Boomtown on the Barents

Hammerfest was a struggling fishing village deep in the Arctic Circle. Then the energy company came. Then the Russian fighter jets.


in Archive


The dingy waiting area at gate 25 in Tromso, Norway, with its stained cloth seats and strewn candy wrappers, could be anywhere. Except for the signs in both Norwegian and Russian. And if the passengers waiting to board aren’t suited up in collars and pinstripes, then many of them are bundled up in all-weather jackets emblazoned with the logo of StatoilHydro, the huge Norwegian oil and gas conglomerate.

I’m the last to board and opt for the middle seat in the back row, bookended on either side by empty seats. Two men in slacks and collared shirts occupy the windows. “Best seat on the plane,” the man to my left says, somewhat flirtatiously. I soon learn he’s a Slovenian living in Athens and ask him what a person living on the Mediterranean would be doing on a flight to Hammerfest, 600 miles above the Arctic Circle. He responds by rubbing his thumb, index, and middle finger together — the international gesture for money.

The man and his younger colleague to my right, a recently minted MBA rookie, work for Maran Gas Maritime, the gas division of the Greek giant Angelicoussis Shipping Group. Maran Gas owns five liquefied natural gas (LNG) ships, two of which were added to the fleet this year. We talk about the South Koreans’ expertise in shipbuilding and the superior sunshine in the Greek climes when the Slovenian explains with blurry-eyed despondence that it’s not easy getting to Hammerfest from Athens. Athens to Frankfurt to Oslo to Tromso to Hammerfest: it’s a long way to go for a one-night stay in a $300-a-night hotel on the storm-whipped Barents Sea. Apparently, tomorrow morning’s face-to-face with StatoilHydro is an important one.

As the flight attendant approaches with a cart of snacks and duty-free perfume, the man asks me the purpose of my trip to Hammerfest. I explain — no notebook in hand — that I’m a journalist working for an American magazine. He quickly drops his buddy-buddy ways.

“I’m weary of journalists,” he says, pausing. “Especially the female ones.”

I ask him why.

“It’s not what you say, it’s what you write.”

As we descend into Hammerfest, an orange flame passes across his window. Then an island with the light intensity of Las Vegas comes into focus, along with a quadruple-domed ship I will later learn is the 945-foot Arctic Princess. Just over once per week, for the next 35 years, the Arctic Princess and other vessels like it will sidle to this island for a fill-up and then steam onward to receiving plants throughout the world, including Spain and France, but primarily to a plant in Cove Point, Maryland, where the gas will then be distributed for heating, cooking, and electricity throughout the mid-Atlantic United States, as far north as Boston.

As the plane approached Hammerfest, I couldn’t help but be reminded of television footage during the Gulf War, when flames from burning oil wells in Kuwait ubiquitously flashed across our television screens. The single flare outside the plane window raged unflinchingly against the inky sky. Except this wasn’t the oil fields of Saudi Arabia, and crude oil was not falling from sky. This was the island of Melkoya, the nerve center for Snohvit, or Snow White, the northernmost liquefied natural gas facility in the world, built and operated by Norwegian energy company StatoilHydro. And the nearest city wasn’t Riyadh or Kuwait City — it was Hammerfest, a town of 9,407 in Finnmark, the northernmost county in peaceful, egalitarian Norway, a country where its 4.7 million inhabitants benefit from the second highest GDP per capita among all OECD countries.

Norway is Europe’s Saudi Arabia. Last year, it was the world’s 10th biggest oil producer and the world’s third biggest oil exporter behind Saudi Arabia and Russia. But this flame has nothing to do with the burning of black gold over which wars are being fought in the Middle East. This flame has to do with one acronym — LNG, or liquefied natural gas, which is on its way to becoming the new oil, except it burns more cleanly and in the past has been far more expensive to process than crude. However, with oil now approaching $95 a barrel, natural gas consumption across the globe will continue to increase. According to the United States Energy Information Administration, the U.S. will need to import about 20 percent of its natural gas by 2030, a sixfold increase from current imports. What’s more, as oil and gas reserves in more agreeable latitudes begin to get tapped out, the compass will continue to shift northward — toward the North Pole — where it’s believed that untold amounts of natural resources lie below. Thus as global warming continues to bake land and melt ice, nations like America, Canada, Russia, Norway, and Denmark begin strategizing power plays in zealous pursuit of potentially lucrative booms like my seatmate.

