Author: Filip Fremo Minge

The Shell refinery at Risavika in Sola was completed two years later, while the Norsco base in Tananger became operational as early as 1966.

But things really took off once the Ekofisk field had been discovered in the autumn of 1969 and started trial production on 14 July 1971.

Operator Phillips Petroleum Company moved its offices from the Dusavik base outside Stavanger to Tananger in Sola, and Shell could finally start refining Norwegian rather than imported crude.

Sola’s population now rose steadily from 8 400 in 1965 to 15 000 two decades later, and jobs grew even faster – from about 2 000 in 1970 to almost 8 000 in 1985. That averages 10 per cent annually.

Phillips and Shell became cornerstone companies. A large part of their workforce, particularly in Phillips, worked offshore. In addition came newly established oil supply firms.

More jobs were also created in retail, public administration, education, health and social care, personal services and so forth.

Although traditional agriculture remained important for the local authority, the number of farmers gradually declined as a result of mechanisation.[REMOVE]Fotnote: This article is based on the chapter “Elverket i Oljealderen” in I det regionale spenningsfelt. Sola Energi 1913-1999, Kristin Øye Gjerde.

Boreskipet Drillship ligger ved kai på Norscobasen i Tananger (1968). Foto: NOM/Norsk Fly og Flyfoto

The “agio tax”

The sharp rise in Sola’s revenues was attributable entirely to the oil industry, and it found itself in an enviable position during this period. Tax revenues rose even faster than population and jobs.

To give an indication, the local authority’s overall income from wealth and income taxes rose from NOK 9.3 million in 1966 to NOK 198 million in 1990. The biggest growth came in 1978-82, when it averaged 39 per cent a year.[REMOVE]Fotnote: Sola local authority, plans.

The secret behind this sharp increase was the tax paid by the oil companies – primarily Phillips – on agio, or the percentage fee charged when exchanging one currency for another.

Under Norwegian law at the time, the companies paid tax on their interest income to the local authority where they had their head office. In making this rule, however, the government had failed to take account of the considerable sums involved.

As operator of the Greater Ekofisk Area, Phillips had placed capital to be used for new investment in banks around the world – particularly the UK.

These deposits yielded substantial interest payments, and tax was payable on converting this income into Norwegian kroner.[REMOVE]Fotnote: Toralv Torstenbø, former chief executive officer in Sola local authority, interviewed by Kristin Øye Gjerde, 22 February 2001.

Sola council is said to have almost gone into shock the first time Phillips paid this agio tax. It suddenly had more money than it could spend.

During the 1970s and early 1980s, Sola’s municipal income always exceeded the budgeted amount. Large sums could be transferred every year to a capital fund.

Since the local authority was in a growth phase, additional funding was needed for the big developments it faced. While the rest of Norway experienced a slump in the late 1970s, Sola continued in top gear without a sign of unemployment.

Net income tax revenues came to NOK 55.5 million in 1978, while net spending was NOK 31.9 million. And these fantastic results went on improving.

By 1982, wealth and income taxes yielded NOK 203.4 million – compared with a budget of NOK 146 million, which was upgraded to NOK 190 million during the year.

According to Toralv Torstensbø, the financial controller, agio tax accounted for almost half this amount – in other words, as much as the tax paid by all other enterprises, private individuals and industry in Sola.

Its chief executive officer became a little overweening. In his comments on the 1982 budget, he declared that it would be “natural for Sola local authority to feel a strong regional responsibility and not to be too strict about the traditional division of costs between state, county and local authority.”

In line with this open-handed policy, Sola paid for both road projects and an upper secondary modern school which the county council was supposed to fund.[REMOVE]Fotnote: Chief executive officer’s budget proposal for Sola local authority covering 1974-85.

Tightening up petroleum tax

This unexpected prosperity undoubtedly created some jealously in the neighbouring local authorities, and the media began to show an interest in the issue.

Local daily Stavanger Aftenblad interviewed Sola’s chief executive and controller in 1981, when its photographer took a shot which illustrated the boundless wealth – Torstensbø stood  showering hundred-krone notes over his colleague.

This story was not only read by the paper’s regular subscribers. The following day, 150 copies were distributed to members of the Storting (parliament).

