The New Klondike

It is no secret that the arctic is heating up, both figuratively and literally. Every day, new examples of global warming are appearing, and nowhere in the world is this trend more evident than in the high arctic where the polar ice pack is thinning and the permafrost is thawing.

At a recent conference on potential arctic trade routes, a prominent Canadian climatologist predicted that the Canadian arctic may actually see heavier pack ice than at present as the first-year ice disappears and is displaced by thicker polar ice. At lower latitudes, the seasonal pack ice may even disappear altogether. In the last 10 years, the eastern arctic has seen an increase in icebergs - not because colder temperatures caused more ice to be produced, but because the Greenland Ice Sheet is calving more icebergs than at any time in recent history. What effect climate change will have is still unknown. While some believe it is a natural variation that will soon reverse, others think it is evidence of a continuing trend from which there is no return.

Recent economic activity in these new frontiers has been spurred by the thirst for hydrocarbon energy, created in part by newly industrialized economies in China and India, the depletion of sub-arctic fields, political instability in some traditional producing countries, and other myriad factors.

The United States Geological Survey has stated that as much as 25% of the world’s remaining petroleum resources are likely to be found in the arctic. As a percentage of the total marine area, the 14 million-sq-km Arctic Ocean (which has the most extensive continental shelf of any ocean basin [~53%]) comprises a huge frontier for hydrocarbon exploration.

Not since the 1980s when oil prices were very high and companies like Dome Petroleum and Gulf Canada were doing some very exciting work in the Beaufort Sea has ice engineering been such a hot topic. Exploration and development at that time were economically unsustainable, and when Canada’s Petroleum Incentive Program grants were terminated and world oil prices fell back, much of this work ceased, and platforms were mothballed.

The economics have changed, and development is now well under way in the Beaufort and Kara seas as well as sub-arctic regions such as offshore Sakhalin, the Caspian Sea, offshore Newfoundland, and in the Barents Sea. Each of these regions has unique, ice-related challenges. The high Arctic presents its own challenges, such as developing cost-effective ice resistant structures for resource extraction, extreme cold temperatures, sensitive environmental issues, long periods of darkness, and difficult logistics. Another major challenge operators face in this area is providing safe and reliable means to evacuate personnel from offshore platforms in emergency situations.

Oil companies also face market challenges. Arctic fields are far from their clients, and it is a challenge to find techniques for efficient, reliable, and economic transportation over long distances. Traditionally, shipping in arctic waters has taken place using icebreakers with a larger beam than the escorted vessel. Development of oil and gas fields on a larger scale in arctic regions will require larger independent tankers. These tankers must be designed for operation under severe arctic conditions, including navigation through pressured ice and ridge fields. An alternative is to construct pipelines from the high arctic to southern markets or to ice-free ports where petroleum can be transshipped. Pipeline construction could face opposition from indigenous people, whose land must be crossed, as well as environmental concerns related to construction phases and long-term impacts on migrating animals.

As in any frontier, various nations are struggling with sovereignty issues in the area. Russia, Canada, the US, Norway, and Greenland, which all have established territories adjacent to the arctic, have yet to agree on ownership of subsea riches. Discussions about lands and waters that had been all but ignored in the past are suddenly at the top of international agendas. There has been a recent flurry of scientific and anthropological activity in several counties with the objective of supplying evidence that the arctic seafloor is a natural extension of their lands.

That said, the arctic has seen many collaborative projects involving dozens of nations. Projects such as Snow White, which delivers LNG to the US and Spain, have brought together people from over 57 countries. Just as the Klondike gold rush of the late 19th century led to its fair share of discoveries, this New Klondike has the potential to teach us more and more about our changing world. The more we know about arctic regions, the better able we will be to safely and wisely get the most and best out of them.

Dan Walker, PhD, PE
President
Oceanic Consulting Corp.

This page reflects viewpoints on the political, economic, cultural, technological, and environmental issues that shape the future of the petroleum industry. Offshore Magazine invites you to share your thoughts. Email your Beyond the Horizon manuscript to Eldon Ball at[email protected].