From the plane window, my jaw is agape by the sheer size of the Arctic Princess, a behemoth piece of floating aluminum and steel almost three times the length of a football field, but the man tells me not to be overly impressed. “That’s a small one,” he says. Our final interaction is outside baggage claim in Hammerfest’s two-gate airport, where he’s miffed that the driver his secretary arranged ahead of time hasn’t shown up. He heads outside for a smoke and bids me farewell by suggesting I meet his junior, with whom I’d also chatted on the flight, for dinner later that night at the hotel. I didn’t show up.

Hammerfest’s brief history goes a little something like this. It was first a fishing hub, and then it wasn’t. Geographically speaking, its location is key not only because it’s a portal to all points north, east, and west, but also because its port remains ice-free year-round. The population of Hammerfest is resilient and wholly familiar with hardship. Their town has been rebuilt twice in just over a century — the first time in 1891, after a massive fire decimated the hamlet, and the second in early 1945, after it was looted and burned by the retreating German occupiers.

Hammerfest’s prosperity peaked in the 1960s, when the fishing industry was at an all-time high. But after that, the town was on a steady decline for decades with fewer prospects than a dugout canoe made of gum and popsicle sticks. By the late 1990s it bottomed out entirely. The young people were bolting southward in swarms before becoming ensnared in body-numbing jobs in dying fish factories. Between July 2000 and January 2002 alone, the town lost 240 of its then 9,260 people. The water pipes were disintegrating along with its schools, chips of paint flaked from its wooden houses, and the mortality rate outnumbered the births.

All this time, however, vast reserves of natural gas sat beneath the Barents Sea, and were finally discovered 90 miles offshore by StatoilHydro. The company tried to develop the project twice before 2000 but failed for two reasons: The technology wasn’t developed enough and, more importantly, there was no market to sell the processed gas. So despite sitting on billions of dollars worth of natural resources, the city’s population limped along on fish and a little tourism. For 25 years the city clinched its fists. There were no safeguards to prevent Hammerfest’s population from further evaporating. There was only one hope: an industrial-sized fairytale called Snohvit, or Snow White. With the click of a mouse on August 21 this year, all of Hammerfest’s fair-skinned and red-lipped fairytale wishes came true when the first flare-off of natural gas from the $11 billion dollar project illuminated the night sky like a bolt of lightning.

The plant had been fired up for just over a month when I arrived, and the engineers and technicians were still in the tweaking stage, fine-tuning the controls and adjusting the stream flow with the anxiousness and excitement of teenagers learning to drive.

Barring the almost ubiquitously soupy clouds, rain, and snow, almost everywhere in Hammerfest has a view of the sea. And right smack in the middle of the seaview is the island of Melkoya, home of Snohvit, only two and a half miles from the town center and accessed by an underwater tunnel. From afar, the island resembles a low-profile battleship: gray, industrial and intimidating as hell. The island was privately owned before Statoil snatched up the land for a rumored $1.3 to $1.5 million, a mere grape in the 247-acre natural gas processing vineyard that is estimated to reap as much as $3.2 billion a year in potential income until 2035. Now, where a handful of red and white wooden farmhouses once stood just five years ago is a palpitating ganglion of organized chaos. And Melkoya is really only the motherboard. The natural gas is currently piped in from nine subsea wells in three fields, which will increase to 20 wells as time progresses. There are no fixed platforms or manned bases controlling the wellstream — everything is underwater — and controlled by a few clicks of a computer mouse located on shore.

“There were no back-up plans if the government said no. If Snohvit hadn’t have come, it would’ve been catastrophic,” said 37-year-old Mayor Kristine Jorstad Bock, who moved with her husband to Hammerfest in 1995. “When the government said go,” she snaps her fingers, “overnight the society turned from being very negative to very positive.”

