Month: April 2018

Forty-four oil companies applied by the deadline of 1 June 1978. Responsibility for assessing these applications rested for the first time with the recently-established Ministry of Petroleum and Energy. Norsk Hydro had withdrawn from the Petronord collaboration, while the Norwegian Petroleum Directorate and state oil company Statoil were in place.

Awards were made in early 1979 and gave Elf a single licence interest of 13.5 per cent in the “silver” block, 30/6 – which proved to contain the Oseberg field. All but one of the applicants had named this block as their first choice. Statoil became operator for 30/6 with Elf as its technical assistant.

The latter job primarily involved keeping fully up to date and monitoring exploration and drilling operations to ensure that they were executed in a safe manner.

Being technical assistant gave a company weight, and was a sign that the authorities had confidence in it. Elf was accordingly satisfied to be given this role on the silver block, since it could thereby establish a collaboration with Statoil as Norway’s leading oil company. The operatorship was later transferred to Hydro. Oseberg proved to be a goldmine. Elf’s holding corresponded to about a quarter of the revenues from Frigg.

As a result of mergers, the Total archiveconsists in turn of a number of sections. Many departments and offices have also had separate sets of records. These documents deal not only with Frigg, but also with the company’s ordinary operations. The Eanof archive also comprises several sections – the union’s own correspondence files, materials from the chief safety delegate and the transactions of the working environment committee. Material from Elf Aquitaine Norway is also included, since union representatives sat on the company’s board.

Under a deposition agreement with Total E&P Norge AS, the National Archives in Stavanger has undertaken to store the material even though it formally remains the property of the records creator. Legal rules on confidentiality will be observed, but enquiries about access to and use of the archive will be considered by the company until a possible future amendment to the agreement.

Before the material was sorted, it filled 160 metres of shelving. Rearrangement has reduced this by 50 per cent. The selection aims to document a cross-section of Frigg activities – not only material relating directly to development and operation of the field but also necessary contextual documentation. Space has accordingly been given to land-based operations and general company history. Furthermore, efforts have been made to concentrate on internal company records not found elsewhere. Little of the information reported to the Norwegian authorities (the Norwegian Petroleum Directorate and the ministries) has been conserved by this project. It will nevertheless become lodged with the National Archives’ records when these government document collections are transferred there.

The National Archives has only selected 140 technical drawings produced in connection with the construction and operation of the Frigg field’s installations, a tiny percentage of the total. These include flow diagrams, elevations, deck cross-sections and diagrams of well and piping tracks.

Other sets of records at the National Archives in Stavanger also contain materials dealing with Frigg. The most important are the records of the NPD and the Ministry of Industry’s oil office. The latter embraces material transferred in its time to the NPD and subsequently passed on the National Archives.

From the early 1970s, the Norwegian government was already giving weight to promoting domestic companies as suppliers to the oil industry. Conditions on establishing offices in Norway and the use of Norwegian suppliers were included in the licensing rounds which awarded acreage on the Norwegian continental shelf. While these political guidelines helped to set a more national stamp on the oil industry, the Norwegianisation process took time and did not make itself fully felt until the 1980s.

In the late 1970s, the Frigg development was one of the projects reviewed in a cost analysis of such activity on the NCS. A number of developments had found costs rising sharply compared with initial estimates, and an official inquiry – known as the Moe commission – was appointed to establish the reasons. This body submitted a wide-ranging report in 1980 on progress in the various development projects on the NCS, under the title Cost analysis on the NCS.

Fordeling av Frigg-kontraktene pr. høsten 1978.
Tabell satt opp av Elf til Kostnadsanalysen bind 2, s.104

This report identified a number of factors which could lead to overruns.[REMOVE]Fotnote: Distribution of Frigg contracts to the autumn of 1978. The table was prepared by Elf for the Moe commission’s
report (vol 2, p 104).

One was the country responsible for the delivery, as shown in the table above. Data in the cost analysis showed that about 26 per cent of total deliveries for the Frigg development came from Norway and 37 per cent from France. While the latter accordingly accounted for the biggest share overall, it is worth noting that the Norwegian proportion increased during the development phase.

