Interest heats up in arctic oil and gas regions

John Waggoner
Drilling Technology Editor

HOUSTON -- Arctic oil and gas exploration remains an important segment of the industry amid both technological and regulatory challenges.

According to a panel of experts at the Offshore Technology Conference in Houston, Texas, arctic oil and gas exploration remains a niche but an important one with the potential to become even more so.

"The economics are quite challenging [vis-à-vis current oil and gas prices]," says Alan Murray, product manager at Wood Mackenzie's Exploration Service, even though interest in the region remains strong. He said a recent survey of oil and gas industry participants indicated that the arctic region ranked first for new areas of activity, even before Brazil and West Africa.

While the resource potential remains the number one draw of the region, there are other advantages for operators such as fewer competitors and generally greater tolerance by governments for the time needed to develop the region.

"There is less pressure from governments to speed up the development," he says, adding that companies with experience in the region and with political sway would be most likely to succeed.

Peter Noble, chief naval architect at ConocoPhillips, agrees that technology is not necessarily the only hurdle. However, he believes that technological advances are essential toward developing the arctic oil and gas industry.

"We know a lot about the arctic but we have more to learn," he says.

Among the priorities for development he cites are:
* Arctic offshore drilling systems
* Year round transportation
* Ice information and forecasting
* Oil spill prevention and mitigation
* Pipe laying and trenching in ice-covered waters
* Emergency evacuation.

"It is important that the industry works together on this," he says.

Noble points out that the unpopulated region remains a key point of controversy among nations that claim territory in the arctic, but adds that areas known or suspected to have oil and gas are in well defined jurisdictions.

Gary Mandel, executive vice president of Aker, says that technology transfer is an important consideration for developing the arctic. In the case of Aker, which has operated an ice research facility in Finland for years, the information gained is readily shared with others in the industry. Although each project has unique challenges, cooperation can help ensure both project economics and safety, helping to win over populations that may be reluctant to have drilling or shipping going on nearby.

The absolute lack of infrastructure in most of the arctic is another major consideration.

"One of our own biggest challenges is how to build a gravity-based cement structure in the middle of nowhere," Mandel says.

05/06/2009