Norway and Russia share a 122-mile border through the lush Pasvik Valley, home to the highest density of brown bears in Norway. In the far north, where East meets West, Russians and Norwegians have had a cordial relationship since the fall of the Soviet Union despite long-standing disagreements over fisheries and a disputed zone in the Barents believed to be packed with huge reserves of oil and gas. This year, though, Russia has been flexing its muscles in a way that smells faintly of its Cold War tactics. As of November 9, Norway’s military has dispatched fighter jets 42 times this year to monitor Russian military planes off its shores, 32 since the end of June. Some of those planes have been documented to be carrying missiles. “But at no point have they broken into our airspace. They have done nothing wrong according to international law,” said Lieutenant Colonel John Ogland, a spokesperson for National Joint Operational Headquarters. But that’s just in the air. “There has also been larger naval activity in the Barents Sea this summer than we have seen for some time,” Ogland said. “I don’t want to be any more specific than that.”

According to a story published October 1 in the International Herald Tribune, a leaked report to local Norwegian media from the chief of the armed forces considers a scenario in which Russia’s quest for oil, gas, and fisheries challenges its western neighbor. This potential scene spells out little help from NATO should a “serious conflict” arise. The IHT quotes Norwegian General Sverre Diesen as saying in the report that there was no danger of war, “but there are gray zones.”

Almost 60 Russians live in Hammerfest. Yet the neighboring tribes co-exist peacefully — or at least as far as the residents are willing to disclose. Several organizations were founded for the sole purpose of forging greater Russian-Norwegian bonds, including PetroArctic — founded in 1997 to help increase Russian and Norwegian cooperation with future StatoilHydro projects in northern Norway and the Barents — and ProBarents — an organization to help create new local and regional business opportunities from the North’s oil and gas industries.

When I interviewed Mayor Bock, she couldn’t explain why her Russian neighbors had been flying their military aircraft around her coastline and greater Europe recently. “I don’t know,” she says, looking down briefly at her desk before responding. “I don’t think that’s new, they’ve always done that because they know what the Americans have in Vardo (the Globus II radar station in Vardo, Norway’s easternmost town, about 40 miles by sea to Russian territory) and in the area. They know we watch them.”

Later, I speak with the town’s environmental adviser, Tom Eirik Ness, who was more frank: “Nobody disputes that the last reserves of oil, gas, and fisheries are up here. This will be a very hot area in the future with politics and the military, and I hope there will not be any war.”

Regardless, just about everyone in Hammerfest will explain that the arrival of Snohvit was “like winning the lottery.” Of course, the people of Hammerfest will also insist that they live in the world’s northernmost city, though this fact is disputed by several other northern burgs from Norway to Alaska.

Hammerfest may be closer in distance to the North Pole than it is to London or Paris, but no longer is it a crumbling one-horse town. For starters, there are at least 10 salons in which to get your hair cut. Though neither Barneys nor Burberry have arrived, it’s possible to get a fake tan, a tattoo, and a new hot tub in the same day from stores just a few hundred feet from one another on Strandgata, the town’s main drag. Earthier types can buy a yoga mat at InterSport for their thrice-weekly class at the local gym and pick up a bottle of organic rosewater shampoo and a liter of Rice Dream at the natural foods store if they need to stock up. Aspiring bodybuilders can buy whey protein isolate in quantities by the kilo and I can check my e-mail on the wireless connection at Peppes Pizza, the Norwegian equivalent of Domino’s, in the Nissen Hammerfest Senter, the new shopping mall whose top two floors double as office space, or “mini Wall Street.”

Everything in the left window of the O. Nilsen A/S toystore is pink. The Tropical Bling Barbie is wearing pink, the Barbie Chat Divas are wearing pink, the Bratz Fashion Pixiez are wearing pink. And there isn’t just one of each in the window, there are stacks of five or six. But it’s not until you step inside the two-story toy store and browse among the orange parquet aisles that you see just how much merchandise third generation owner Oli Nilsen has amassed. And not just toys, cribs, and baby carriages, but French coffee presses, cookie jars, and enough candles to set the town on fire a third time. “Business has never been better,” says Nilsen, who lives in the building’s uppermost floor with his family. “Snow White has so much to say for us. We’ve been waiting for this since the ‘70s. The alternative was not good.”

