Oil and gas

written by Eleonora Milazzo – ACCEL European Fellow

In 2008, the US Geological Survey stated that the area north of the Arctic Circle contains around 30% of the world’s undiscovered gas and 13% of the world’s undiscovered oil. The total undiscovered conventional oil and gas resources are estimated to amount up to 90 billion barrels of oil, 1,669 trillion cubic feet of gas, and 44 billion barrel of natural gas liquids. About 84% of these resources are located offshore, with the gas largely concentrated in Russia. Oil resources are mostly located offshore and are less consistently grouped within one country’s jurisdiction.[1]

In the Arctic, many onshore areas have already been explored. In 2007, more than 400 oil and gas fields had already been developed in the Arctic, mostly in West Siberia and Alaska.[2]

Photo credit: B&C Alexander/ArcticPhoto
Photo credit: B&C Alexander/ArcticPhoto 

Where? What?

  • More 70% of undiscovered resources are estimated to occur in five provinces: Arctic Alaska, the Amerasia Basin, East Greenland’s Rift Basins, East Barents Basins, and West Greenland-East Canada.[3]
  • 60% of estimated oil resources are located in the Alaska Platform, the Canning-Mackenzie basin, the North Barents Basin, the Northwest Greenland Rifted Margin, the South Danmarkshavn Basin, and the North Danmarkshavn Salt Basin. Of these, the Alaska Platform is most significant reserve.[4]
  • 70% of undiscovered gas is estimated to be in three provinces: the West Siberian Basin, the East Barents Basins, and Arctic Alaska. Around 66% of undiscovered gas is believed to lie in just four areas: the South Kara Sea, the South Barents Basin, the North Barents Basin, and the Alaska Platform. Of these, the South Kara Sea in Russia is believed to contain nearly 39% of undiscovered gas.[5]
  • Most of undiscovered oil and gas is expected to lie offshore.
  • The USGS report suggests that deep ocean basin areas, which are contested in terms of extended continental shelf claims, do not contain considerable hydrocarbon resources. The undiscovered resources, instead, tend to lie on the continental shelf or onshore, where boundaries are not contested.[6]

Current or projected exploration or development activities in circumpolar regions is as follows:

  • Russia has been intensifying exploration and development efforts. Twenty major oil and gas basins have been discovered on its shelf, 10 of which contain proven [7] Gazprom and Rosneft are the only two companies that receive licenses to extract. They will continue to guide reserve development in the future, though the Russian energy market is gradually opening to private and foreign companies.
  • In Canada, exploration activity mostly occurred between the 1970s and the 1980s. The government has recently shown interest in developing offshore reserves in the Beaufort Sea and has sold leases for exploration and development. Overall, drilling in the Canadian Arctic has proven to be both extremely expensive and dangerous.
  • In Greenland, high costs for accessing possible fields discourage exploration efforts. Following a recent hydrocarbon discovery made by the British oil company Cairn Energy, the government of Greenland awarded oil and gas exploration licenses.
  • Oil extraction operations in Norway are concentrated in the North Sea but other fields are being developed in the Norwegian and in the Barents Seas.
  • The Alaskan Arctic is estimated to contain the highest number of undiscovered oil deposits. Exploration activities are currently being conducted there.

 

Photo credit: Paul Souder/Corbis
Photo credit: Paul Souder/Corbis

How?

The UNCLOS provisions regulate offshore activities in the Arctic and grant coastal states sovereign rights to the management and exploration of natural resources on their continental shelves. The coastal states are also obliged to preserve the environment and take into account the standards of international organizations, like IMO.[8]

A number of binding and non-binding measures are devoted to the regulation of exploration and extraction activities, especially regarding the risk of pollution incidents.

Both ships and floating or mixed platforms fall under the International Convention for the Prevention of Pollution from Ships (MARPOL). The MARPOL Convention aims to prevent or minimize accidental and operational pollution in the Arctic marine area. All the Arctic states are also party to the International Convention on Oil Pollution Preparedness, Response and Cooperation, whose purpose is combating oil pollution incidents. Another important agreement, the Agreement on Cooperation on Marine Pollution Preparedness and Response, was signed in May 2013 by the Arctic states. The objective of the Agreement is to “strengthen cooperation, coordination and mutual assistance among the Parties on oil pollution preparedness and response in the Arctic in order to protect the marine environment from pollution by oil”.[9]

Non-binding measures include the Arctic Offshore Oil and Gas Guidelines adopted by the Arctic Council. It aims to get Arctic coastal states to adopt the highest environmental standards within their legislation.

 

What are the risks of oil and gas extraction in the Arctic?

Photo credit: Ramil Sitdikov, RIA Novosti
Photo credit: Ramil Sitdikov, RIA Novosti

Resource extraction in the Arctic is connected to various operational or accidental risks. Operational risks include discharge and emissions from drilling sites and transport vessels, while accidental risks are typically oil spills.[10] These risks are particularly harmful in the case of offshore drilling sites, where spills have much broader ecosystem impacts.

Until now, no spill has occurred in the Arctic. Still, in the event of a future spill, rescue and cleanup responses would be considerably more difficult or even impossible to carry out compared with in other environments. An accident like the Deepwater Horizon oil spill occurred in 2010 would have extremely dangerous consequences in the fragile Arctic ecosystem, where the harsh environment and lack of infrastructure hampers rescue and cleanup operations.

 

 

[1] U.S. Geological Survey, 2008. USGS Fact Sheet 2008.

[2] Gauthier, L. D. et al., 2009. Assessment of Undiscovered Oil and Gas in the Arctic. Science. Vol. 324 (5931), p. 1175-1179.

[3] U.S. Geological Survey, 2008. USGS Fact Sheet 2008

[4] Gauthier, L. D. et al., 2009. Assessment of Undiscovered Oil and Gas in the Arctic. Science. Vol. 324 (5931), p. 1175-1179.

[5] Ibid.

[6] Johnston, P. F., 2010. Arctic Energy Resources and Global Energy Security. Journal of Military and Strategic Studies, vol. 2(2).

[7] Ernst & Young, 2013. Arctic oil and gas. Report.

[8] Det Norske Veritas & Fridtjof Nansen Institute, 2012. Arctic Resource Development. Risks and Responsible Management. Joint report prepared for the ONS Summit 2012.

[9] Agreement on Cooperation on Marine Pollution Preparadeness and Response, 15 May, 2013.

[10] Riedel, A., 2014. The Arctic Marine environment. In Tedsen, E., Cavalieri, S., Kraemer, R. A., eds., 2014. Arctic Marine Governance: Opportunities for Transatlantic Cooperation. Berlin: Springer.

 

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