An Icy Welcome: The Future of Oil Exploration in the Arctic

When Royal Dutch Shell announced 27 September that they were to abandon their inaugural foray in search of oil and gas in the Alaskan Arctic, environmental lobbyists were overjoyed. After ongoing protest, it seemed like the campaigners had won. Promising to seal the oil exploration well in the Arctic Ocean for the ‘foreseeable future’, Shell appeared to bow their heads to the power of civil society. Unfortunately, this jubilation must be taken with a pinch of salt.

Image courtesy of Backbone Campaign, © 2015.
Image courtesy of Backbone Campaign, © 2015.

The ‘foreseeable future’ that Shell promised is reliant on one thing—energy prices. Currently, crude oil prices have dropped to a level comparable to the 2009 economic downturn. This is largely due to the uptake of shale oil production in the United States (U.S.), an innovation which has brought the largest energy consumer market close to fuel independence. However, this is a short-term outlook. The head of OPEC predicts that U.S. shale output will peak in 2018, and the U.S. Energy Information Administration admits that one of the most common shale fracking techniques sees production decline by 60-70% in the first year alone.[1] This glut of non-traditional fossil fuel energy is not sustainable, and nation states know this.

In the longer term, states have to secure energy stocks which are reliable and yet untapped— scraping the barrel of petroleum reserves and increasing geopolitical interest in inhospitable places like the Arctic. As the world begins to warm, the icecaps will melt and become more accommodating to human endeavor. It is an endeavor that currently seeks one thing: fossil fuel.

The Arctic region has the potential to be the largest fuel honeypot in the world. As snow and ice melt, a never before accessible supply of ‘black gold’ becomes uncovered, which many states want a cut of. With an estimated 90 billion barrels of oil and 44 billion barrels of natural gas beneath the seabed of the Arctic, Arctic Oil reserves represent around 22 per cent of the world’s total oil and gas reserves.[2] This quantity is not to be understated, and is in a region which 8 states (including both the U.S. and Russia) have a stake in. In the past, this reserve has been the forbidden fruit of the energy market— merely a glint in the eye of Gazprom and ExxonMobil executives. However, with climate change melting the caps and quelling the inhospitable nature of the region, it is becoming more and more accessible.

One of the first nations to truly capitalise upon this new source of wealth has been Russia. Following a geological survey in 2007, Moscow media reported the ‘sensational news’ that it had been discovered that the Russian coastal shelf—the designate of ocean sovereignty under UN Convention agreement—now included the Lomonosov ridge. It just so happens that this ridge, potentially of Russian sovereignty, was estimated to hold around 10 billion tonnes of oil and gas reserves.[3] This typifies the increasing Russian hunger to make the most of the oil and gas reserves in the Arctic region.

To deal with this growth in explorative research and drilling in Russian Arctic waters, an increasingly substantial infrastructure is solidifying. Russia’s decision to build 10 coastal military search and rescue outposts alongside increasing the number of heavy-duty icebreaker ships to 40 and the announcing the reopening of 50 mothballed Soviet-era military bases demonstrates Russia’s commitment to securing their energy potential in the Arctic region.[4] It’s a move which has not gone unnoticed by the rest of the world.

This has notably pricked the interest of the U.S.: the thawing ice is melting the dividing line between the geopolitical backyards of these old foes. As the ocean opens, it becomes an area of increasingly heightened tensions— threatening a reiteration of (a distinctly more literal) Cold War. Forget the missile gap, the representation of this new polar tension is the icebreaker gap. Among Russia’s 40 icebreakers sit some six nuclear-powered ships, meaning they are able to continually patrol the Arctic region, literally breaking the ice to increase access to lucrative areas for oil exploration. The United States, on the other hand, has a mere 2 vessels. Not being able to hold their own in this emerging field is bad news for the U.S., and Obama understands this, addressing the issue on 1 September by bringing forward the acquisition timetable for two new icebreakers and calling for Congress to increase Arctic security funding to ‘ensure that the United States can meet our national interests.’[5]

With increased Russian attention focus being paid to the Arctic, the U.S. attempting to narrow the icebreaker gap, and a large portion of the rest of the world holding a strategic or economic hand in the outcome of oil exploration in the polar region (including China, whose navy is currently on its first ever tour of Europe’s Arctic states), expansion continues unabated. Despite drops in oil prices, nations cannot afford to leave their long term energy security unchecked. It is for this reason that the U.S. originally allowed exploration by Shell, Russia made claims to the oil-drenched arctic shelf, and why China’s National Offshore Oil Corporation is buying up arctic exploration licenses from Iceland and Norway.[6]

Exploration is taking risks in the scramble to sniff out the maximum energy potential for future national security. The speed that these explorative moves are happening at, and the inhospitality of the Arctic region, mean that environmental safety has passed by the wayside. Treaties on search and rescue and oil spill responses have only been created in the past five years, and the sheer remoteness of the places being accessed makes the potential for real environmental damage high— think Deepwater Horizon, over 1,000 miles away from the nearest Coast Guard station and in a unique natural habitat. It could be catastrophic.

We should be happy that Shell have pulled out of their Alaskan venture, but it is not the end. We cannot presume that civil action to continually push back the intrepid oil men will work— it won’t, as there is both untapped profit and national energy protection at risk. Whether we like it or not, fossil fuels are still viewed as the untouchable core of energy security. For as long as this is the case, the Arctic will continue its upward projection as a space of geopolitical importance, heightening the tensions of nearby states whilst jeopardising this unique natural environment.

[1] http://www.bloomberg.com/bw/articles/2013-10-10/u-dot-s-dot-shale-oil-boom-may-not-last-as-fracking-wells-lack-staying-power

[2] http://www.ft.com/cms/s/0/c639f33e-6a02-11dd-83e8-0000779fd18c.html#axzz3o5GRTPH0

[3] http://www.theguardian.com/world/2007/jun/28/russia.oil

[4] http://csis.org/files/publication/150826_Conley_NewIceCurtain_Web.pdf

[5] http://www.theguardian.com/us-news/2015/sep/01/us-icebreakers-arctic-sea-traffic

[6] http://www.wsj.com/articles/in-the-race-for-arctic-energy-the-u-s-and-russia-are-polar-opposites-1440542608

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