Just a few steps away from the entrance of Hammerfest Kebab, a greasy walk-up joint run by one of the 45 Iraqis in town, is the Qa café, an eatery and coffee shop that could be a very distant ancestor of Starbucks, minus the chain part. It’s one of the only places in town that serves vegetarian dishes, and where espresso comes from a real Italian espresso machine rather than an all-in-one single-button wonder. I ate there almost every day, and sometimes more than once, which almost qualified me as a regular. I made the mistake of giving one of the guys behind the counter a bill too large to make easy change and apologized self-effacingly for the “foreigner screwing everything up.” “Don’t worry,” he assured me in perfect English. “I’m a foreigner, too. I moved here from Finland last week.”

In fact, the town is in such desperate need of help that three people, including the mayor, asked me — somewhat jokingly, but still — if I would be willing to move to Hammerfest to work. The bottom line is that the labor force isn’t big enough locally to fill all the jobs. Everyone who can work, does work. Many of the construction workers commute from Alta, a two-hour drive south, every day.

The cacophony of jackhammers in town is incessant, and their accompanying operators are town fixtures in rain, sleet, and snow. A new culture center is being built by the harbor, underground water pipes are being repaired, schools are being renovated, a new kindergarten is going up, and plans are in the works for a new soccer stadium and a new home for the elderly. It’s perhaps no coincidence that the new Re/Max real estate office occupies the ground floor of StatoilHydro’s Hammerfest office. One new house was built in 2002, as compared to 230 in 2005. The housing market has ballooned and most homes have appreciated at least 100 percent. And it’s only the beginning. For the next three decades, no less than $22 million a year will get pumped directly back into the community thanks to Snohvit’s property taxes alone.

Hammerfest resident Knut Iversen returned to his hometown of Hammerfest in January after more than 20 years away. His return was motivated by equal parts family, optimism, and job creation. The former professional handball player is 50 percent of the two-person Hammerfest Tourist office, arguably the only sector that took a major hit during the construction of Snohvit since there were few rooms in town for tourists since they were mostly occupied by workers.

“I think this whole project is all a little bit of a political play by the national government because the whole region had problems. The population was going down, people were leaving,” Iversen says. “The Norwegian government has a lot of money. I’m not so sure it was so necessary to take this gas to survive. I’ve heard some people talking that stabilizing the population was important because it’s also strategic for Russians.”

Despite its proximity to the top of the world, Hammerfest has always been somewhat international by geographical default. The Finns and the Russians are their closest neighbors; Murmansk is about 10 hours from Hammerfest by car. To some degree, the fishing industry also brought foreign workers here, but nothing compared to the flood of immigrants from more than 60 nations who came together on Melkoya to help during the construction phase. Out of the 25,000 people who worked on the plant’s construction, roughly two-thirds were Norwegian, about 3,000 of which were locals; the rest were from abroad. Those who lived outside of Hammerfest would come for 14 nights, work 12-hour days, and then head home for three weeks.

Former taxi driver Tommy Andersen dubbed this flood of workers the “Klondike.” And it was a Klondike of mostly men, few women. On that rare night the Melkoya workers got off, they wreaked havoc downtown, he says, so much in fact that the locals quit going to bars and started having more house parties. “It was scary to be a woman in Hammerfest,” he told me while we sat in Kaikanten, the town’s most popular watering hole. “Just imagine a stampede of horny men coming to town. You could actually tell who was going out which days of the week — on Friday nights the Melkoya people weren’t going out because they had to work. On Saturdays the Hammerfest locals were having private parties when the Melkoya workers would go out. It was like that for two or three years.” He points to a blue awning across the street belonging to the Hotel Thon, one of the two business hotels in town. “The locals in Hammerfest would go there because the Melkoya people would come here.”

From 2003 to this October, Andersen, who also works at the local movie theater, was one of the town’s 18 cabbies. (He’s starting up a new job as a security guard at the airport). He drove more than 155,000 miles in three years and recounts endless stories of witnessing love beginning and ending in the backseat of his car, cleaning up puke, and getting asked about local prostitutes. But the worst, he says, is when the first wave of workers, “the rough workers, the ones who were moving rocks and things like that” would skip out on cab fares. “It’s like they thought I should’ve been honored to have them in my car in my town.”