That in turn prompted Centre Party representative Lars Velsand to make a passionate speech in which he described the position as a misuse of tax revenues.

He called on the government to intervene so that individual local authorities were unable to benefit in this way. Nor was he alone in finding it unreasonable that a small community like Sola should get so much money.

The result was an amendment to the Petroleum Tax Act on 11 June 1982, which specified that the proceeds from the agio tax should be transferred in future to central government.

Løfteskipet Uglen i aksjon ved Norscobasen i juli 1980. Foto: NOM/Norsk Fly og Flyfoto

Unfortunately, however, Sola had got used to consuming these revenues. It is easy to learn expensive habits, but not so straightforward to shrug them off again.

Matters had become a little unusual when the council’s executive board adopted the style of the oil company chiefs and took a helicopter outing during an ordinary budget meeting.[REMOVE]Fotnote: Oskar Goa, former chief technical officer in Sola local authority, interviewed by Kristin Øye Gjerde, 23 October 2000.

However, most of the tax money benefitted the general public. Paying for Sola upper secondary school and new national and county highways is an example of this.

The council also invested on local authority school buildings and community facilities such as the big sports complex at Åsen, with an outdoor athletics ground and two modern indoor arenas. Dysjaland and Tananger also acquired new sports arenas.

A new cultural centre built in central Sola has a distinctive architecture in brick and glass, with a grassed roof to blend with the surrounding Jæren landscape. With two stages and a public library, this became the community’s main venue for events and so forth.

The local authority thereby built up a very good infrastructure. Power cables were laid in the same trenches as water and sewage pipes, a network of cycle lanes was built and street lighting installed.

On the downside, virtually all these investments boosted operating expenses. The council’s running costs rose by an annual average of 30 per cent in 1978-84, with the biggest growth in the last three years of the period.

So the calls by Storting representatives to transfer agio tax receipts from councils to central government represented a real threat to local politicians.

Sola joined forces with other local authorities in the same position, including Stavanger, Oslo and Bærum as well as Rogaland county council.

A delegation met the Storting’s standing committee on finance to present their case, and secured a commitment to accept a phased reduction in revenues over four years.

The local authorities would receive 80 per cent of agio tax receipts during the first year, then 60 per cent, 40 per cent and finally 20 per cent.[REMOVE]Fotnote: Amendment to the Petroleum Tax Act adopted on 14 May 1982.

In reality, however, the run-down percentages were adjusted to extend over five years in annual steps of 80, 60, 20, 20 and 20 per cent. The total amount going to the local authorities was the same.

The arrangement was controversial to the last, and also uncertain because it had to be approved in each annual government budget.

Living within its means

After the tax change, Sola’s chief executive officer saw the writing on the wall. It seemed “to be unquestionable that [Sola] has seen its best days in purely financial terms and must return to setting tougher priorities for various assignments,” he asserted in connection with the budget process for 1983.[REMOVE]Fotnote: Chief executive officer’s budget proposal for Sola local authority, 1983.

It took the politicians a little longer to accept this reality, but they were forced to reduce investment and operating expenditures in the years which followed.

Cutting back on the new sports arenas and cultural centre was not very desirable. Nor was it pleasant to have to slow down. But savings had to be made, and long-terms spending plans were removed from the budget for possible reintroduction later.

A raft of measures were stripped from the budget in 1985, such as extensions to and modernisation of schools, sports arenas and swimming pools, a new somatic nursing home, housing for the intellectually disabled and sheltered housing. Grants for national and county roads were reduced.[REMOVE]Fotnote: Chief executive officer’s budget proposal for Sola local authority, 1985.

Once the government’s compensation scheme had ended, Torstensbø – now chief executive officer – told Stavanger Aftenblad that he did not want to paint too gloomy a picture.

“But it’s clear that we must set much more moderate financial priorities than we’ve been used to. To sum up the position, we were previously flush with cash and poor in facilities. We’re now flush with facilities and poor in cash.”[REMOVE]Fotnote: Stavanger Aftenblad, ”Alt blir dyrere i det rike Sola”, 19 May 1987.

Sola kulturhus fotografert vinteren 2004

Rogaland county council also raised the question of whether it would be possible to establish a permanent arrangement which allowed local authorities and counties to benefit from some of the tax revenues paid by local oil companies.

