Battle over operating Troll

Troll was not only a gas giant, but also contained big oil reserves. The question of what role Statoil should play in such an important field on the Norwegian continental shelf (NCS) was vigorously debated in the 1980s. That exposed fundamental differences of opinion, as well as a willingness by politicians and oil companies to reach pragmatic compromises.

By Ole Jone Eide, Norwegian Petroleum Museum

- Deepsea Bergen at the Troll field. Photo: Leif Berge/Equinor

The first confirmation of Troll’s riches came during 1979 from exploration drilling in block 31/2, with Shell as operator. Large quantities of gas and some oil were proven. It soon transpired that the reservoir was not confined to this block but extended into the adjacent acreage to the south and east (blocks 31/3, 31/5 and 31/6). Statoil CEO Arve Johnsen sought to convince Labour petroleum and energy minister Bjartmar Gjerde that the only way to safeguard the state’s interests in such a large and strategic field was to give Statoil the operator role.[REMOVE]Fotnote: Lerøen, Bjørn Vidar, 2020, Født til rikdom. En reise i Norges oljealder, Cappelen Damm: 290.

Report no 123 (1980-1981) to the Storting reflected Johnsen’s view. The Ministry of Petroleum and Energy (MPE) noted the importance of having the same operator for the three extension blocks. Admittedly, it had registered Norsk Hydro’s desire to be operator and the warning from the Norwegian Petroleum Directorate (NPD) that Statoil would have “serious capacity problems if the company is given further assignments”.

The MPE’s recommendation was nevertheless clear: “Given Statoil’s big equity interest in the field, the size of the reserves and possible future revenues, as well as the need to coordinate the activity with other development and production on the NCS, the ministry finds that the operator assignment should be allocated to Statoil”.[REMOVE]Fotnote: Report no 123 (1980-1981) to the Storting, Om tildeling av blokker i 31-området på kontinentalsokkelen, MPE: 8.

New brooms

Plans called for this White Paper to be considered by the Storting in the autumn of 1981, but that did not happen. The Conservatives took over the government after the general election that September and, with Vidkunn Hveding as petroleum and energy minister, Johnsen had good reason to prepare for opposition in coming years.[REMOVE]Fotnote: Johnsen, Arve, 1990, Statoil-år. Gjennombrudd og vekst. 1978-1987, Gyldendal: 160. He did not need to wait long. Soon after the change of government, the White Paper was withdrawn.

The Conservatives presented a new report to the Storting on awarding the sector 31 blocks in June 1982. This emphasised the importance of several Norwegian companies serving as operators on key NCS fields.[REMOVE]Fotnote: Report no 99 (1981-1982) to the Storting, Om tildeling av blokker i 31-området på kontinentalsokkelen, MPE: 7. Statoil was proposed as exploration operator for blocks 31/3 and 31/5, while Hydro was preferred as the operator for 31/6.[REMOVE]Fotnote: Ibid: 9 However, no change was made to the proposed allocation of interests in the three blocks in the previous White Paper – Statoil 85 per cent, Hydro nine per cent and Saga Petroleum six per cent.[REMOVE]Fotnote: Ibid: 9. Statoil chair Finn Lied also emphasised the importance of securing an influence which was proportionate to such large equity interests. That could only be achieved by being the operator. Board minutes, Statoil, 28 May 1982, item 5/82-4 (Source: SAST, Pa 1339 – Statoil ASA, A/Ab/Aba/L0002: Styremøteprotokoller, 26.01.1979 til 28.06.1985, 1979-1985).

Demand for unitisation

The White Paper encountered considerable scepticism in the Storting (parliament). Members of the standing committee on industry and energy from the Labour, Centre, Christian Democrat and other parties maintained that Saga had been taken insufficiently into account. To make up for that, it should be awarded an operator role. At the committee’s initiative, and with a Storting majority at its back, an operator committee comprising the three Norwegian companies was now also established to ensure the best possible coordination in developing 31/3, 31/5 and 31/6.[REMOVE]Fotnote: Lerøen, Bjørn Vidar, 1996, Troll. Gas for generations, Shell: 44.

However, the NPD called for an even greater degree of harmonisation to ensure that Troll was exploited in the most socioeconomically favourable way. The background for this demand was the communication mentioned above between the discovery in block 31/2 and the other three blocks. If the parties failed to cooperate closely enough on developing the field as a single unit, the risk was that a large proportion of the reserves could be lost.

This insight prompted the NPD to declare that unitising the development of the whole Troll field was a non-negotiable requirement.[REMOVE]Fotnote: See Nerheim, Gunnar, 1996, En gassnasjon blir til, vol 2, Norsk oljehistorie, Norwegian Petroleum Society, Leseselskapet: 269. That established it in a very clear role as the resource manager at an overarching level.[REMOVE]Fotnote: Lerøen, 2020, op.cit: 295.

Unitisation meant in practice that Shell, as exploration operator for 31/2 with a 35 per cent stake in that block,[REMOVE]Fotnote: Lerøen, 1996, op.cit: 11. would cooperate with the three Norwegian companies in the other blocks to recover both the oil and the gas.

Operatorships fall into place

A unitisation deal – which meant treating the whole field across all the blocks as a single unit for development and production purposes – was entered into by all the parties involved in 1985. This established a Troll unit management committee.[REMOVE]Fotnote: Lerøen, 2020, op.cit: 296. The following year, agreement was reached on several pragmatic adjustments to the original positions of the oil companies involved.

Proposition (Bill) to the Storting on developing and landing petroleum from Troll and Sleipner East.

The Storting’s final approval of the operatorships for Troll in December 1986 marked the end of one of the most noteworthy battles ever fought on the NCS.[REMOVE]Fotnote: See here for the Storting proceedings: https://www.stortinget.no/no/Saker-og-publikasjoner/Saker/Sak/?p=7285, accessed 27 April 2022; see also Bore, Marie Rein, 2004, Troll Olje: Hydros «Mannen på månen»-prosjekt, master’s thesis in history, University of Oslo: 34. Lasting more than two years, this process has been called “a brutal struggle for power” and “a dogfight.[REMOVE]Fotnote: Lie, Einar, 2005, Oljerikdommer og internasjonal ekspansjon. Hydro 1977-2005, vol 3, Hydros historie 1905-2005, Pax: 75. The results are outlined below.

Shell became development operator for the Troll A gas platform, standing in block 31/6. Statoil took over as production operator in 1996.[REMOVE]Fotnote: Lerøen, 2020, op.cit: 297.

Hydro was appointed operator for oil recovery from the Troll B and C platforms. These represented phase two of the field’s development, covering oil from Troll West.

After the merger between Statoil and Hydro’s oil and energy division in 2007, the combined company became operator for the whole Troll field.[REMOVE]Fotnote: For Equinor’s own presentation of Troll today, see “The Troll field and platforms Troll A, B and C”, https://www.equinor.com/energy/troll, accessed 22 March 2022; for more detailed literature on Troll, see for example Tønnesen, Harald and Hadland, Gunleiv, 2012, Oil and gas fields in Norway. Industrial heritage plan (2nd edn), Norwegian Petroleum Museum: 152-159, and Lerøen, 1996 and 2020: 286-327.

A plan for development and operation (PDO) for phase three of the Troll development, covering gas from Troll West, was approved in 2018.[REMOVE]Fotnote: Troll, https://www.norskpetroleum.no/en/facts/field/troll/, accessed 22 March 2022.