The project was divided into phases. Phase I covered the development of the British share of the field, phase II the work on the Norwegian side, and phase III the installation of the compressors. During phase I and the first part of the second phase, Norwegian involvement was relatively modest apart from local services. One exception was the construction of the concrete gravity base structure (GBS) for the pumping platform, which was later converted to the first drilling installation (CDP1). The GBS was built in Åndalsnes by Norwegian Contractors on behalf of the French Doris group. Suppliers in Norway had an advantage in delivering this type of structure, which called for deep fjords for construction and short distances for towing. A corresponding commitment on the UK side occurred with the construction of Frigg’s TP1 platform in Scotland. The GBS for MCP-01 was built in Sweden because this country had the construction capacity needed.

In phase II, the Norwegian share of orders increased from 17 to 33 per cent, whilst Britain’s proportion sank from 22 to seven per cent. This was primarily because Norwegian Contractors secured the contract to design and construct the GBS and module support frame for the second treatment and compression platform (TCP2). This structure was again built at Åndalsnes. Part of the job of fabricating and hooking up the topside modules went to the Orkanger yard of France’s Spie Batignolles/Vigor. Oil Industry Services in Kristiansand became involved as a sub-contractor at the hook-up stage.

Companies in Norway secured more than half of all the contracts in phase III of the Frigg development, which involved positioning the compressors on TCP2. The Norwegian authorities considered it desirable that Elf placed the order for the compressor modules in Norway, since the domestic share of goods and services for the field was lower than the government expected. In a number of cases, tenders from Norwegian fabricators were uncompetitive.

Because of political pressure, companies in Norway nevertheless won a series of contracts. The largest went to a joint venture between Spie Batignolles and Vigor, with Ponticelli as piping sub-contractor. The generator and process control module was fabricated in Orkanger. By comparison, about half the total deliveries to Statfjord A derived from Norwegian companies. Ten per cent of these contracts were held to have been awarded on a non-commercial basis – in other words, bids from foreign firms were lower than those from Norway, but the latter were preferred to help build up a Norwegian supplies industry.

One purpose of the Moe commission’s analysis was to investigate whether the purchase of Norwegian goods and services was responsible for the cost increase. The study found that the rise in costs from using domestic suppliers was not especially great in relation to total expenditure. In the autumn of 1978, the development project was estimated to have cost NOK 10.5 billion. That represents an increase of NOK 7.6 billion from the 1974 forecast of NOK 2.9 billion, or more than a tripling. No less than NOK 1.2 billion of this rise related to the loss of the DP1 jacket. The additional cost of using Norwegian deliveries was put at NOK 50 million, since bids from domestic fabricators were often higher than those from foreign suppliers. According to the report, the bulk of the overruns was attributable to expensive technical solutions, often in combination with the use of consultants and weak control by the operator. Prices had also been driven up because a number of large development projects were being pursued at the same time.

The additional cost of using Norwegian suppliers was small by comparison with the total overruns in the Frigg development. Many had feared that political pressure to “buy Norwegian” would lead to sharp cost increases, but these worries proved misplaced. The deadline-based contract for gas deliveries meant that progress was prioritised at the expense of cost control. Delays arising from the loss of the DP1 jacket could be recovered to some extent with deliveries from Norway. The Frigg project was implemented at a time of very strong price inflation for oil industry supplies. It also proved difficult to cost the new technical solutions which were adopted.

Sources:
Moe, Johannes (ed): Kostnadsanalyse norsk kontinentalsokkel (Cost analysis for the NCS), 1981.
NOU 1999, 11: Analyse av investeringsutviklingen på kontinentalsokkelen (Analysis of investment development on the continental shelf).

Elf started to cut costs in the autumn of 1985 through a determined downsizing. There was no way a workforce about 1 600 strong could be maintained in Norway.