The council pointed out that it was otherwise normal practice for Norwegian companies to pay taxes to the local communities they were based in.

This request was turned by Labour finance minister Gunnar Berge because the councils concerned still benefitted from bigger tax payments by oil company employees and on property.[REMOVE]Fotnote: Stavanger Aftenblad, “Rogaland reiser skattekrav på ny”, 16 January 1988.

According to Torstensbø, this was only partly true. The big oil companies were not so significant for Sola’s income once the agio tax was excluded.

About NOK 2 million was received annually from Phillips, primarily in property tax. The most important taxpayers in the local authority were the roughly 90 companies at Aker Base. These were service providers such as Halliburton, Schlumberger and Baker Hughes.

At the same time, Sola acquired a steadily growing number of affluent residents and a growing share of its revenue came from income tax. Despite the cut-backs, it remained prosperous.

Åm was born at Årdal in the Sogn district of western Norway in 1944, and grew up in Oppdal and Volda/Ørsta where he proved an able pupil at school. 

He opted to study mining engineering at the Norwegian Institute of Technology (NTH) in Trondheim, graduating with honours in 1967. 

Åm’s first job was with the Norwegian Geological Survey (NGU), again in Trondheim, where he worked and conducted research for six years. One of his jobs was to interpret aeromagnetic measurements of sub-surface rocks made from the air, which provide valuable information on geology and prospects for finding petroleum. In a series of publications, he described the big sedimentary basins identified in the Skagerrak between Norway and Denmark and in the Norwegian and Barents Seas. 

He joined the Norwegian Petroleum Directorate (NPD) in 1974, serving as a section head in the resource department and a principal engineer in the safety department. 

That was followed by three years with Statoil, where he became the state oil company’s first vice president for research and development. His appointments at the time included chairing a research programme on offshore safety, which led to legislation enacted by the Storting (parliament) and a bigger research effort. 

Joining Phillips

olje og gassveteran knut åm,

Åm secured a job with Phillips in 1982 and was soon sent to the head office at Bartlesville in Oklahoma to get better acquainted with the company and its corporate culture. 

After a year in the USA, he returned to the company’s Tananger office outside Stavanger and became the first Norwegian to serve as offshore manager for the Greater Ekofisk Area (GEA). 

That put him in charge of 23 platforms, with responsibility for the waterflooding programme as well as the project to jack up a number of the installations. These major developments extended the producing life of the GEA and sharply increased estimates for recoverable reserves from its fields. 

Åm led this work during difficult times, with low oil prices and the need to implement cost savings and overcome substantial financial challenges. As if that were not enough, he also taught at the University of Bergen from 1985 to 1990 as an adjunct (part-time) professor of applied geophysics. 

First Norwegian chief executive

Knut åm,

After heading operations in the Permian and San Juan Basins at Odessa, Texas, from 1988-91, Åm became the first Norwegian president and managing director for Phillips Petroleum Norway. 

That put him in charge of 3 000 employees in the GEA as well as in Tananger, Oslo, Teesside and Emden. This was when a redevelopment of Ekofisk was planned, along with the future cessation and removal of old platforms.[REMOVE]Fotnote: https://www.fylkesmannen.no/globalassets/fm-rogaland/dokument-fmro/felles-og-leiing/brev-og-artiklar/fm-tale-til-knut-am.pdf 

By 1996, Åm was back in Bartlesville – now as vice president and head of all exploration and production in Phillips. He stayed in that job until retiring in the USA during 1999.

Offices and committees

But his working life did not end there. Appointments from 1999 to 2007 include membership of the Statoil board – and many similar posts can be mentioned. 

Åm has been president of the Norwegian Geological Council and the Norwegian Petroleum Society, and chair of the Norwegian Oil Industry Association (now the Norwegian Oil and Gas Association). 

He led the exhibition committee of the 1996 ONS oil show in Stavanger, and has chaired Bergen’s Christian Michelsen Research institute as well as the industrial council of the Norwegian Academy of Science and Letters.  

In addition to chairing Hitec ASA, he has been a director of several technology companies. 

