Bringing value down the pipeline

New York is known as “the city that never sleeps.” As such, its energy consumption is among the highest of any US city. 

And because New York City is so densely populated, it must also proactively combat potential air pollution. In recent years, Statoil has helped to meet both of these needs through the availability of natural gas.

Statoil views natural gas as an important part of a low-carbon future. With less than half the CO2 emissions of coal and far fewer airborne emissions, it is a compelling energy alternative. But for a population as vast as Manhattan, where can a sufficient source of natural gas resources be found? 

That answer was found in the hills of Ohio.

BRINGING MOLECULES TO MARKET

Ohio may be home to long rivers and rolling hills, but beneath the surface are two massive shale formations known as the Utica and Marcellus Shale.  

Statoil was one of the first international oil companies to enter the growing US shale play. In its pursuit to be the world’s most carbon-efficient producer, it was – and is – important that Statoil provide clean, cheap alternative solutions for energy needs in the US. 

Kevin Maule, a natural gas trading manager for Statoil, and Oddgeir Eskeland, a manager of energy trading for the company, were involved in initial conversations around US opportunities and in determining the best way to transport the natural gas to a high-demand market.

“It was important for Statoil to be able to take the gas to the market that needed it. The company made a significant decision in entering the Marcellus Shale play,” Kevin said, noting that the company did not want to become a ‘stranded producer’ with significant supply and no place to take it.

After significant market analysis, they selected New York City, a location with significant energy needs as well as a desire for cleaner-burning energy supply. Kevin and Oddgeir knew they would face challenges: the Spectra pipeline, which would transport natural gas from the Marcellus Shale, would be the first new pipeline to enter Manhattan in more than 40 years. The permitting process alone took four years to complete. But Statoil, determined to provide an alternative energy option to New Yorkers, persisted in its efforts.

Kevin and Oddgeir ensured Statoil had a significant vested interest in the pipeline rather than depend on someone else to handle the logistics behind getting the natural gas to market. The company made a 20-year commitment, including more than $70 million per year, to its role in the Spectra pipeline. According to Oddgeir, Statoil has the capacity to delivery roughly 10 percent of average annualized demand in the greater NYC area.

The winter following the first delivery of natural gas via the Spectra pipeline ended up being one of the coldest in recent memory, and Statoil helped to meet the season’s significant demand and provide a cleaner, more cost-effective solution to the region. Meanwhile, through the company’s long-term commitment to the Spectra pipeline, it has ensured a steady demand for its Marcellus natural gas for two decades. 

It was important for Statoil to be able to take the gas to the market that needed it. The company made a significant decision in entering the Marcellus Shale play

Kevin Maule. Natural gas trading manager. Statoil

NEW USE FOR THE LAND

Statoil also ensures fair dealings with those who own the land on which they operate.

Raymond Bauer, a landowner and lifelong resident of Ohio, leases his land – which sits on the Marcellus Shale – to Statoil. He has seen the benefits of leasing his land to Statoil. “Financially, it’s been a real blessing to us,” said Raymond. “We have two boys and a girl who are married with families, and we’ve been able to help them – and if it weren’t for this, we wouldn’t have been able to.”

In addition to financial benefits, Raymond appreciates that the company has communicated openly and honestly with him and ensures its operations have a minimal environmental impact. The land Statoil is leasing from Raymond holds personal value to him. 

“I was born and raised on that piece of land. That was my grandfather’s place, and it’s been in the family for years,” Raymond said. “Statoil has been a good steward of the land and respectful of the land I grew up on. If there was anything they had a question about, they’d always come talk to me before acting.”

According to Raymond, Statoil’s involvement in the Spectra pipeline project has brought renewed life to their community, too.

“[Statoil’s involvement] has been a big boost to this county and a lot of people,” said Raymond. “It’s nice to drive around now and see families and people buying new vehicles where they were never able to before.”

I was born and raised on that piece of land. That was my grandfather’s place, and it’s been in the family for years. Statoil has been a good steward of the land and respectful of the land I grew up on.

Raymond Bauer. Landowner and lifelong resident of Ohio

BRIGHTER LIGHTS FOR THE BIG CITY AND BEYOND

In addition to providing benefits to landowners in Ohio, Statoil’s delivery of natural gas has paid off for its shareholders as well as the citizens of New York City, who today enjoy a cheaper and cleaner burning fuel source. According to the New York Post, natural gas usage saved New Yorkers more than $500 million between November 2013 and October 2016. But the benefits don’t end there. 

As the air above one of America’s most recognizable skylines becomes clearer, it is easier to see the bright future ahead for natural gas energy sources. It’s yet another example of how Statoil is bringing value to its stakeholders – from Ohio farmers to Manhattan residents to Statoil shareholders. And it’s a picture of how we can all receive value from a low-carbon future

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