Conflict or Cooperation?
The Arctic is warming at an alarming rate, a development that some believe will be a key driver of geopolitics in the coming years, convinced the rapidly melting ice will unlock commercial opportunities in oil and gas extraction. Beyond the energy resources, melting ice is opening Arctic sea passages for longer periods each year, cutting thousands of miles off trade routes between Europe and Asia. It is already apparent that the world’s largest economies are jockeying for control of the region in which the dawn of a new era of Arctic exploration is opening. Most critically, these high-risk, high-cost resources are increasingly viewed as commercially exploitable, given current and forecast oil prices. Both Norway and the US, two of the world's major oil and gas producing nations, have achieved big Arctic discoveries in recent years. They are looking to further develop one of the world's most remote regions as a more vibrant core area of exploration, while Russia has no plans to be left behind. But with Russia stepping up its Arctic military presence just a day after Canada moved to extend its territorial claim all the way to the North Pole, it remains to be seen whether this will be a region of conflict or cooperation.
Recognized as a costly and difficult area to explore, the region north of the Arctic Circle, according to the US Geological Survey, holds about 90 Bboe and 1,670 Tcf of gas, which is about 13% of the world's undiscovered conventional oil and 30% of its undiscovered natural gas. Yet the formidable and technologically challenging environment means the frontier region remains largely unexplored. All that is about to change: Norway plans to include oil and gas exploration drilling permits in the Southeast Barents Sea for the first time in an upcoming bid round, while Ken Salazar, former U.S. Secretary of the Interior, has declared that the Obama administration plans to further open and develop its Arctic areas for drilling to continue reducing that nation's dependence on foreign imports.
Charles Emmerson, senior research fellow in energy, environment and resources at Chatham House, believes "A race (to drill) is inevitable in the Russian Arctic, very probable in the Norwegian Arctic and probable in the Alaskan Arctic. The question is whether it is economically viable to bring oil out." Early results have been mixed, with some initial success in the Barents Sea tempered by disappointing initial results off Greenland. But the industry is driven, knowing that the Arctic represents the last great frontier for oil exploration, with a potentially large prize for those companies willing to invest in the region and brave the demanding elements.