Mention must also be made of the improved recovery committee appointed by the Ministry of Petroleum and Energy with Åm as chair. This produced a report in September 2010 which presented 44 specific measures for improving the recovery factor on the Norwegian continental shelf (NCS). 

Through his work and many appointments, Åm has been acclaimed for a combination of expertise, creativity and determination.  He also demonstrated the ability to tackle the requirements of Norway as a nation as well as the industry and its employees – not least with regard to the working environment and safety in a demanding and risky offshore industry. 

Optimist

In retirement, Åm is an optimist – with regard to the climate as well. “I’m very concerned with nature, but believe we should extract the resources it’s given us,” he told Otium in 2016. 

“Norway could have a long and good future in the oil and gas industry if people give it more support. Exploring for new deposits is important, but we should also seek to achieve a far better recovery factor from both new and existing fields.” 

“You can naturally concentrate on life’s negative aspects. Then everything’s simply awful. I think you’ll be a far happier person if you prefer to see the positive side of life. I call that self-motivation. We need more of that in the energy sector.”[REMOVE]Fotnote: https://api.optimum.no/sites/default/files/PDF/optimum-magasinet-2016.pdf 

Early promotion and trust followed, and he served as an offshore installation manager (OIM) for more than 33 years in the Greater Ekofisk Area. 

Plain-speaking

Kristensen recalls that he was a committed young man in the early 1970s – an open, curious and plain-speaking person who was not afraid to criticise health, safety and environmental (HSE) conditions. 

The working style he encountered offshore suited him well, ready as he was to speak his mind. “I’ve undoubtedly been a loud-mouth. I’m used to having zealous people in the Family With grand-parents and a father who served as mayors, which is perhaps why I don’t quite know when to keep quiet.” 

Thinking back to working conditions when he started in petroleum industry, he recalls living on Gulftide, Norway’s first production facility, and says it was fascinating. 

“This was an old jack-up rig, with the helideck installed on planks. We were four to a cabin, and things were pretty shabby. Primitive conditions prevailed, to put it mildly.” 

The workplace at the time was characterised by the presence of the Americans, and confusions frequently arose between them and those who were not particularly good at English. 

“It was very unusual,” reflects Kristensen. “We were trained up by the Americans, of course – they were the ones who knew about this business. There were a lot of misunderstandings among the Norwegians, people who pretended to understand the messages they were given about what jobs to do. Both serious and funny situations occured. Those of us who’d been to sea undoubtedly had an advantage in that we knew the language a bit better. The rest were fishermen and smallholders and ordinary people from the Districts in Western Norway who didn’t speak much English. Offshore terminology wasn’t easy for people who didn’t have the language.” 

He quickly grasped the ethos in this working environment. “The Americans often only gave you one chance. If you showed that you could cope with your job, you won trust, new opportunities and more responsibility.” 

Given his background in the Norwegian merchant marine, however, Kristensen reacted negatively to a number of the conditions which prevailed at the time. “I was one of the youngest then, and that wasn’t always easy because there were a number of older and more experienced people who felt they had a ‘monopoly of brains’,” he comments. “And quite a lot were pushy. “Working conditions weren’t orderly, with proper employment contracts like I was used to from my time at sea thanks to the Norwegian Seamen’s Union – unionisation and the like.” 

He adds that he is grateful for everything he learned from the Americans, but that they at the time were not particularly keen on unions and the Norwegian concept of collaboration between employers and employees. “They thought it was enough to enter into agreements on a man–to–man basis or with the company, and saw no need to organise this via trade unions.” 

Involved

Given his views, it is not surprising that he became involved at an early stage with the Ekofisk Committee by serving as secretary to Øyvind Krokvik, who was first head of this union. 

Kristensen explains that he has been committed throughout his career to involvement and worker participation and to good collaboration between unions, the safety service and management. That was particularly important during the early years of the petroleum industry on the NCS, he emphasises. His experience of union work accompanied him into various senior posts on Ekofisk. 

With a gleam in his eye, he says the following about his promotion: “Acquiring managerial responsibility early on may have had something to do with my involvement with the union. “Putting in place systems for worker participation and collaboration was particularly important in the early years of Norway’s offshore industry. 

“I played a part in establishing the parameters which govern industrial relations out on the field today, with unions and the safety delegate service.

I became the country’s youngest OIM at the age of 24, and served as a manager out there for 41 years.

