Alaska-Russia ties tighten around Arctic: local businesses, organizations can lead America in Arctic development.

• Author: Christiansen, Peter H.
• Position: BUSINESS DEVELOPMENT

[ILLUSTRATION OMITTED]

Climate change is transforming the Arctic. It is bringing higher year-round temperatures, diminished ice cover, danger to traditional ways of life, disruptions in ecosystems--and enormous commercial possibilities.

Change and new possibilities are already re-arranging the existing order in the Arctic. Russia, flush with energy wealth, is turning toward the Arctic to sustain growth. Alaska, sharing with Russia a common border, significant economic interests, and a history of regional cooperation, is in a unique position to influence, and benefit from, the emerging Arctic order.

Much depends on Alaska's understanding the broad movements shaping the future. Four major trends now are converging that will set the course for Russian-Alaska relations in the next quarter century.

ENERGY DEMAND

World energy resources are in demand as never before, and modernization in China, India and other nations will only increase the pressure on supplies. Russia has the world's largest energy reserves outside of the Middle East, and most of it is undersea natural gas in the Arctic.

In July, the United States Geological Survey reported that undiscovered energy resources total 90 billion barrels of oil and 1,669 trillion cubic feet of natural gas. Almost all of these reserves are in the Arctic Ocean off western Siberia and Alaska.

Demand is pushing development of new extraction technologies that work in extreme conditions. Now Arctic energy is extractable and commercially attractive. Statoil, a Norwegian energy company, collaborated with Russia's Gazprom (the world's largest energy company) to extract natural gas in the Barents Sea, far above the Arctic Circle.

The project, called Snohvit (or Snow White), relies on undersea processing and a moveable barge for loading tankers, rather than surface platforms. Snohvit went online in 2007. The barge model reduces the cost and human footprint of gas extraction greatly over the platform model.

Snohvit is a harbinger of things to come. Most of the Russian reserves are in the Barents, Kara, and Laptev Seas, the north coast of a region known as Yamal-Nenets, just due north of the Khanty-Mansiysk Okrug (state).

[ILLUSTRATION OMITTED]

Khanty-Mansiysk itself sits astride Russia's largest oil and gas reserves. It is now one of Russia's wealthiest regions, just behind Moscow and St. Petersburg. Locals refer to it as "the energy heart of Russia." Once poverty-stricken and backward, it lost population steadily in the 1990s. Now the booming oil and gas industry lures an influx of skilled and highly paid workers.

These workers are likely to bring their families with them and settle down. Unlike the North Slope, where workers rotate in and out in shifts, Russians usually live where they work. After losing population in the 1990s, Khanty-Mansiysk's population is growing quickly. The region is modernizing and enjoying a housing boom.

According to Priscilla Wahl, director of the Northern Forum, Khanty-Mansiysk is one of the most progressive regions in...