The USGS released a report in 2008 saying that there could be up to 400 billion barrels of oil equivalent reserves in the Arctic, comprising 6.7% of the world’s proven oil reserves and 26% of natural gas reserves, recoverable with current technology. Much of the world is waiting to see exactly how these resources will be exploited and who, if anyone, will ultimately reap the riches.

The Arctic hydrocarbon question has resulted in a flurry of interest in all things Arctic by many northern countries. With oil and gas in the equation, nearly every aspect of Arctic management becomes a geopolitical issue to any country with a stake in energy security.

It is perhaps for this reason I found myself in Tromsoe, Norway in late January, 300 km north of the Arctic Circle, along with nearly 1,000 other scientists, policy-makers and industry-representatives at the Arctic Frontiers conference, an annual event to discuss all things related to Arctic science and policy.

The Arctic has been getting quite a bit of attention over the last decade, and certainly it has been deserved. Drastically reduced sea ice, rising sea and air temperatures, changing ecosystems, acidifying ocean waters, all driven by climate change, are good indicators that the Arctic will be the first region on Earth to undergo widespread transformation at the hands of anthropogenic global warming.

But with these environmental stresses comes emerging economic opportunity. As sea ice recedes, greater offshore area is potentially open for fisheries, transportation, tourism, and (of course) drilling. Though quite a bit of discussion at the Arctic Frontiers conference was devoted to environmental threats from climate change, one of the main financial supporters of the conference was ConocoPhillips, the fifth largest oil refinery in the world.

ConocoPhillips was also the first company to start producing gas in Alaska in 1965. From the industry’s perspective, one of the drivers for continuing to move into the Arctic for oil and gas exploitation, in spite of the fact that the current cost of recovering the cheapest Arctic oil is US$35/barrel (compared to US$5 for Saudi oil), is the continuing rise in demand from places like China. After all, when accounting for Copenhagen pledges, OECD oil consumption is predicted to decrease by 2035.

The Arctic expansion is not a given, however, even if no additional regulation on Arctic drilling were instated. There are significant (if not obvious) challenges to operating in the Arctic: overcoming cold weather, ice, lack of infrastructure, limited weather forecasts, and deep waters will require a lot of R&D, new technology and infrastructure development.

And then there is the discussion about additional regulation. Given the concern about all the stresses that Arctic communities and ecosystems are facing as a result of climate change, oil and gas activity would add another layer of risk that governments may or may not want to take. Not only is it extremely difficult for oil companies to operate in ice-covered waters, it is currently impossible to clean up an oil spill under ice, or even in areas of broken ice.

Statoil, a Norway-based oil and gas company, is advocating an ecosystem-based approach to assessing the impact of new oil and gas exploitation in Arctic and sub-Arctic regions. They are supporting the development of a model of various ecosystems, looking closely at their “functional and structural elements,” that is, the plants, animals, habitats, other various resources needed for living, and their complex interlinkages that make up an ecosystem. Then decision-makers can run simulations of the potential effects of oil and gas activity (drilling, oil spills, tankers, invasive species, etc.) on the entire model ecosystem. Sounds appropriate, right?

While the ecosystem-based management approach is a good idea, it has to be done right for all the effort to actually pay off. Modeling ecosystems, even those in the Arctic which are relatively simple compared to a Brazilian rainforest, is an extremely difficult task. Furthermore, for it to be meaningful, someone has to set the standard for what regulators want to achieve when ‘preserving’ ecosystems. Do we want to ensure that Arctic ecosystems are entirely unaffected by oil and gas activity? What would an ‘unaffected’ ecosystem look like? How much change are we willing to tolerate? So far, scientists and policy-makers have been pushing these questions on each other. Policy-makers want to know how to ensure oil and gas extraction is sustainable (at least from an ecosystem perspective), and scientists insist than this is a term for policy-makers to define.

We should probably applaud Statoil for being this concerned, whether out of the goodness of their hearts or just being better prepared for the impact assessments they will have to comply with anyway. After all, the Norwegian oil and gas industry is considered well-regulated, complete with a carbon emissions tax, discharge permits, and a holistic regulatory body, the Norwegian Petroleum Directorate. In the aftermath of the Deepwater Horizon disaster last summer, Norway was the first country to suspend offshore drilling.