They may have thought ‘he’s more trouble than we need, so we’ll just promote him up and then be quit him’.” 

Kristensen reports that he has been preoccupied throughout his managerial career with ensuring that “things are genuine” – that a manager must understand and personally be part of “the home team”. He explains that as the ability to understand a position from the standpoint of the various parties involved, and adds that he has thrived offshore with a living and working community. This he defines as one “where you get close to people, where everyone is seen and heard, and where they understand that they play an important role in reaching a common goal”.[REMOVE]Fotnote: Pionèr, ONS 2018: 8. 

It did not take him long to learn how to adjust his management style to the offshore environment, but admits that this approach has developed over the years. “The leadership culture which dominated on the platforms during the early years undoubtedly influenced me a bit. I was probably very inflexible and saw things in black-and-white, but have become more judicious and considered over time. 

“Nobody left my office earlier in any doubt about what I meant. I thought that saved a lot of time. But I can’t have been too bad, or I wouldn’t have held down the job for so long.” 

Strategy

Kristensen’s long service makes him unique on Ekofisk, and he has thought a lot about management. His expressed strategy has been to get people on side over HSE through commitment and integrity – and without any “second agenda”. 

“Working in the Ekofisk Complex with 600-700 people is an unusual experience,” he observes. “I held the same job as the man in charge for 20 years. “That means you’re ‘on stage’ the whole time, and attend 10-12 HSE meetings every week. You’ve got to get people committed, drive a doctrine and sell a message.” This involves getting what people have to concentrate on implanted in their hearts and minds so they can contribute to their own safety and that of others, he explains. 

“You must be genuine, and your own integrity must be order. You have to build trust, and not least display respect for your audience.” 

“What’s been a powerful help for me is that I’m on the home team. I’ve been a skilled worker myself and have been through most things.” 

Kristensen emphasises several times that he regarded the unions, their elected officers and the safety delegates as a resource in this work. 

“The tripartite collaboration pursued in the petroleum industry between government, companies and unions functions very well,” he concludes.  “This is about informing and involving people, and ensuring that decisions aren’t taken over their heads. Our company has achieved that in a positive way.” 

“The fact that Ekofisk is a mature field and ConocoPhillips is a mature company also has something to do with it. Cooperation with the Petroleum Safety Authority Norway and other authorities is also very good.” 

Kristensen denies that union-management collaboration has become more strained during the downturns experienced by the petroleum industry. “Strained and strained – we must adjust to external conditions and try to protect the jobs needed to safeguard the industry. But nobody’s ever been made redundant by this company. That’s worthy of respect. “

“Downsizing has been solved with severance packages. People have often been given early retirement. From that perspective, it’s been a privilege to work for an operator company.” 

Commitment

After almost 46 years with the company, Kristensen’s commitment to continuous improvement, good safety and high production regularity is as strong as ever. Recognising that substantial progress has been made in the HSE area over the years he has worked in the industry, he affirms that this issue is closest to his heart. 

“We’ve staked out the path as we’ve advanced. We don’t accept incidents and accidents. We take a completely different approach to risk today. Accidents which do occur are used for all they’re worth in an effort to say to ourselves: ‘this has actually happened, but it’s our duty to learn from it’.” 

Kristensen has personally experienced accidents and injuries at close hand, and thereby knows the importance of preventive safety work to protect people, the environment and equipment. 

He will never forget some incidents – and immediately mentions the Alexander L Kielland disaster in 1980 With 123 casualties. An article in local daily Stavanger Aftenblad as recently as 2012, with photos of all those who have died on duty on the NCS since 1966, made a big impression on him. 

Britain’s Piper Alpha explosion in 1988, when 169 people were killed, is another major incident he recalls. His conclusion is that the petroleum sector has not been a Promised Land for all. 

The former OIM proudly mentions a number of HSE improvements which have partly been the result of technological advances in the industry during his time. But he warns about hazards which still exist, such as vessels drifting out of control. A well-known incident on New Year’s Eve in 2015 made a particularly strong impression on him. 

A 150000 tons, unmanned barge had come loose and was threatening to collide with installations on Ekofisk. Several hundred workers from this field and neighbouring Valhall were flown to safety and production was shut down. The barge passed the platforms at a distance of about one nautical mile, but Kristensen found the actual incident and the threat it posed frightening. 

