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Abstract
Over the past five years there has been a remarkable resurgence in oil and gas exploration in the North American Arctic. From completed disinterest only a half a decade ago the region has attracted billions of dollars in new investments from a host of different international oil companies. Unlike the past booms in the region, which inevitably ended in busts, this new wave of development is different. This article examines the changes in both the Arctic itself as well as the global energy environment and concludes that the North American Arctic will see slow bust sustained development over the coming decades, ultimately becoming one of the last great oil producing regions in the world.
Keywords:
Notes
1. Karin Clark et al, Breaking Ice with Finesse: Oil and gas Exploration in the Canadian Arctic (Calgary: The Arctic Institute of North America, 1997), p. 206.
2. Centre for Energy, Canada: NWT Statistics, accessed October 2, 2011 [online] http://www.centreforenergy.ca/FactsStats/statistics.asp?template=5,13
3. Graham Chandler, “Stranded Gas,” Up Here Business (June 2008).
4. Resource Development Council, accessed October 2, 2011, [online] http://www.akrdc.org/issues/oilgas/overview.html.
5. Chandler.
6. Clark et al., p. 86.
7. Or roughly $3.50 adjusted for inflation; Ibid., p. 91.
8. Or roughly $24,000 adjusted for inflation; Ibid., p. 94.
9. Or roughly $60 vs $3.50 adjusted for inflation; Judith Maxwell, Energy from the Arctic (Canada: Canadian American Committee, 1973).
10. Or roughly $50,000 adjusted for inflation; Clark et al., p. 87.
11. Jeffrey Jones, “Oil's Return to Canada's Arctic is no Stampede,” Planet Ark (October 25, 2007).
12. Darren Campbell, “Who Will Take the Plunge,” Up Here Business (June 2008).
13. Wesley Loy, “Record Bids for Oil, Gas Leases in Chukchi Sea, Alaska won't get a Penny from Federal Sale of Remote Chukchi Sea Tracts” Anchorage Daily News (February 7, 2008).
14. “Ottawa Awards BP Exploration Permits in Beaufort Sea,” Alexander's Gas and Oil Connections 12:13 (July 21, 2008).
15. Loy.
16. Simon Bowers, “Shell Postpones Plans to Start Arctic Drilling until Next Year,” The Guardian (September 17, 2012).
17. Barbara Kollmeyer, “Repsol in $768 million Alaskan Exploration Deal,” Market Pulse (March 7, 2011).
18. Northern Economics, Economic Analysis of Future Offshore Oil and Gas Development: Beaufort Sea, Chukchi Sea, and North Aleutian Basin (March 2009), p. ES-5.
19. Northern Economics, p, ES-6.
20. David Barber, Louis Fortier and Michael Byers, “The Incredible Shrinking Ice,” Policy Options 26:1 (2006), p. 67.
21. Royal Dutch Shell, Technology in the Arctic (April 2011).
22. Ibid.
23. US Energy Information Administration, Annual Energy Outlook 2011 (April 2011).
24. David LeGeese, “Shale Oil Boom takes Hold on the Plains,” National Geographic Daily News (28 September, 2011).
25. Dan Dicker, “Shale Oil's Promising Future,” The Globe and Mail (June 1, 2011).
26. ExxonMobil, The Outlook for Energy: A View to 2040 (2012).
27. Ambrose Evans-Prichard, “Oil Markets Brace for Saudi ‘Rage’ as Global Spare Capacity Wears Thin,” The Telegraph (October 13, 2011).
28. John Vidal, “WikiLeaks Cables: Saudi Arabia cannot Pump enough Oil to keep a Lid on Prices,” The Telegraph (February 8, 2011).
29. Ibid.
30. British Petroleum, BP Statistical Review of World Energy June 2011 (June 2011) p. 9.
31. Index Mundi, accessed October 3, 2011 [online] http://www.indexmundi.com.
32. InflationData.com, Historical Crude Prices, accessed October 3, 2011 [online] http://inflationdata.com/inflation/inflation_rate/historical_oil_prices_table.asp.
33. British Petroleum, Statistical Review of World Energy, p. 6.
34. Matthew R Simmons, Twilight in the Desert: The Coming Saudi Oil Shock (Hoboken, NJ: John Wiley & Sons Inc., 2005).
35. Vladmir Soldatkin, “Russian 2010 Oil Output hits Post-Soviet Record,” Reuters (January 2, 2011).
36. Tom Lasseter, “Russia's Oil Boom May be Running on Empty,” McClatchy Newspapers (August 22, 2008).
37. See Chevron, ConocoPhillips and BP 2010 annual reports.
38. See Exxon and Shell 2010 annual reports.
39. Much of those reserves were also acquired rather than discovered. ExxonMobil would likely have fallen short of its goal of 100 percent replacement without its $41 billion acquisition of unconventional natural gas giant XTO Energy; Homeland Security News Wire, “Oil Giants Struggle to Find more Oil” (February 23, 2011).