Forecasts showed that production from Frigg would gradually decline, and could cease altogether around 1995.[REMOVE]Fotnote: Elf Aquitaine Norge A/S, annual report for 1985, p 40: Elf today. The oil price slump in 1986 prompted oil companies in general to cut back their activities, with downsizing and rationalisation becoming an international trend. A marked decline in the Elf Aquitaine Norge workforce can be seen in the graph below, from 1 600 in 1985 to roughly 1 000 in 1991.

The workforce expanded somewhat between 1991 and 1994 because of the Lille-Frigg and Frøy developments.[REMOVE]Fotnote: Elf Aquitaine Norge, annual report for 1992, p 8: Employees By the early 1900s, however, it had become clear that the profitability of Frigg production was in decline. A shutdown of the whole field would only be a few years off unless operating costs could be reduced. Project 94 was launched to adapt the organisation to a lower level of profitability. With the aid of severance packages and early retirement, the number of employees in Elf was reduced from 1 039 at the start of 1994 to 873 by 31 December 1995.

The Change 97 campaign began in September 1996 as a continuation of the downsizing process, with attractive severance packages. By the end of 1997, the workforce had been reduced to 558 people. Yet another process involved the transfer of 99 employees to Norsk Hydro in connection with the latter’s takeover of the Heimdal operatorship on 1 January 1998.[REMOVE]Fotnote: Elf Petroleum Norge, annual report 1997, employees and organisation.

In connection with the downsizing, an extensive restructuring of the operations organisation and production philosophy for Frigg was implemented in 1997. This Future Operations (Futop) project was pursued by Elf’s own organisation. Offshore technicians, for instance, were actively involved in its planning and execution.[REMOVE]Fotnote: Hansen, Christian: From a Chinese butterfly to nails. Paper at the 23rd World Gas Conference, Amsterdam, 2006. All preventive maintenance was subjected to a critical assessment, which resulted in a 41 per cent reduction in the maintenance programme. A maintenance assessment showed that only 10-15 per cent of material damage and faults were so important for continued operation that they had to be immediately repaired. The rest could wait until a specialist team was mobilised.

A new organisational model was implemented, with a flatter structure. This involved removing a number of middle managers and establishing multiskilled teams with extensive self-management and responsibility. Operating costs for Frigg were reduced by about 40 per cent compared with the early 1990s. Elf Petroleum Norge’s annual report for 1998 assumed that Frigg would shut down on 1 October 2001, but the restructuring helped to keep operation of the field profitable until the autumn of 2004.

In order to enhance flexibility during the final production phase, a contract for Frigg maintenance was signed with Aker. The latter had long experience of contractual work on the field, with employees stationed out there for a number of years. Part of the Elf workforce was transferred to Aker, but remained on Frigg. The move to Aker meant that they could be shifted to other fields as the Frigg workforce was downsized. Maintenance, modifications and support functions thereby came to be largely performed by contractor personnel who were well acquainted with Frigg.[REMOVE]Fotnote: http://www.akerkvaerner.com/internet/AboutUs/AkerKvaernerGroup/GroupStructure/MMO+Europe/Projectsandexperience.htm.

The French school are leasing the premises from Kampen school in Stavanger.

Petroleum workers from all corners of the globe moved in, including many French speakers. Elf had discovered Frigg and begun to build up an organisation in Stavanger. Many people were brought from France, and a number had their families with them. Most would be in Norway for two-five years, and needed educational provision for their children. The French school opened in 1972, leasing the premises from Kampen school which it still occupies. Although it was the arrival of the oil industry which prompted the creation of this facility, neither Elf nor other companies had anything directly to do with its establishment or operation. It represented a fantastic provision for Elf employees. Children who had gone to school in France, or who were to continue their education there, could attended classes with a French curriculum and teaching.

A privately-owned institution, the school falls under Mission Laïque Française, an organisation which runs schools outside France where major French companies operate.¹ The teachers are French, and come to work in Stavanger for three-year periods.