“Drifting vessels which come loose in rough weather, which can get pretty challenging out there, are perhaps the biggest hazard we now face. Luckily we have good procedures to handle such challenges.” 

Reminder

Such incidents and near-misses are regarded by Kristensen as a reminder that the petroleum industry is under an obligation to learn the necessary lessons. He points to the potential for learning from other industries, and emphasises the good collaboration which prevails across the company. Mechanical handling provides a good example, he says. 

“Things can go terribly wrong. After fatal accidents in the 2000s, we established a work group which held monthly meetings. I took part as technical manager for these facilities. We involved everyone in the logistics chain on land, at the base and on the platforms. That attracted so much attention and such great improvements that we’ve now managed to prevent virtually all undesirable conditions in this area.” 

Despite good systems and routines, colleagues on the installations are Kristensen’s most important reminder of the responsibility he has had as an OIM on Ekofisk. 

“Experiences from my early years meant that I have become particularly attentive to HSE – and I was involved in quite a lot, of course. But this mostly relates to the individual who gets injured on your watch and on your shift – in other words, the people you work with. They stood on the drill floor and worked so that the sparks flew around their ears. Having only two-three fingers used to confer ‘status’.” 

He notes that improvements have a lot to do with technological progress. Much risk has been eliminated by automating a great deal of the work which used to be done manually. 

“But we still have more than enough opportunities to injure ourselves. This has a lot to do with awareness – being present in the real world, making sure you’re focused. That’s actually expected for 12 hours at a time.” 

A respectful attitude to his big responsibilities and duties was maintained by Kristensen to his last working day. “Emergency preparedness is like being at war – you do what you’re told. But you feel it. Although we’ve trained so long at this, you’re still conscious of being responsible for several hundred lives. Taking a wrong decision could … You must act on the basis of the information you’ve got, not what you know many months later. When you tackle it, however, you get a sense of mastery at solving the problem together with an outstanding emergency response organisation on land. Ultimately, though, you’re the skipper on your own ship.” 

Time to reflect

Kristensen has finally retired from ConocoPhillips, giving him time to reflect over his own commitment and lifestyle offshore as it affected him and his family. 

“For my own part, I must say that it’s had a price,” he admits. “I couldn’t get involved in politics or organisations, for example. I was only at home half of the time. I followed up the kids when I was at home, of course, but never felt I could be active in associations and so on, contribute the way I’d have liked.” 

He has found the transition to retirement unaccustomed in many ways. “Simply remembering that I’m not going offshore is a big change, for example. I had to deal with so many challenges right up to my last day at work that it’s been impossible to prepare anything. I ought to have thought about and planned retirement a bit better, of course, but I’ll undoubtedly find something to do when I want to.” 

The aim of this facility – an extension to the Ekofisk South project – was to increase waterflooding on the southern flank of the Ekofisk reservoir in order to maintain oil and gas production. 

An amended plan for development and operation (PDO) of Ekofisk South was approved by the Ministry of Petroleum and Energy on 7 September 2017. 

This involved installing a new seabed template with four water injection wells, and represented a continuation of the well-established Ekofisk production strategy based on waterflooding.[REMOVE]Fotnote: https://www.regjeringen.no/no/aktuelt/okt-utvinning-pa-ekofiskfeltet/id2570011/. 

The template was installed in September 2017, with a technical solution similar to that used on the seabed facilities already installed – Ekofisk 2/4 VA and 2/4 VB.[REMOVE]Fotnote: Pionér, no 2, ConocoPhillips, 2018.

In addition to the structure itself, including wellheads and Xmas trees, the installation comprised control modules with umbilicals connected to the existing waterflooding system. 

The 2/4 VC facility receives injection water from Eldfisk 2/7 E, while power and control signals come from Ekofisk 2/4 M. It is run from the Ekofisk 2/4 K control room. 

When fully developed, overall injection capacity for this subsea installation will be 80 000 barrels per day through the four wells. 

The water pipeline and umbilical to 2/4 VB were extended to 2/4 VC. Well operations on the latter began on 24 May 2018 with a view to starting injection before the end of the year.