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MADRID: The appetite for Arctic oil has surged in line with
rocketing crude prices but environmental concerns and a diplomatic
stalemate stand in the way of exploration, experts say.
At a time when supplies are struggling to keep
pace with surging demand from developing countries, the industry is
increasingly looking to new frontiers in its search for new
reserves, with the Arctic clearly in the sights.
“There is lots of oil under the North Pole,”
said geologist Donald Gautier of the US Geological Survey at the
World Petroleum Congress this week. He estimated that the Arctic
holds 100 billion barrels of oil.
But while extracting the oil from the harsh
Arctic environment poses unprecedented technical challenges, the
biggest barrier to exploration is the disputed ownership of the
region, which makes it difficult to get permission to drill, he
added.
“Technology is critical on the one hand but
the real issue in access to those continental shelves,” said
Gautier.
Five countries that border the Arctic
Ocean—Canada, Denmark, Norway, Russia and the United
States—dispute the sovereignty of the region’s waters and they
have become more vocal in their claims as interest in the region’s
resources rises.
Last year Canada announced it would build eight
Arctic patrol vessels to reassert the country’s northern
sovereignty.
“Canada has a choice when it comes to
defending our sovereignty in the Arctic; either we use it or we lose
it. And make no mistake this government intends to use it,”
Canadian Prime Minister Stephen Harper said at the time.
Shortly after, Russian explorers placed a
rust-proof titanium Russian flag on the seabed below the North Pole
in what was seen as a bid to further Moscow’s claims to the
Arctic.
The North Pole is not currently regarded as part
of any single country’s territory and is therefore administered by
the International Seabed Authority.
Environmental concerns also put the brakes on
oil exploration in regions like the Arctic that are opening up to
oil development thanks to technological developments, said David
Boone, the president of Canada’s Escavar Energy, an oil and gas
producer.
“Even as space age technology opens up new
areas, environmental concerns can shut them down just as quickly,”
he said.
The danger of oil spills in such a sensitive
environment, where the cold means crude breaks down at especially
slow speed, and the risk of disruption to local ecosystems figure as
the two biggest concerns.
Industry leaders and analysts agree though that
with oil prices at record highs, oil firms are not short on the cash
that would be needed to open up new areas to oil exploration.
“Anyone who suggests that the oil industry
does not have the money to invest with oil at $140 a barrel is being
facetious,” said StatoilHydro vice president for business
development Robert Skinner.
Earlier this month BP, ConocoPhillips and MGM
Energy Corp were awarded exploration rights by the Canadian
government for three offshore blocks in the petroleum-rich Arctic
region in a lease sale.
The World Petroleum Congress, a gathering of
executives from major oil companies and ministers from top oil
producing nations held every three years, wraps up on Thursday. It
is one of the industry’s biggest events.
-- AFP
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