By Gwladys Fouche
HAMMERFEST, Norway (Reuters) - In Hammerfest, a Norwegian town on Europe's northernmost tip where reindeer often roam the streets, many feel the petroleum-fueled boom they are experiencing outweighs the risks of offshore exploration.
Norway, Europe's second-largest energy supplier, is not so sure and this week announced a freeze on drilling in new deepwater areas until it knows what caused BP's huge oil spill in the Gulf of Mexico in April.
If extended, the freeze will hinder the development of northern towns like Hammerfest, which are eager to reap the wealth from an expected oil and gas boom after Norway and Russia resolved an Arctic border dispute in April.
"There is always a risk that there could be an oil spill, but I think people here are willing to take that chance," said Mats Albinsson, a 55-year-old docker in Hammerfest.
Drilling regulations in the Norwegian Barents are among the strictest in the world, with a ban on all emissions to water.
A Barents exploration rig shutdown in 2005 after some 10 cubic meters of drilling fluids and chemicals were spilled, compared with 12,000-19,000 barrels of oil per day said to be leaking in the Mexico Gulf.
The old fishing outpost of Hammerfest and its 9,774 inhabitants are already doing well after Statoil built its Snoehvit LNG plant, Europe's first LNG producing facility.
"The LNG plant has brought hundreds of jobs," said Albinsson. "Young people take up specialized education and hope they can get a job at the plant. Before they would move."
Hammerfest hopes it can expand further when Italy's ENI finishes construction on the Goliat oil field or if Statoil expands the LNG plant with another processing "train."
COUNTING WINDFALLS
Other towns, like Kirkenes further east, hope they will get windfalls from Shtokman, a giant gas field in Russia developed by Gazprom, Statoil and France's Total, which some estimates say may quench world gas demand for a year.
The new border zone in the Barents Sea alone could hold 10 billion barrels, according to reports citing Soviet-era studies of the 175,000 square kilometers disputed zone ranging from continental Europe's northern tip to the Arctic Ocean.
Geologists say the area may be one of Europe's most attractive remaining areas for hydrocarbons.
In Hammerfest, with the plant's 156 million crowns ($23.41 million) yearly property tax, local authorities have renovated schools and kindergartens, water and sanitation infrastructures and built a cultural center for 274 million crowns.
They are also improving the town's roads and are even building heated pavements to make the snow melt in Arctic winter -- when the sun dips below the horizon for several months.
"Oil and gas activities in the region should not stop," said Hammerfest mayor Alf Jakobsen. "We will of course take what happened in the Gulf of Mexico seriously and make sure we have strong environmental regulations in place."
"There is always a risk with oil activities. But the Barents Sea is robust enough to cope. We have good emergency systems and new developments are happening in this field," he said.
Others agreed the spill should not hinder the oil boom but should ensure the wealth is spread around.
"I hope what is happening in Hammerfest continues," said Rolf Thingvold, a 78-year-old fishmonger selling whale meat and dried cod at 150 crowns ($22.51) a kilo on the waterfront.
"If it does, the money needs to spread out to other towns in the region. Right now everything is concentrated here."
(Editing by Wojciech Moskwa)
