and even before the recent plunge in prices, state-controlled Statoil ASA (STL)’s key project in the area had been delayed twice.
“The premises for what we’re discussing could be gone because of a weakening market,” Terje Aasland, a lawmaker from the oppositionLabor Party, said during a debate on Arctic oil in Oslo yesterday. “What we believed a few months ago, we don’t believe today.”
Arctic oil and gas projects from Greenland to Russia have faced hurdles for years, including rising costs, lawsuits, technical challenges and political opposition. Royal Dutch Shell Plc (RDSA)halted drilling offshore Alaska twice in two years after investing $5 billion, and the development ofOAO Gazprom (OGZD)’s Shtokman gas field has been shelved.
….Norway, where oil workers are the best paid in the world, is already one of the most expensive places to do business. And while the Barents Sea is more hospitable than other parts of the Arctic thanks to warming currents of the Atlantic Gulf Stream, oil deposits are more expensive to develop than in the North Sea due to a lack of pipelines, platforms and terminals.
No crude finds have yet been brought to production here, and Eni SpA (ENI)’s Goliat field is headed for a 50 percent cost overrun when it starts producing in 2015.
Statoil’s Castberg project has been delayed because of higher costs and taxes and a disappointing 3 billion kroner ($450 million) exploration campaign that failed to add enough new resources. It may be delayed again as crude hovers near the project’s break-even price of $70 to $80 a barrel, managing partner Jarand Rystad of Oslo-based consultant Rystad Energy AS said last week.
When Norway’s parliament last year opened an area of the Barents Sea previously disputed by Russia, it was the first time the country’s exploration acreage was expanded since 1994, underscoring the Arctic’s importance in Norway’s national petroleum strategy. The government has since proposed 61 blocks for the next licensing round, of which 54 are in the Barents Sea, including the northernmost acreage ever. Awards are expected in 2016.
The minority Conservative-led government is already facing pressure from the Liberal Party and the Christian Democrats, whose support it depends on to govern, to withdraw as many as 15 blocks because they’re too close to the edge of the Arctic ice cap, a sensitive ecosystem supporting animals from polar bears to fish.
Now, Labor could support the two parties as they start negotiating with the government, Aasland said. His comments signal a change in policy after Jonas Gahr Stoere succeeded former Prime Minister Jens Stoltenberg as party leader.
“It’s obvious Labor is in movement,” he said. “Fossil-energy production is becoming more and more challenging.”
The Liberals are also seeking to tighten rules that let oil companies write off exploration expenses from taxable income, making Arctic ventures even less attractive and avoiding subsidizing projects that end up being unprofitable, the party’s deputy leader Ola Elvestuen said.
Arctic fields including Castberg are among uneconomic projects that risk wasting $1.1 trillion of investor’s cash through 2025, a report by the Carbon Tracker Initiative said earlier this year.”