Business opportunities in the Arctic: capitalizing on long-term advantages.

• Author: Wolf, Greg
• Position: SPECIAL SECTION: World Trade Alaska

Arctic development is an increasingly popular topic around the world. It is a subject of many international forums and conferences. It has also attracted the attention of many non-Arctic nations including China, Japan, India, South Korea, and Singapore. These countries recently sought and attained permanent observer status to the Arctic Council, an intergovernmental forum for the Arctic nations.

What's driving this global interest in all things Arctic? One factor is the presence of vast supplies of natural resources. The melting Arctic ice gives access to abundant resources, including oil and gas, minerals, and metals. According to the US Geological Survey, one quarter of the world's undiscovered, technically recoverable oil and gas resources may be found in the Arctic: oil, 90 billion barrels; natural gas, 1.7 trillion cubic feet; and natural gas liquids, 44 billion barrels. Exploration may discover even far greater reserves than currently estimated.

Also, the parting of the ice opens wide areas for international shipping, commercial fishing, and tourism and creates opportunities for development of remote areas that are presently inaccessible due to transportation limitations. The maritime cargo movements through the Arctic shipping routes saw a significant increase during the last three years.

Until recently the number of commercial ships transiting through the Arctic Ocean has been low because of existing ice. While in 2010 only four cargo ships transited through the Northern Sea Route (NSR), in 2011 there were thirty-four ships, and 2012 saw forty-six vessels plying the route. The sailing season for the NSR starts in June and ends in November. Most of the vessels require an icebreaking escort. Rosatomflot, a Russian company operating a fleet of nuclear-powered icebreakers, provides escorts to the cargo ships.

Arctic Advantages

Another reason for the focus on the Arctic is the opportunity for dramatically reduced shipping times for cargo ships. For example, a ship traveling from Norway to Japan will shave twenty-one days off the current transit time and achieve commensurate cost savings associated with a far shorter trip.

Deep-water ports and other infrastructure development projects are yet another reason for an increased interest in the Arctic region. These projects will involve engineers, architects, construction companies, environmental consultants, and other development specialists. Arctic areas, now inaccessible, will require...