This is not to say there are no tensions among the regulators and the regulated in Norway. There is currently a raging battle in the Norwegian government over whether to allow drilling near Lofoten, an Arctic archipelago, which environmentalists and some members of the fishing industry are concerned could disrupt important bird and sea mammal populations, not to mention fish stocks, particularly cod, and could be a difficult area to clean up any oil spills due to extreme weather. Industry argues that its “extraordinary” safety record indicates it is ready to operate in an area like Lofoten, and that such development could create 1,000-2,000 new jobs and additional tax revenue.

Russia, on the other hand, is moving full-steam ahead with its Arctic hydrocarbon exploitation. Russian-owned Rosneft and BP are set to explore the Arctic shelf in the Kara Sea (with Putin arguing that BP is the best partner to have precisely because of their wake-up call from the Gulf of Mexico flub). However, according to Valery Kaminsky, Director of VNII Okeangeologia, Russian plans to scale up Arctic offshore drilling are being postponed to 2016. The technology is simply not ready for handling sea ice and shifting icebergs.

The US is experiencing a more uncertain internal dialogue, similar to Norway’s. After the Deepwater Horizon blowout, the Department of the Interior placed a moratorium on offshore drilling for sixth months, although it was later clarified that there was no moratorium for Alaska, only an “additional review of proposed drilling plans” according to The National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling. Secretary Salazar emphasized the need to approach Arctic drilling with the utmost caution.

With the release of the final report of the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling, the readiness of the US for Arctic offshore drilling is called into question. In their working paper on the challenges of Arctic oil spill response, the commission indicates that the shallower waters of the Chukchi and Beaufort Seas compared to the Gulf of Mexico, as well as the less expansive human use on the Alaska shores reduces the economic impact and clean-up difficulty of any potential oil spill in this region. Existing regulation requires an emergency response action plan in the event of a spill, which must contain, among other things, a “worst-case discharge appendix.”

However, in light of the incredible destruction unleashed by the Deepwater Horizon spill, the Commission is hesitant to place complete trust in emergency response action plans. They have suggested the need for increased regulatory standards for the response plans, and question whether BOEMRE has the expertise or capacity to review the plans. For example, NOAA, the EPA and the Coast Guard may be able to contribute effectively to this process.

Since the release of the Commission’s report, the Coast Guard has been vocal about the risks of relying completely on industry for oil spill response. Right now, the Coast Guard is not in a position to provide response capacity in the Arctic, with only one of their three ice breakers being available for an oil spill off Alaska’s northern coast. Fram Ulmer, former Alaska lieutenant governor, has suggested that investing in the Coast Guard is prerequisite for offshore Arctic drilling.

The take away message on the precautionary side is that we should probably wait to expand Arctic drilling until we have the appropriate technology, regulation, and capacity to clean up an oil spill in offshore Arctic areas, especially those that experience ice cover for part of the year. The industry side argues that their safety record is good enough to warrant regulatory trust, that is, nothing like the Gulf of Mexico oil spill is going to happen in the Arctic.

The precautionary side replies – I think we can wait. The oil and gas are not going anywhere.

Source: www.leadenergy.com

After the signing ceremony in London, with Energy Secretary Chris Huhne and Rosneft chairman Igor Sechin in attendance, BP’s chief executive Bob Dudley said the deal “underlines our long term, strategic and deepening links with the world’s largest hydrocarbon-producing nation.” Rosneft’s president Eduard Khudainatov said it would allow his company to “utilise the experience and expertise of BP”.

But in Washington, where BP has few friends after the catastrophic oil spill in the Gulf of Mexico last year, some members of Congress expressed concern at the possible implications for US security.

At the start of the year, Russia opened its first oil pipeline to China, exporting 300,000 barrels a day.

The Eastern Siberia-Pacific Ocean pipeline will enable the Kremlin to command higher international oil prices as it now supplies both east and west.

Source: www.tribunemagazine.co.uk

“We have always believed there was oil and gas off this island. We been waiting for something like this to happen for decades,” said Kenni Rende, a 44-year-old shop assistant at the town’s only electronics shop. “I hope it will provide income for Greenland so that we can finance our way to becoming a more independent nation,” he added.

The mood of elation was shared at the Bureau of Minerals and Petroleum, one block away, where Henrik Stendal was preparing for a presentation in a small room packed with maps and rocks.