The school was attended by 100 French children and young people in 1977. During the 1980s, a Norwegianisation of the oil industry occurred as locals acquired the necessary expertise to take over. This reduced the need to import personnel for the industry. That also applied to Elf. Fewer French families came to Stavanger, and the number of pupils at the school declined. To prevent its closure, Norwegian children were invited to apply for the further education stage. The only requirement was that they had studied French in secondary school – essential since all teaching is in French.

Today, the school has 60-70 pupils, both French and Norwegian, in classes from primary level to the first year of further education. A nursery section caters from children from three to six.

Unlike Stavanger’s French-Norwegian Cultural Centre, which is subordinate to the French embassy, the school is independent. But it cooperates closely with the centre. The latter’s media facility is much used, and the pupils also use the centre’s premises to exhibit art they have created in class.

¹Mission Laïque Française er en organisasjon som driver skoler utenfor Frankrike hvor store franske firma opererer. Formålet er å spre fransk språk og kultur ved å oppmuntre til dialog mellom kulturer. Minestère des Affaires Ètrangères.

Like similar institutions elsewhere, it is subordinate to the French embassy. But unlike all other bodies of its kind, the cultural centre in Stavanger has introduced a form of bilateral relationship. Its job is not only to make France and the French language better known in the city, but also to raise awareness of Stavanger and Norway among the French.

The centre was inaugurated with due ceremony in 1981. The audience in Kongsgaten 54 included Einar Førde, minister of education and church affairs, Stavanger mayor Arne Rettedal, French ambassador Pierre Dessaux and Pierre Chouzenoux, managing director of Elf Aquitaine Norge. Visiting professor Jacques Blanc at the Rogaland Regional College (now the University of Stavanger) became the centre’s leader, with Nora Smedvig as his assistant. It took less than a year from the time the centre was proposed until it stood ready.

After two years, the centre outgrew the premises in Kongsgaten and a third floor was taken over. It moved in 1989 to modern facilities in Løkkeveien, which include a conference room, classroom, media library and film room. The new building was financed by Elf (now Total), and the company also contributes to the centre’s annual running costs.

According to general manager Marc Ordaz, the centre has a unique collaboration with Total and could not survive without its support. This is provided under a contract renewed every three years. “Total’s backing reveals the French mentality,” says Ordaz. “It demonstrates how important culture is for France and the French.”

The centre  had three permanent staff and 12 teachers under contract in 2007. Its three priority areas are cultural exchange, assistance for studies in France, and – most importantly – language courses in French. A large cultural programme is pursued, with events to promote French culture. Scholarships are awarded annually to students in the last year of further education who want to do an extra year of studying in France. The centre has contacts with five French universities in this programme. Language courses are provided at every level, from beginner to advanced conversation. Many Elf/Total employees and their families have had the pleasure of learning French at the centre.

Frigg proved to contain no less than 40 per cent more gas than had been estimated when it first came on stream. Seventy-eight per cent of these reserves were recovered. The recovery target set by the Norwegian government for gas from an offshore reservoir is 75 per cent, so that goal was met with a comfortable margin.

Frigg has meant a lot for Norway as a gas nation, for the Norwegian economy and for its licensees. Together with its satellite fields, it has also been highly significant for the UK. From the early 1980s, Frigg supplied almost a third of all gas consumed in the British Isles.

On the same day that the management side issued this statement, the Catering Workers Union (CAF) – part of the Federation of Oil Workers Trade Unions (OFS) – withdrew from the talks. The employers then broke off negotiations over all three agreements and announced a lock-out. The CAF called a strike on 6 April. In response, the employers instituted a lock-out of all workers covered by the three agreements. The OFS stepped up the strike on 19 April by calling out members of the Union of Operator Employees (OAF) on the UK side of Frigg and shut down gas deliveries to the UK.

Both sides were called in by Norway’s chief state mediator three days later for mediation. This effort broke down, and everyone was summoned to Arne Rettedal, then minister for local government and labour. He made it clear that they had one night to negotiate, and fixed a new meeting for the next day. Since the overnight talks also proved fruitless, the minister informed unions and management on 26 April that the matter would go to compulsory arbitration. This meant the unions had to resume work. Gas deliveries to the UK had then been halted for six days.