Upon recounting Andersen’s story to StatoilHydro spokesperson Sverre Kojedal, he said he could not confirm whether workers failed to pay cab fares but did cite an exhaustive list of problems including drugs, drunk driving, quarrels in the reception of the camp, and smoking at the plant, but was quick to extol the virtues of the company’s strict discipline policy. He estimates that between 50 and 100 people were given the boot out of 25,000.

Andersen says that the men who have been working on the plant for the last two years have a different kind of attitude. “They’re the highly educated ones and they actually show people in Hammerfest respect,” he says. “It’s a two-sided story. The island also brought many good things to the city. I bought my house for NOK 650,000 ($121,000) and it was appraised last week for NOK 1.52 million ($283,000).”

Andersen and I walk outside to where his 2006 Ford Monteo stationwagon is parked. He wipes a finger across the driver’s side door and holds it up. “How much of this dirt do you think is from road and how much of it is mixed with soot from the torch? I’d say it’s about 50/50.” The torch he’s referring to is Melkoya’s high pressure flame just over a mile from his house, and the soot to which he refers is the insidious layer of fine black dust that started accumulating on houses, cars, and boats in certain Hammerfest neighborhoods because of an unfavorable wind direction.

The locals were steamed. StatoilHydro received around 100 complaints and held a town meeting as damage control. More than 150 people showed up. The local health authorities and the Norwegian Institute for Air Research assessed the situation, concluding there was no reason to be concerned. Same with the Norwegian Pollution Control Authority, which said it was “unlikely” the emitted soot particulates would pose significant threats. But the media had a field day with words like “harmful” and “cancer.” Hammerfest High School principal Svein Tore Jacobsen didn’t attend the meeting but as the father of three children he was concerned. “When you see you have soot on the car you think, shit, what’s happened. But the local health authority says it’s no danger and I trust them. And Statoil says it’s no danger, and I trust Statoil,” he says. Then again, Jacobsen’s school has a contract with StatoilHydro: If his students pursue the oil and gas track and graduate, they’re automatically employed. StatoilHydro helps maintain his matriculation rate.

A 15-minute walk from downtown is Hotell Skytterhuset, a decidedly less formal and less expensive hotel than those downtown where Trond Pedersen has worked since May 2000. From August 2005 until August 2007, the hotel was on contract with StatoilHydro to house some of the workers, primarily engineers from the Munich-based engineering company Linde Group. The last Melkoya worker in the hotel left October 12, which marked the end of an era for the hotel, says Pedersen. For two years the hotel’s 75 rooms were almost always fully booked. The night the last Statoil worker left, there were around 10 guests. “If the construction didn’t come, this hotel probably wouldn’t have survived economically,” he says. “And now that the last guy has left, it’s really like stepping back in time to fall 2001, before everyone came for the project.”

In a world of few absolutes, one thing is certain: Non-renewable resources like natural gas will not last forever. Nor will the town’s economic prosperity without considerable foresight and prescience into its sustainability post-Snohvit. Geologist and ProBarents project adviser Kare Tormod Nilsen sees the Snohvit project akin to winning the lottery and spending all the money without investing any for the future. “There are challenges that big companies in small societies face,” he says. “Oil and gas introduces a great market in the north, but is it close to the society living nearby? To be a part of it, we need to build competencies. We are used to fishing, we are used to distances, we lack capacities and sustainable interests.” He draws a graph on a white board in the conference room with time on the X axis and value on the Y, and asks how you fill the gap between the two to allow prosperity in Hammerfest to continue beyond the point at which the non-renewable resources run out. Though Nilsen is all for exploring and exploiting the natural resources that exist in his hometown territory, all of his proposals have to do with renewable energy. One solution he proposes is turning Hammerfest into a CO2 hub. Snohvit has a specially designated pipeline for capturing carbon dioxide separated from the wellstream and sending it back down underwater to be stored for millions of years in a sandstone reservoir 8,000 feet below the water’s surface. Another solution is establishing a wind farm in Hammerfest and shipping the energy elsewhere.

