Norway’s Equinor launched its first energy transition plan in 2022 detailing how it intends to achieve net zero by 2050.

Its roadmap includes a 2030 target to halve emissions from operated oil and gas fields and to invest over 50 per cent of gross capital expenditures into renewables and low-carbon markets.

But the past year has highlighted that energy supply must be not only cleaner, but secure and affordable as well.

For Equinor, that means a transition underpinned by its traditional business: oil and gas.

The company began producing from the Norwegian Continental Shelf (NCF) 50 years ago and its production from the NCF is still integral to western Europe’s energy supply. It also operates a network of gas pipelines to Germany, France, Belgium and the U.K.

Its strategic role as secure supplier to Europe was amplified in 2022 when it became the continent’s leading gas supplier, after deliveries from Russia’s Gazprom were cut amid the Ukraine crisis, an event that pushed European gas prices to record highs.

Equinor posted record net profits of US$28.7 billion for 2022, exiting the year with total output of 2.05 million boe/d in the fourth quarter. The company expects production to increase three per cent in 2023, rising through to 2026 on the back of sustained annual investments worth $8.5–$9 billion this decade.

Transition still on track

The events of 2022 haven’t altered Equinor’s transition plan, which is based around three pillars: renewables; low-carbon solutions such as CO2 storage and hydrogen; and reducing emissions from oil and gas operations.

Its current focus is on the offshore wind segment. Equinor generated first power in 2022 from the floating offshore Hywind Tampen wind farm, which will supply electricity to the Snorre and Gulfaks petroleum fields. Another project, the world’s largest offshore wind farm called Dogger Bank in the U.K., is set to begin production in 2023.

The goal is to achieve 12-16 gigawatts (GW) of installed capacity by 2030 from its renewables portfolio, which spans both local and international markets, including the U.S.

More projects are planned. Equinor is assessing seven offshore wind projects off the Brazilian coast, alongside Petrobras, with the potential to generate up to 14.5 GW.

The renewables portfolio also includes solar power and battery storage projects.

In carbon capture, its Northern Lights CO2 transport and storage scheme — Norway’s first licence for CO2 storage on the NCS — is expected to receive first gas in 2024.

The company has also progressed projects to reduce emissions from oil and gas activities: average CO2 emissions from operated upstream production in 2022 was 6.9 kg per boe.

Building on oil and gas

The European Union (EU) sees Norway as a long-term provider of oil and gas during the coming decades as it manages its own transition.

The Ukraine crisis has brought fossil fuels back to the forefront, and there is now a recognition they will be needed for longer. Europe is looking for energy security, said Equinor chief executive officer Anders Opedal.

Yet there is a balancing act. Despite a commitment to fossil fuels, there is an understanding that, long-term, all scenarios show a need for decarbonized energy.

More long-horizon thinking is needed given the costs, technology, and logistical constraints embedded in the transition.

The licence for Dogger Bank was signed in 2011 — taking eight years to reach final investment decision.

In January, Equinor announced plans with RWE that would see up to 10 GW of blue hydrogen produced in Norway and then to be exported by pipeline to Germany by 2038.

Upstream investments

Equinor’s investment in fossil fuels provides stability in the interim, with output expected to plateau and trail off toward the end of the decade.

During 2022, Peregrino Phase 2 in Brazil came onstream, alongside Johan Sverdrup Phase 2 and Njord Future on the NCS.

Aggressive drilling will see 35 exploration wells in 2023, mostly around established infrastructure.

The company also continues to invest in its operations in the Barents Sea and Arctic Circle, where several discoveries have been made.

That includes additional investment in Hammerfest LNG to secure operations to 2050.

The plant was restarted last year after a fire in 2020, but during normal production delivers 6.5 billion cubic metres (bcm) per year.

In December, Equinor brought onstream Askeladd Phase 1, a Snohvit field satellite, to bring 18 bcm of gas and two million cubic metres of condensate to market via the Hammerfest LNG plant, in Norway’s far north.

Investor friendly transition

The success of Equinor’s approach — using fossil fuels as a platform that generates the revenues to invest in wind and other low-carbon areas — will be vital for Europe’s energy stability, as the continent adjusts to decarbonization and moves away from Russian gas.

Achieving an investor-friendly transition, one that makes returns on a mixed portfolio of assets and technologies, will be another major test — one that will resonate with all North American producers grappling with similar challenges.