Decision on oil and gas exploration in an Arctic area: Case study from the Norwegian Barents Sea

This paper addresses how risks to the environment in the Arctic are handled in decisions regarding the exploration for petroleum resources. An exploration well in the Norwegian Barents Sea is used as a case to demonstrate how environmental risks are assessed together with technical and economic considerations in the Oil Company’s decisions to enter into a new area and drill a well. The paper outlines environmental challenges in petroleum activities in the Arctic, the different roles of the Authorities and Oil Companies in decisions about petroleum activities, and the Oil Company’s tools and decision criteria used in addressing risks in the decision making.It is concluded that environmental and associated reputation risks are not a major issue at the strategic level in the Oil Company, since the most controversial areas in the Norwegian Arctic offshore have already been kept out of the exploration acreage by the authorities. Risks and uncertainties penetrate every aspect of the exploration of petroleum resources, and environmental risks are not unique in this sense. The Oil Company has established technical and economic tools and decision criteria to address them, and the mitigation of environmental risks becomes an element in the technical and economic analyses that affect detailed design and operational procedures. Mitigation measures such as the minimization of discharges to the sea (the so-called “zero-discharge” policy) and oil spill contingency planning are dimensioned to meet authority requirements and expectations rather than on strict risk acceptance considerations. A significant concern is to avoid delays in the permit granting process.