I ask Nilsen about the critics who have been against the Snohvit project from the get-go, including the World Wildlife Federation and Belluna, a well-regarded Norwegian environmental organization. “I’m from this area. People are trying to put food on the table and take care of their environment. Always, everywhere,” he says. “Sometimes I feel that when I discuss with people, especially those not living here, that they are trying to put me in exotic terms, like we should approach Finnmark slowly on wooden skis from the south, where people should go in their Lappish clothes, so you can continue having a nice postcard. You have to remember we living here want to be part of the global world.”

Hammerfest Municipality environmental adviser Tom Eirik Ness is a convert. He was first anti-Snohvit, but then he turned pro, though hardly by choice. The reality is that no amount of venom could fend off StatoilHydro. You cut off one of its tentacles and it will regenerate 10. “If you can’t beat him, you join them,” he says. “They are going to be here for 35 or 40 years, we’re going to have to talk together.”

At the end of our meeting, Ness gives me a water bottle as an oblation, adding that it was an honor to give it to an American. The bottle is clear with a double-sided sticker. Ness translates the sentence on the backside of the sticker that he reads through the plastic: “Hammerfest waterworks gives you good and fresh mountain water straight from the tap for under 1 cent a liter. Clean water is the healthiest thing you can drink. Always bring your water bottle, and replenish it when you need to.” On the front side of the sticker is an aerial photograph of Hammerfest and nearby Melkoya dusted in snow. I can even make out the tower from which the flare burns.

StatoilHydro’s headquarters in Hammerfest conjures up the dismal disposition of a prefab office on a construction site, with the charm of with Styrofoam coffee cups, particle board desks slapped with wood veneer, and curtains that would’ve had some cachet in the ‘70s. Spokesman Sverre Kojedal was finishing up the final touches on a press release about the soot immediately before our interview. As we head out to Melkoya in a Ford SUV, Kojedal explains that Snohvit is really only the beginning. “The starting point for going north and east is Snohvit,” he says as we pass through the specially built two-lane tunnel to the island and its three lines of security control. StatoilHydro currently has a research and development program underway for acquiring the requisite technology for all points north, which it hopes to start by 2030. Kojedal says that a drilling rig will arrive this month to bore an exploratory well in the Barents to determine whether there’s more gas to be found. Another well will be drilled this spring. If both succeed, then the company moves on to the assessment phase, followed by design, engineering, and eventually construction.

Also in late November, StatoilHydro began a two-year drilling program in Arctic waters to determine the size of one of the world’s few remaining unexplored oil prospects.

On Melkoya, the 330-foot high-pressure flare that Kojedal himself has seen from as far as 60 miles away is really just a security valve to burn off excess gas. (There’s a low-pressure flare, too.) Ideally, the flare will only be used between 10 and 15 times a year once the testing phase ends in December. “Burning gas is a double negative for us,” says Kojedal. “We burn what we’re going to sell and we also have to pay a special carbon dioxide tax.” Like a slot parlor on Native American lands, the flare from Snohvit is the beacon of prosperity Hammerfest and its environs so badly needed.

Other than the sheer magnitude of the equipment and the pipeline resembling linguini from afar, the first thing you notice on Melkoya is the wind, which punches you in the face until you just have to give in and seek shelter again inside the car. The second thing you notice is the view — rough seas and jagged snow-capped islands enveloping the island like barbed wire. “Can you hear the noise?” Kojedal asks me. I can, and it sounds like a blowtorch in my ear. “That’s from the flare. You can feel the heat and the vibration.”

Just as we’re about to get back in the car, he points out the observation post StatoilHydro has preserved on the island. After the Germans invaded the Soviet Union in 1941, the occupiers installed three coastal batteries in and around Hammerfest, one of which was on Melkoya.

And finally, standing behind the guardrail preventing us from falling into the choppy sea below, Kojedal shows me the opening between two islands in the distance where there’s only open water and sea ice standing between us and the North Pole. The ocean’s horizons push back to the point of infinity among the rising and falling dunes of sea water. We could just as well be standing in desert oil fields with white caps whipping all around us like whirls of sand. • 4 December 2007