“It is exciting. This amounts to an appetiser for all oil companies to come here and do more exploration, seismic and data,” said Stendal, who is the head of the bureau’s geology department.

Greenland’s government had been hopeful that Cairn Energy had found signs of hydrocarbons but the ultra-secretive nature of the business – and its extraordinary importance – meant the British oil company had told no one in advance.

Bill Gammell, Cairn’s chief executive, said there were signs of oil and gas bearing sands, but the hole still needed to be drilled to its target depth. Stendal said it was highly encouraging given the six wells drilled over the last 40 years had been completely “dry”. A one-in-seven hit rate would mark this area out as exceptional; the North Sea equivalent is around one in 30.

It reinforces the views of the US Geological Survey which said last year that it believed there could be 90bn barrels of oil and 50tn cubic metres of gas in the wider Arctic region.

Enormously positive then for a Greenland desperate to move away from dependence on fishing, tourism and handouts from the Danish state which has sovereignty over the world’s largest island. But nervous moments for Greenpeace and other environmentalists keen to keep one of the Earth’s last wilderness areas away from the oil industry.

Whatever the eco-warriors want, Big Oil is coming and the Cairn discovery could not be better timed.

In around two weeks time the Bureau of Minerals and Petroleum will announce the winners of a new licensing round.

Stendal would not say who they were but he admitted that most of the leading lights – that means the likes of ExxonMobil and Shell – are queuing up to drill in Baffin Bay off the west of Greenland.

And the find will heat up interest in two new licensing rounds in other parts of the country that are already being lined up to take place in 2011 and 2012.

It is not just Greenland that it keen to explore in an Arctic region whose natural environment is already being eroded by global warming.

Iceland, Norway and Russia are also looking at handing out exploration rights, although BP’s blowout in the Gulf of Mexico has sent a ripple of anxiety through the west’s safety authorities.

Cairn and the Greenland authorities claim the water depths being drilled by the Stena Don and Stena Forth floating rig and drillship are less than one-third of the 1,500 metres of the Gulf.

They also point out that there are 16 vessels working on standby around the Cairn well, T8-1, and six of them are specifically given over to guiding icebergs out of the way.

Stendal says Greenland drilling regulations are tougher than those enforced in the North Sea, and far stricter than the lax rules of the Gulf.

He is confident that all is being done to ensure that there can be no recurrence of the Deepwater Horizon blowout in freezing waters where oil would break down much more slowly than in the warm currents off Louisiana.

But this will not reassure Greenpeace, which has taken its ship Esperanza into the region to highlight its concerns.

The environmental group said the move was wrong, not least because Cairn was a relatively small company with no experience of drilling in harsh conditions and had made its name discovering onshore oil in India.

“We think it is completely irresponsible for Cairn to proceed with these operations when the US, Canada and Norway have imposed tough new restrictions on deepwater drilling until lessons can be learned about what exactly went wrong in the Gulf,” said Mads Flarup Christensen, secretary general of Greenpeace Nordic. “Drilling in these kinds of waters is very sad. It shows the way the oil industry is being forced into the last frontiers by trying to exploit tar sands and deep water.”

Cairn management recently visited the Greenland capital to reassure the public that it would stick to the highest possible safety standards in line with an agreement signed with the government. “Security has always been the most important in everything we do and so we want it to continue,” commercial director Simon Thomson said.

He does not need to convince Stendal who says that Greenpeace is “not welcome” by the people of Greenland, who see the organisation as a threat to their future economic wellbeing. “You cant live on fish alone,” he says drily.

But at the Nota Bene electronics shop, Rende is not quite so equivocal: “We had heard of the catastrophe in the Gulf of Mexico but I hope the [Cairn] security makes us safe.”

Source: www.guardian.co.uk

Opponents of offshore oil drilling in the Arctic are making a last-ditch effort to convince the Obama administration to impose the same kind of moratorium on oil and gas development that it did on major commercial fishing in the Far North.

Signatures from nearly 300,000 people supporting a halt on new drilling in the Chukchi and Beaufort seas, and also in Alaska’s Bristol Bay, were unveiled outside the Department of Interior in Washington, on the last day available for public comment before the department decides on future leases on the Outer Continental Shelf.

