Getting Arctic hydrocarbons will be a lot harder than anticipated

FT special report on Canadian energy that highlights the difficulties of accessing Arctic oil and gas and bringing it economically to market.

First is the sheer remoteness.  Then there's the extremely hostile environment.  Even with the ice-clearing in the summer, the genuine window for exploitation is still measured in weeks.  Everything you use must be special built, platforms with extreme reliability.

And the fields in question need to be big - really big - to cover the high costs.  

In short, only the majors and supermajors should apply, because only they will have the "financial firepower."

This is all before governments issue ever stringent safety requirements to protect the environment, a bar that rises with each Deepwater Horizon.

Finally, there's how you get it to market, with the big choice being between fixed pipelines and ice-class shuttle tankers.  Neither is cheap.

Just a bit of cold water thrown on the anticipated "bonanza."

I note it with interest as I write the final report (while traveling most of the week) for Wikistrat's recent "How the Arctic Was Won" simulation.

Greenland: Show me the money - and what else?

FT story on Greenland's oil rush and how it's driving the independence movement toward it's next goal. Having achieved self-governance in 2009, it remains a "dependency" on Denmark. But with 52b barrels offshore, the next step seems clear: economic independence that ultimately allows for true political independence.

I wouldn't try to portray the Greenlanders as chaffing under Danish rule.  Honestly, it's hard to imagine anybody chaffing under Danish rule. It's more that the newfound wealth changes things: people want economic advance and once that happens, perceptions change.

Greenland is 85% Inuit and about 15% Danes.

Naturally, the push to access the oil is generating an enviro backlash. Greenpeace is hot on the scene, although the ship seems to be populated totally by foreigners (their effort is dubbed "Operation Foreigner"). The group sees Greenland as a chance to revive itself after some wandering years. Meanwhile, the local activists seem most concerned about creating jobs for Greenlanders.

All rather fascinating to watch as globalization comes big-time to the Arctic.

WPR's The New Rules: Global Warming Shifts Focus to Friendly North

 

From the Arctic Council's website.

According to virtually all global warming projections, humanity faces significantly more conflict in the decades ahead as we fight over dwindling resources in climate-stressed lands. However, those reports typically overlook one likely outcome that could counterbalance the more negative impacts of global warming -- that of northern territories becoming significantly milder, more accessible, and, most intriguingly, more hospitable to immigration. This is the essential good news to be found in Laurence C. Smith's fascinating new book, "The World in 2050."

Read the entire column at World Politics Review.

Read about the book because of Smith's piece in the WSJ, which I blogged.  Asked Putnam for the book and got it pronto.  Like I hint at in the piece, Smith's survey of futurism was only average and didn't really add anything to the book.  I have no idea why he or his editors felt the need to promise "the world in 2050," because the text simply doesn't deliver. But the book-within-the-book on the "New North" was eye-popping. I would have loved to hear more about that and skip all the surveying.

What! No naval war over Arctic resources?

Image found here

Moscow Times story:

Russia and Norway have reached an agreement on a long-running border dispute, Norwegian Prime Minister Jens Stoltenberg said Tuesday, in a deal that will provide a framework for how the two countries divvy up the vast energy reserves on the Arctic shelf.

"The decision [we have reached] provides that the disputed territory in the Barents Sea and the Arctic Ocean are divided into two equivalent parts," he said Tuesday at a joint news conference with President Dmitry Medvedev. "The way in which the border line will be drawn satisfies both states."

The agreement will regulate both fishing and drilling on 173,000 square kilometers of the Arctic shelf, which will be divided into two approximately equal parts. Details of the agreement were not disclosed as documents are still being prepared for the final deal.

The scuffles over the countries' Arctic border area have been a sore point in relations for some time. The Norwegian coast guard has detained a number of Russian fishing vessels over the years for various violations. In 2006, Russia temporarily banned the imports of fish from four Norwegian enterprises in what was largely seen as a political move.

Rights to develop the Arctic's vast energy resources have been another sticking point, but in a sign that the two sides may be warming to a more cooperative approach, Medvedev on Monday invited Norway's Statoil to explore the giant Prirazlomnoye oil field in the Barents Sea.

Don't you just hate it when things work out like that?

[thanks to WPR's media roundup]