Offshore shelf drilling operations in the Arctic Circle has become increasingly attractive to many oil and gas companies and investors. It is common knowledge that as crude oil prices continue to rise, cheaper alternatives must be explored and tested to eventually replace or reinforce our energy supply. These alternatives will include solar panels and wind turbines however, many companies are choosing to explore new oil reserves previously deemed uneconomical. One of the reserves being most seriously considered is, of course, the Arctic. The United States Geological Survey (USGS) estimated in 2008 that the Arctic contained close to 412 billion barrels of undiscovered oil.
The Arctic Circle area boasts about 22 percent of the “not yet discovered but recoverable” resources in the world. This is almost one third of the world’s potentially recoverable natural gas reserves. Due to improvements in drilling technologies and weather monitoring, the likelihood of accessing these reserves economically is slowly becoming a reality for many oil and gas companies.
Along with the technological advancements that bring along the ability to identify oil and gas pockets, ice is rapidly declining in the Arctic Sea. This has allowed increased exploration for minerals. A record ice-melt was recorded in 2012 which also began to allow the Northwest Passage to become navigable. The next record low ice is expected to occur within the next two years. This means that voyages can now be conducted to areas that were previously inaccessible. Additionally, this means that drilling contractors will have longer seasons to work.
The Chukchi Sea, which is a marginal sea of the Arctic Ocean is estimated to hold as much as 30 billion barrels of oil and gas. Several oil companies have been bidding for extraction rights, for around US $2.6 billion. Significant wave data has been recorded over the past three decades for both the Chukchi Sea and the Kara Sea to narrow down potential drilling windows. Drilling seasons are determined by the retreat and return of ice in the Marginal Ice Zones (MIZ).
Combining this historical information with new information collected can help predict the start and end dates of future drilling seasons. In May 2014, it was forecast that the 2014 Arctic drilling season would start on July 25 and continue until October 25 for the Kara Sea and from July 18 to October 25 for the Chukchi Sea. The actual ice-free period (less than 15 percent ice in the region) began on August 4 for the Kara Sea and on July 25 for the Chukchi Sea. The end dates were expected to be within ten days from the estimated dates.
Although promising, there are definite risks in the Arctic Sea such as potential freezing of fluids and the obstacle of winterizing equipment due to cold temperatures. Other potential challenges include remoteness in an already isolated region, communication challenges, collision risk with drifting icebergs, and weather delays while retrieving drilling equipment from the ocean at the end of the season.
Another definite concern is that the frequency of Arctic storms has increased due to atmospheric interactions with the open sea. NASA’s Arctic storm track maps contrast storm frequencies between 1950 – 1972 and 2000 – 2006 which shows a marked increase. The question remains – are the risks worth the potential benefits from drilling in this area?
The three factors that would make the exploration of Arctic reserves attractive to oil and gas companies are high commodity prices and technological feasibility, coupled with favorable environmental conditions. High commodity prices is of course met due to the rise of crude oil prices and continued investment in drilling technologies. This makes it feasible to explore the option of Arctic drilling. Of course the environmental concerns have been met with increased temperatures which are warming waters. An additional consideration are the potential positive and negative impacts on local economies, any environmental risks such as disrupting ecosystems and political sensitivities. However, these concerns seem to be diminishing as policies are slowly being put into place. We will most likely soon see drilling in the Arctic region.
Cho, William. “An open Arctic and its impact on drilling” Marine News. November 2014; 58 – 62. Print.