The National Post is Canada’s second largest national paper.
Part 2 of a two-part series on the prospects and challenges of exploring oil and gas in the greater Arctic region.
The greater Arctic region is one of the world’s last few unexplored energy frontiers: foreboding and risky but irresistible to world powers given its treasures beneath.
A combination of high oil prices, the global race for new discoveries and climate change has lured oil majors to dip their toes in the frigid waters in the hunt for the estimated 90 billion barrels of oil and 1,670 trillion cubic feet of natural gas, despite a backlash from environmentalists.
While many fear the region’s rapid development will destroy its fragile and unique ecosystem forever, the Arctic has the potential to generate at least US$100-billion in oil and gas and mining investments within a few years, a Chatham House report says.
“There is a wide range of potential scenarios for the Arctic’s economic future, depending principally on local investment conditions and global commodity prices,” wrote Charles Emmerson, who co-authored the Chatham report and wrote The Future History of the Arctic. “Oil and gas, mining and the shipping industries will be the biggest drivers and beneficiaries of Arctic economic development.”
It is also turning the region into a new theatre for geopolitical tensions.
Canadian prime minister Stephen Harper, Russian president Vladimir Putin, Chinese premier Wen Jiabao and U.S. secretary of state Hillary Clinton have all trekked the North over the past year, either renewing their support for the region or forging new alliances.
“Canada has a choice when it comes to defending our sovereignty in the Arctic; either we use it or we lose it,” Mr. Harper famously said in 2007, adding that he intended to ‘use it’.
While Canada is still contemplating how best to manage the Arctic, others like Russia have moved swiftly and consider the Arctic to be its “top strategic resource base” by 2020.
While the Arctic Council — an interstate association comprising coastal countries and a number of interested observers such as China — ensures countries play nice and share scientific research, each country is gearing up for the great race for resources.
With Russia’s oil reserves depleting, the Arctic presents Mr. Putin with the promise of billions of barrels within Russia’s northern boundaries and greater political clout domestically and internationally. The Kremlin and state-owned entities have struck deals with oil majors such as Exxon Mobil Corp., Total SA, Statoil and Eni SpA as part of a plan to attract US$500-billion within its massive Arctic borders — and beyond — over 30 years.
For the rest of this article, please go to the National Post website: http://business.financialpost.com/2012/07/27/arctic-the-great-sled-race/