FOCUS: Arctic oil and gas fall victim to politics and economics
| Published date | 01 November 2016 |
| DOI | http://doi.org/10.1111/oet.12434 |
| Date | 01 November 2016 |
FOCUS
Arctic oil and gas fall victim to politics and economics
Planstodeveloptheenormousreservesofoilandgas
that are believed to lie under the Arctic Ocean have
become mired in political disputes both in and among
the littoral states, creating uncertainty over exploration
plans. Russia is nevertheless determined to press ahead
with developments there as it seeks to remain a major
global player in both the oil and gas businesses. US and
European sanctions, however, are hinderi ng its eorts
and causing delays to a number of projects.
ere are varying degrees of interest from the other
Arctic nations. Norway has both an oileld and a gaseld
in production in the Barents Sea and sees the area as
being able to compens ate for the decline in its North Sea
elds. Greenland also wants to exploit the waters o its
coast. Canadian interests in the Arctic oshore are more
long-term since there appear to be better short-term
prospects onshore. e US has expressed considerable
interest in its northern continental shelf buthas impose d
stringent requirements on oil and gas companies that
want to explore there.
Huge resources
A study by the US Geological Survey (USGS) estimates
that the area north of the Arctic Circle could con-
tain90bnbblofoil,44bnbblofnaturalgasliquids
(NGL), and 1,669 tcf of natural gas, most of which are
estimated to lie oshore. More than 400 oil- and gas-
elds have already been discovered and these account
for approximately 240 bnboe. e study concluded that
“e extensive Arctic continental shelves may constitute
the geographically largest unexplored prospective area
for petroleum remaining on Earth” [1].
e largest oil reserves are thought to lie in or o
Alaska, with further signicant accumulations o
Greenland, Canada and in the B arents Sea, o Norway,
with generally s maller ones both onshore and oshore
in Russia. Russia,on the other hand, looks to have much
of the Arctic’s gas, based on the hydrocarbon provinc es
identied by the USGS (see Table A).
e ve oil and NGL basins listed in Table A account
for more than 70% of the undiscovered Arctic oi l
reserves identied by the USGS. Similarly, three of the
vegasprovinceslistedmakeupover70%oftheArctic’s
undiscovered natural gas. e largest combined reserves
ofliquidsandgasaretobefoundintheWestSiberian
Basin, which accounts for 32% of the Arctic total.
Exploiting the Arc tic’s hydrocarbon reserves will be
costly, especially those that lie oshore. Oil prices of just
over $50/bbl are not economic in the long run for new
elds. Many Arctic elds are likely to require sustained
price levels of $100/bbl or more. ere is, however, a
Table A
Principal Arctic Hydrocarbon Provinces
Province Estimated Reserves
Oil NGL Natural Gas Total
(mn bbl) (mn bbl) (bn cf) (mn boe)
Oil/NGL∗
Arctic Alaska 29,961 5,905 221,398 72,766
Amerasia Basin 9,724 542 56,891 19,747
East Greenland Rift
Basins
8,902 8,122 86,180 31,387
East Barents Basin 7,406 1,422 317,558 61,755
West Greenland-East
Canada
7,274 1,153 51,818 17,063
Natural Gas Oil NGL Total
(bn cf) (mn bbl) (mn bbl) (mn boe)
Natural Gas†
West Siberian Basin 651,499 3,660 20,329 132,572
East Barents Basin 317,558 7,406 1,422 61,755
Arctic Alaska 221,398 29,961 5,905 72,766
Yenisey-Khatanga Basin 99,964 5,584 2,675 24,920
East Greenland Rift
Basins
86,160 8,902 8,122 31,387
∗Ranked in order of oil reserves
†Ranked in order of gas reserves
Totals rounded
Source: USGS [1]
political dimension that needs to be taken into account.
e Arctic continental shelf has great strategic signi-
cance for all the littor al states, all of which want to stake a
claim to the region’s riches, which should in turn ensure
that its development is not neglectedfor long.
Russian efforts
Russia has by far the longest northern Arctic frontier
andisactiveinseveralpartsofitscontinentalshelf.
In addition to trying to develop a series of oil- and
gaselds, it is also engaged in improving the access to its
northern oshore by op ening up a shipping route along
the entire length of its northern Arctic shore. Russia’s
Arctic developments are not conned to the continental
shelf. Several new elds are being developed onshore in
a move that marks a northern and eastern mig ration of
exploration and produc tion away from the older elds of
European Russia and West Siberia.
Russia is developing oil- and gaselds in the Arctic
both oshore and onshore. e main projects are gas
rather than oil and most activity at present is onshore.
However, in addition to the handicaps of geology,
geography, and low oil prices, Russia is also subject to
sanctions by the US and Europ ean Union, dating from
© 2016 John Wiley& Sons Ltd
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