The R&D portfolio is structured in six programmes: Exploration, IOR - Reservoir Drilling & Well, New Development Solutions, Oil and Gas Value Chain, New Energy/New Ideas and Academia.

Research and development expenditure was NOK 2.24 and NOK 1.97 billion in 2008 and 2007, respectively. R&D expenditure is partly financed by joint venture partners of StatoilHydro-operated activities. Cooperation with external partners, for example academia, R&D institutes and suppliers, is crucial to technology provision. Typically, more than 50% of R&D expenditure is external work.

As conventional fossil fuels become ever harder to find, our company is increasingly setting its sights on remote geographical areas and developing unconventional hydrocarbon sources such as tight gas and oil sands and building growth platforms in carbon-neutral energy sources (renewables).

In exploration technology, we are developing new basin and prospect concepts that enable better global screening, exploration drilling and quantitative prediction of basin prospectivity. In addition, we are working on the identification, characterisation, and prediction of deepwater plays for exploration within complex geological settings. The incorporation of integrated geophysical and geological methodologies into next generation workflows results in continued improvement of subsurface imaging and interpretation. The goal is to considerably reduce the risk of drilling dry holes and enable us to determine the presence of commercially viable reservoirs prior to drilling.

For proven reservoirs, the aim is to optimise hydrocarbon recovery by improving ways of identifying remaining reserves and draining our reservoirs as efficiently and effectively as possible. Important success factors here are data integration and faster model updates for integrated operations across disciplines, organisational entities and geographical areas. The objective is to achieve more reliable, better and swifter decisions. We are developing fit-for-purpose modelling techniques for better and more efficient modelling of reservoir drainage, more efficient drilling and intervention solutions, and more cost effective well construction methods.

Innovative offshore field development solutions lead to a transition from topside to intelligent, remotely-operated, autonomous seabed facilities, coupled with ultra-long, subsea tie-backs and wellstream compression devices. However, we also see that compact processing technology developed for subsea applications has a substantial potential to improve efficient production on existing platforms. The aim is to improve regularity and performance for both new and producing fields. Furthermore, it is necessary to increase the knowledge about design and operation in ice-bound areas and in ultra-deepwater conditions. We have also started to develop technology for the processing and transportation of offshore heavy oil.

The opportunities in gas value chain technology may lie in gaining greater access to, and cost-effectively developing, difficult unconventional gas resources. We are developing technology for the processing and transportation of challenging gas as well as pipeline solutions for deep and ultra-deep assets. In supporting our M&M business we work on refining technology for handling challenging and unconventional crude oil.

The Calgary Heavy Oil Technology Centre was established early this year to strengthen our efforts in heavy oil technologies. The focus is on developing onshore extra heavy oil value chains and on improving recovery methods, water management and carbon capture.

The final demonstration of GTL technology on a semi-commercial scale was completed this year. This concludes a demonstration programme in which a Joint Venture consisting of StatoilHydro together with partners Lurgi and PetroSA has demonstrated the technology.

Our commitment to environmental stewardship is twofold: meeting our objective of zero harm to the environment by expanding our toolkit of environmental monitoring and integrated risk-modelling systems, and, secondly, by creating business in new energy sources. In addition to our present activities in offshore wind and biofuels, we plan to further investigate opportunities in renewable energy sources and carriers. We are working on cost and energy-efficient carbon capture and storage (CCS) with no harm to the environment, and we believe technological innovation is the key to meeting a profitable, sustainable, low-carbon energy future. Integrating trend-breaking technologies such as biotechnology and other new ideas into the value chains is also part of our research and development efforts.

As part of the research effort, we are pursuing an extensive collaboration programme with academia in which we gain access to world-class research within strategic areas for StatoilHydro. By stimulating the development of leading competence in the energy segment, we also secure long-term recruitment to science and technology.

By supporting collaboration between universities, research institutions and industry, we believe this also contributes to building a strong Norwegian petroleum cluster.