The power requirement for gas compression will be limited for the two years, and we are confident that in cooperation with the Norwegian authorities we will ensure stable and predictable production from Melkøya in this short period. We will optimise and adapt power demand for operations and compression to ensure stable and optimal resource utilisation.

Our assessment today is that the impact on the finances of the project is acceptable. Melkøya produces very important gas volumes, the plant secures important jobs in the north and the project will reduce emissions by 850,000 tonnes of CO₂ annually.

As we understand it, the partnership will pay for the operation of the turbines between 2028 and 2030, but Equinor's assessment is that the economics of the project remain acceptable.

We are confident that the authorities will facilitate access to power so that we can cut emissions from Melkøya, while maintaining important gas production and securing jobs in the north.

The power we produce today is used by Hammerfest LNG. In a potential emergency situation, this will be regulated by contract.

With this approval, the project is moving forward. As of now, we see no need to change the timing of contract awards.

We have a licence to operate the gas turbines until mid-2033. In our plans, we had taken into account keeping them as back-up for two years, until 2030. The authorities will now consider whether it is necessary to keep the turbines on standby until the end of the licence period. The approval letter states:

"If considerations for the power and/or power balance so indicate, the Ministry will, before 1 January 2030, enter into dialogue with the licensees to find agreement-based solutions to ensure periodic operation of the existing energy plant at Hammerfest LNG until the expiry of the licence at the plant in 2033. Conditions stipulate that the licensees shall contribute to such a contractual solution. A contractual solution may, for example, be for the licensees to operate the facility for special periods or for the state to take over the facility. An assessment of the need for such a solution will take place no later than 2028."

It is too early to say anything about the economics of this. We will have to revert to that if it becomes relevant, in which case it will be decided in 2028.

We do not want to speculate on this, and we have been asked to wait for electrification until 2030.

Efficiency will not be compromised by usage when on stand-by.

We have reserved capacity totalling a maximum of 400 MW (HLNG currently has 50 MW) from Statnett when a new 420 kV power line is in place between Skaidi and Hyggevatn. This is sufficient to ensure gas production with low greenhouse gas emissions from Melkøya up to 2050, including power requirements for future increased compression needs. Although compression will eventually require more power, the major power demand is related to electrification of the processing plant.

The authorities have asked that we wait for electrification until 2030. We are confident that the authorities will facilitate access to power so that we can cut emissions from Melkøya as planned and required, while maintaining important gas production and securing jobs in the north.

Hammerfest LNG's estimated future consumption is up to 3.1-3.3 TWh per year. Today, we use around 0.2 TWh. In 2021, Finnmark produced 2.5 TWh and consumed 2.3 TWh of electricity. (Source ) In the price area NO4 covering Northern Norway, the power surplus in 2022 was 10.2 TWh (source ).

The Government launched a power and industrial boost to strengthen the grid and power production in Finnmark, at the same time as they approved the plan for the Snøhvit Future project, where they will develop as much new power as the increased power demand from Hammerfest LNG (350 MW).

We have complied with current regulations and applied for reservation in the power grid for a total of 400 MW, which we have received. Statnett has now been granted a licence to build a power line between Skaidi and Hyggevatn, and Equinor and our partners in Snøhvit are contributing more than NOK 400 million in construction contributions. We have also received approval for amended plans for Snøhvit and Hammerfest LNG, which entail electrification from the government, in addition to receiving approval for a power cable from Hyggevatn to Meland and a subsea cable over to Melkøya. However, this approval requires that the transition to electric operation be postponed by approximately 1 1/2 years to allow time for development of new power and strengthening of the grid. The approval also allows for today's gas turbines to be on standby until 2033 if the power situation so requires. Statnett and the Norwegian Water Resources and Energy Directorate (NVE) must answer how power access is regulated.

The conversion of power supply to operation with power from the grid frees up about 5.8 billion Sm3 of gas that can be sold in the market.

The expected net present value before tax is estimated at NOK 56.3 billion at an rediscount rate of 7 percent. Investments in Snøhvit Future are expected to be repaid by 2030, about two years after production start-up. The mitigation cost is estimated at NOK 1,700 per tonne of CO₂.

The break-even price before tax is estimated at USD 22.8 per barrel of oil equivalent.

In purely economic terms, the costs are almost equal if the plant runs on gas or electricity. In other words, we are not electrifying the plant for financial reasons, but to cut emissions. However, the transition from gas to electricity as an energy source releases gas that can be sold and contributes somewhat to the total gas production at the end of the plant's lifetime.

Snøhvit Future is more than just electrification. The project also includes land compression. As the gas in the reservoir is produced, the pressure decreases and the well stream needs help to reach the facility. That is the purpose of onshore compression – it simply ensures that the gas reaches the plant. The earnings are related to the fact that we can keep production at Melkøya at plateau, therefore it is estimated that the project has been repaid in two years.

This is an integrated project, but an approximate distribution is NOK 6.2 billion NOK on onshore compression and NOK 7 billion on conversion to operation with power from the grid at Hammerfest LNG, including grid connection at Hyggevatn substation.

The Snøhvit Future project triggers a need for more power for the Melkøya plant. Against this background, and in line with current regulations, Equinor and our partners in Snøhvit will contribute approximately NOK 400 million to the construction of Statnett’s planned power line from Skaidi to Hyggevatn.

Our estimates indicate a total cost of about NOK 37 billion (compared with NOK 13.2 billion for the selected project). We know there are different opinions on this cost estimate, but this is based on the knowledge we as operator have about the plant.