40. Chevron. 2010 Annual Report, (2010), Table V.
41. See Exxon annual reports.
42. Amy Myers Jaffe et al., The International Oil Companies, The James A. Baker III Institute for Public Policy, Rice University (November 2007), p. 15.
43. Susan Lyon et al., “Quenching our Thirst for Oil,” Centre for American Progress (April 23, 2010).
44. EIA, Annual Energy Outlook 2011, p. 61.
45. BP Statistical Review, p. 9.
46. Clifford Krauss, “After the Revolution, Hurdles in Reviving the Oil Sector,” The New York Times (August 23, 2011).
47. “Rosneft–Exxon Deal to bear Fruit in Distant Future – Analysts,” Rianovosti, accessed September 23, 2011 [online] http://en.rian.ru/business/20110831/166325390.htm
48. Verdan Vuk, “Navigating the Tricky Seas of Russian-American Energy Collaboration,” Casey's Daily Dispatch (September 19, 2011).
49. This trade was to be in exchange for a 9.5 percent stake in Rosneft.
50. Vuk.
51. United States Geological Survey (USGS), “Assessment of Undiscovered Oil and Gas Resources of the West Siberian Basin province, Russia 2010” (June 2011).
52. USGS, “Circum-Arctic Resource Appraisal: Estimates of Undiscovered Oil and Gas North of the Arctic Circle, (2008), p 4.
53. ICIS News, “Global Shale Gas Options to Delay Arctic Energy Option – US,” accessed September 4, 2011 (October 19, 2009) [online] http://www.icis.com/Articles/2009/10/19/9256361/global-shale-gas-options-to-delay-arctic-energy-action-us.html.
54. US Energy Information Administration, Annual Energy Outlook 2011 (April 2011), p. 37.
55. Ibid.
56. Geopolitics in the High North, “Shtokman and Arctic Petroleum: A Field too Far?” accessed September 12, 2011 [online] http://www.geopoliticsnorth.org
57. LNG export plans make it likely that some of the North American supply will eventually be exported, thus equalizing low North American gas prices and higher European and Asian prices.
58. Charles Emmerson, The Future History of the Arctic (New York: Public Affairs, 2010), p, 201.
59. “Oil in Russia: Exxonerated,” The Economist (September 3, 2011).
60. The most decisive such impact was certainly the 1977 Berger Report which effectively killed the Mackenzie Valley gas pipeline.
61. Kristen Nelson, “BP Delays Liberty Drilling to 2011, citing Expected Plan Reviews,” Petroleum News 15:28 (July 11, 2010).
62. Neil,McCrank, Road to Improvement: The Review of the Regulatory Systems across the North, Ottawa: Indian Affairs and Northern Development, 2008, p. 2.
63. Canadian Association of Petroleum Producers, Northern Regulatory Improvement Initiative: A Submission to Neil McCrank, Special Representative Minister of Indian and Northern Affairs Canada, Calgary: 2008; B. Dixit et al. “Sustainable Energy Development in Canada's Mackenzie Delta–Beaufort Sea Coastal Region” Arctic, 61:5 (2008), pp. 103–10; C. Harrison, “Industry Perspectives on Barriers, Hurdles, and Irritants Preventing Development of Frontier Energy in Canada's Arctic Islands.” Arctic Journal, 9:2 (2006), pp. 238–42.
64. Keltie Voutier et al. “Sustainable Energy Development in Canada's Mackenzie Delta-Beaufort Sea Coastal Region,” Arctic 61:1 (2008), p. 105.
65. Stephen Higham, The Impact of Devolution on the Regulatory Regime of the Inuvialuit Settlement Region, Master's Thesis, University of Saskatoon, 2012.
66. Shawn McCarthy, “Oil Giants Contest Arctic Relief Well Requirement,” The Globe and Mail (June 9, 2011).
67. Ibid.
68. Canada, National Energy Board, Backgrounder – National Energy Board Report on the Arctic Offshore Drilling Review [online] www.neb-one.gc.ca
69. Claudia Cattaneo, “A Cautionary Tale for BC from NWT, Financial Post (March 16, 2012).
70. Randy Boswell, “Russia, Canada Neighbours?” Nunatiaq News (February 14, 2012).
71. See for instance Rob Huebert, “Renaissance in Canadian Arctic Security?” Canadian Military Journal 6:4 (Winter 2005–6); Michael Byers, Who Owns the Arctic? (Vancouver: Douglas & McIntyre Publishers Inc., 2009).
72. For a fuller treatment of this subject see: Adam Lajeunesse, “A New Mediterranean? Arctic Shipping Prospects for the 21st Century,” Canadian Arctic Shipping: Issues and Perspectives, ICNGD Occasional Paper 11:1 (Winter, 2011).
73. John Kirton and Don Munton, “The Manhattan Voyages and their Aftermath,” Politics of the Northwest Passage, Franklyn Griffiths ed. (Kingston: McGill-Queens University Press, 1987), p. 91.
74. John Livingston, Arctic Oil (Toronto, Canadian Broadcasting Corporation, 1981).
75. Several ongoing lawsuits are challenging the validity of all existing Chukchi Sea leases.