DUBLIN — Environmentalists are toiling to stop a modern-day gold rush at the top of the world, as the U.S. and four other countries scramble to stake claims to potentially vast oil riches under the frozen waters of the Arctic Ocean.
Environmental activists such as Greenpeace are opposed to any resource extraction in the region.
“Greenpeace has been protesting on all Arctic ice drillings since 2000,” said Truls Gulowsen, program director of Greenpeace Nordic. “We believe it’s high time to put some bars on the industry’s push into the area. It’s too vulnerable, and there is no way to clean an oil spill out of ice.”
The U.S. Geological Survey (USGS) estimates that the Arctic region contains 90 billion barrels of oil, representing about 13 percent of the undiscovered petroleum in the world. The region could yield about $8.3 trillion in oil revenue at today’s prices.
Some oil experts say the oil fields off the Arctic coasts of the United States, Canada, Norway, Russia and Greenland, which is part of Denmark, could be more than double the USGS estimate.
Extracting the Arctic’s petroleum requires drilling operations unlike those in the Gulf of Mexico, where nearly 5 million barrels of oil spilled during three months in 2010 after an explosion on BP’s Deepwater Horizon rig. It was the biggest oil spill in the history of the industry, and its long-term environmental damage is still being assessed.
“We’re in a global situation where we’ve found more oil and coal than we can afford to burn from a climate point of view, so unconventional sources [of oil] need to be the first to stay in the ground. At the same time, the Arctic is supervulnerable,” Greenpeace’s Mr. Gulowsen said.
Greenpeace recently lost a legal battle with the Scottish oil-exportation company Cairn Energy. On June 10, a court in the Netherlands issued an injunction barring the environmental group from obstructing drilling operations off the coast of Greenland. The group was fined more than $71,000.
’Huge challenges remain’
According to Mr. Gulowsen, the growing interest in Arctic oil reserves results from oil becoming scarcer in traditional source regions such as the Middle East.
“Areas that were completely covered with ice are becoming more and more accessible, and, from the oil companies’ point of view, they’re desperate for more resources,” he said.
Exploration continues regardless of campaigners’ concerns about environmental degradation.
“This space in the Arctic could end up with 200 billion barrels — that’s [more] than Iraq or Iran [have],” said David Horgan, managing director of Petrel Resources, a British-Irish oil exploration company with interests worldwide including in Iraq. “Before now, it wasn’t a live issue because it was so expensive to drill.”
He said drilling is only possible when the Arctic ice cap thaws in the summer for about two or three months, and it could cost $200 million to sink one well. That expense is about twice the cost of drilling in the Gulf of Mexico.
“Huge challenges remain: the sea and the environment, political issues, costs and technical issues,” he added. “The reality is that when drilling in deep water, … such as the well in the Gulf of Mexico, you are pushing boundaries of science.”
Most drilling in the Arctic reaches a depth of about 1,600 feet, while the BP rig that exploded in the Gulf of Mexico last year was drilling down to about 5,000 feet.
A Danish government document leaked last month suggests the country known for its commitment to wind power is more interested in fossil fuels than may have been thought.
Two years ago, Denmark began planning for an Arctic military command to back up its claim. Russia and Canada also have announced similar plans.
A Danish source close to the government told The Washington Times his country is cooperating with other countries with claims to the Arctic.
“There will be overlapping claims. It happens all the time,” he said. “But they will be dealt with under international law in an orderly manner.”
Russia plants a flag
In 2007, Russia warmed up the new Cold War, symbolically at least, by planting a flag in the seabed under the North Pole. Other countries with claims on the Arctic scoffed at the measure at the Russian antics.
“This isn’t the 15th century. You can’t go around the world and just plant flags,” said Peter MacKay, Canada’s foreign minister at the time.
Klaus Dodds, a professor of geopolitics at the University of London’s Royal Holloway College, said Russia’s headline-grabbing stunt masked the real efforts among the Arctic nations to resolve claims through the United Nations.
“When Russia planted the flag, it was an act of stagecraft and statecraft,” he said. “What that particular expedition was doing was reminding the world it was an Arctic power. And what there has been is a concerted effort to maximize sovereign rights over the Arctic Ocean seabed but [this time] under international law.”
The 1982 U.N. Convention on the Law of the Sea gave each of the five nations with Arctic coastlines 10 years to make claims to the region, after their governments ratify the treaty. The United States is the only one of the five that has yet to approve the convention.
“As long as America doesn’t accede to it, tension will remain,” said Mr. Dodds.
Mr. Horgan said the issue of Arctic claims is confused.
“Russia in some ways has the best geological claim,” he said. “Greenland, with a sea ridge that extends to the North Pole, is Danish territory, but there is talk about home rule.
“The [modern] law of the sea was only developed in 1980 or ’81, but it doesn’t tend to cover the Arctic. Originally territorial claims for the sea for countries covered your own land and a mile — because that’s how far a cannon could reach.”
International law gives a nation about 12 miles of territorial waters and up to 200 miles of an economic exclusionary zone where a nation can claim seabed resources.
But the region may not turn out be as lucrative as the Arctic countries’ finance ministries hope.
Real money is new shipping
California-based Russia analyst Anatoly Karlin, who runs the Arctic Progress website, said oil from the far north is not the mother lode that could transform the world market.
“One recent U.S. Geological Survey put production costs of Arctic oil at $100 per barrel,” he said.
The current price per barrel is about $92.
“They estimated 2.5 billion barrels could be extracted, which isn’t huge when you consider the U.S. oil reserves are 20 billion barrels and Saudi Arabia claims to have 260 billion barrels.”
Mr. Karlin said the real money is in new shipping routes.
“The Arctic is warming twice as fast as the rest of the world, and as the ice melts, then energy extraction will become more profitable,” he said. “But in the short term, shipping will be more significant. It could grow tenfold in the next decade.”
Mr. Dodds said even Arctic shipping is not as simple as some believe.
“It’s widely believed the Arctic Ocean will, in the summer, become more ice-free and this will lead to improved accessibility, particularly in the Russian Arctic — though the Canadian Arctic may become more clogged due to local conditions,” he said.
“I genuinely don’t think the Arctic is going to become a northern Mediterranean in terms of shipping volume.”
He added that the political power of the Arctic lies in its remoteness: “The vast majority of people are never going to visit these places, so the images have a huge rhetorical power.”
• Amanda Brown in Kent, England, contributed to this report.
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