The chosen solution has been matured over several years and we have considered various alternatives, including full-scale CCS and partial electrification with CCS. A full-scale CCS solution was studied in 2009-2010.

Full electrification and partial electrification with CCS were studied further. Due to technical complexity, costs, area considerations and high implementation risk, partial electrification with CCS was also abandoned when selecting a concept for the Snøhvit Future project in 2019. Several of the same reasons led to the exclusion of full-scale CCS after the earlier study. In 2018-19, a new assessment of full-scale CCS was made. The conclusion from 2010 was confirmed.

It is extremely complicated to convert a plant that is already in operation for CCS. Although CCS has come a long way as a technology, CO₂ capture from flue gas is still not an off-the-shelf product. Technical complexity drives costs and increases execution risk, i.e. the possibility of overruns and delays. Moreover, it is a very space-consuming redevelopment for a facility located on an island with limited available area.

You can read more about why we and our partners have chosen electrification here .

We, our partners and the authorities all have a responsibility to carry out profitable projects, and 85 per cent of the revenues from Snøhvit and Hammerfest LNG go to the Treasury through tax and the state's direct ownership interest (Petoro). However, cost is far from the only challenge in choosing CCS, in this case, at an existing plant. Technical complexity and high implementation risk were also important arguments.

Quite the opposite! For Equinor, CCS is an important measure to cut emissions in the industry. However, it still needs to be done on the right projects.

We play a key role in Norway's flagship CCS Longship project, where the government, together with major industrial players, is contributing to new technology development within capture, transport and storage of CO₂. Equinor is a key player in the Northern Lights part of the project, which includes transport and permanent storage of CO₂, while other industry players are now building Norway's first facility for capturing CO₂ from flue gas.

We are also involved in other CCS projects outside Norway. We are developing the Northern Endurance Partnership together with operator BP in the UK, where we are maturing CO₂ transport and storage solutions off the North Sea coast. We are also looking at building pipeline and ship solutions that can transport captured CO₂ from industrial customers in northwest Europe, with the possibility of storing their CO₂ under the seabed on the Norwegian continental shelf, such as in the Smeaheia licence. Furthermore, we have acquired a stake in one of the largest CCS projects in the US, Bayou Bend, in Texas, where we, together with operator Chevron and partner Talos, will develop a CO₂ storage site where refineries and other customers in the Gulf of Mexico can have their emissions transported and permanently stored. These are early-stage projects that require major investments and decisions on new infrastructure to be realised.

A CCS plant on the gas turbines on Melkøya will be able to use the same technology as a capture plant at Klemetsrud and Brevik. The difference lies in the CO₂ content of the gas turbine exhaust. At HLNG, the CO₂ content of the exhaust gases is 4%, while Brevik and Klemetsrud have 10%. The dimensioning and cost of CCS per tonne on HLNG will therefore be higher, and the CCS facility more complex.

Firstly, emissions in Norway will be cut by 850,000 tonnes of CO₂ annually, an important contribution to reaching Norwegian climate targets. We remove one of Norway's largest emission points, and it is difficult to succeed with national climate targets without doing something about the major emission points.

Emissions from Hammerfest LNG are covered by climate quotas, but a reduction in Norwegian emission sources will also result in fewer such allowances. When emissions are reduced, allowances become redundant and EU allowances are abolished. In this way, electrification contributes to reducing emissions in the European energy system.

The main purpose of the EU cap-and-trade system is to stimulate emission cuts in Europe in line with the Paris Agreement. Electrification is a measure that shows that the system stimulates reductions in CO₂ emissions. The cap-and-trade system will approach zero in the long term and will be gradually tighter. Equinor has long supported climate policy measures such as carbon pricing to stimulate emission cuts.

On commission from Offshore Norway, Thema have studied the effect of electrification on the Norwegian continental shelf on global greenhouse gas emissions . They conclude that electrification of Norwegian oil and gas installations reduces Norwegian, European and global greenhouse gas emissions. This is due to a combination of market effects in the gas, power and cap-and-trade markets.

In their report, Thema have estimated that the electrification of Hammerfest LNG will reduce the demand for allowances by 59-75% of the emission reduction.

70 percent

5 gas turbine generators, each with a generating capacity of approximately 45 MW. The maximum power delivery from the power station is approximately 225 MW.In addition, about 140 MW of thermal energy is recovered from the exhaust gas from the gas turbines.

As of now, we envisage operations on Melkøya towards 2050, with plateau production until about 2040.

Since the start, the development has been planned in several phases in order to adapt production to the processing capacity at the plant, simply provide replenishment to the plant gradually. The total development comprises the Snøhvit, Albatross, Snøhvit North and Askeladd structures. In December 2022, production started from Askeladd, now we are developing Askeladd Vest, which will provide replenishment to the plant on Melkøya before onshore compression starts up in 2028 as part of the Snøhvit Future project. Expected operations towards 2050 are largely about future compression both onshore and seabed to maintain flow from these fields to Melkøya. We have taken into account future power needs in the reservation we have now totalling 400 MW.

Together with other licensees in the area, we are contributing to the work that Gassco, as architect for Norwegian gas infrastructure, has been tasked with leading on gas robbery alternatives from the southern Barents Sea.

An important task ahead is to explore the area in order to uncover as much profitable and recoverable resources as we can. This is a prerequisite for being able to optimize infrastructure solutions for production and export from the area.