A group of more than 400 scientists also is joining the public push against Arctic drilling. In a letter to the president timed to the deadline for offshore oil comments, a large group of biologists, oceanographers and other scientists warned that profound physical and biological changes in the Arctic Ocean connected to the rapid shrinking of sea ice leave too many unanswered questions to proceed with new oil and gas development.

“Offshore oil and gas activity poses risks to marine mammals, sea birds and fishes from oil spills and chronic habitat degradation through noise, bottom disturbance, and pollution,” the scientists said in their letter. “Adequate technology does not exist to clean up oil spills in broken ice, and the cumulative impacts of widespread industrial activity will only grow.”

The letter urged a delay in new development until adequate studies give scientists a better understanding of the ecosystem. It also said delays would allow for better consultation with Alaska residents in the Arctic concerned about the impacts of oil drilling on the whales and other marine mammals that form the backbone of their livelihoods.

“There’s a great deal of information from different sides in the debate,” said Henry Huntington, science director for the Pew Environment Group’s Arctic program, “and I think it’s important to hear what scientists have to say about their understanding of the ecosystem, and equally important, the scientists’ understanding of … how well do we really know this ecosystem?”

“We still have a chance to do it right in the Arctic,” Jeffrey Short, Pacific science director for the group Oceana, said in a statement. “All we’re really asking is that for once we look before we leap.”

Bristol Bay is south of the Arctic Circle but has been no less controversial because it is home to one of the nation’s most productive fisheries, worth more than $2 billion a year, including the largest sockeye salmon runs in the world.

Lease sales there are scheduled in 2011 but have met opposition from a large number of fishermen and Native Alaskans who argue that the region’s fishery will ultimately generate much more income than oil and gas production.

With diminishing supplies of oil around the world and increasing worries about America’s dependence on foreign oil sources, the federal government is looking hard at untapped deposits offshore around the country, many of which have been long off-limits from drilling for environmental reasons.

The Minerals Management Service opened more than 70 million acres in the Beaufort, Chukchi and Bering seas to oil and gas development from 2007 to 2012, though the program has been largely paralyzed by environmental challenges in the courts.

The Bush administration also proposed an even more ambitious Alaska leasing program for a total of 127.5 million acres by 2015. Federal officials estimate that 27 billion barrels of technically recoverable oil reserves lie beneath the coastal waters of Alaska.

The state has been a big proponent of the drilling expansion, arguing along with federal officials who approved the leasing program that it can be done with sufficient safeguards for wildlife and adequate protections to prevent damage from oil spills in the fragile Arctic environment. Oil wells at Prudhoe Bay, on Alaska’s North Slope, have been gradually making their way offshore in the last several years with few serious adverse consequences.

U.S. Sen. Mark Begich (D-Alaska) submitted his own six-page comment to the Interior Department’s Minerals Management Service, urging “careful” development of offshore resources “to fuel America and help ensure our nation’s energy security.”

“Sound science and a process that values the wisdom of local voices can safely guide this development. The economic and strategic security of our nation requires that we policy makers make these decisions so they [are] not dependent on the whims of the federal court system,” he wrote.

Begich also is arguing for a bigger local share in offshore oil revenues, similar to that awarded residents of Southern states from oil development in the Gulf of Mexico under federal legislation passed in 2006. “If Alaska had been included in that legislation, the state would have received more than $900 million in revenues,” Begich wrote.

“Alaskans are no less worthy, particularly while they arguably bear greater risks.” Download Begich’s comment letter.

Monday’s signature presentation in Washington featured wild Alaskan salmon cakes for lunch and a giant postcard turned over to Kim Elton, a former Alaska state legislator who is the Interior secretary’s official representative for Alaskan affairs.

Department officials have not said when they will make a decision on the leasing program.

Meanwhile, the Obama administration’s Interagency Ocean Policy Task Force, appointed to look at the escalating hazards facing the oceans — from pollution to overfishing to acidification — put the Arctic among its top objectives in the panel’s first set of interim recommendations, released last week.

The federal government’s ocean planning should find better ways to conserve and sustainably manage Arctic coastal and ocean resources, improve coordination of U.S. Arctic policy, and improve scientific understanding of the region, the interim report suggests.

Source: www.latimesblogs.latimes.com/greenspace