Attempts to drill for Arctic oil prove that governments must act together in protecting Polar Regions
|Image source: Morguefile.com|
The icy landscape surrounding the poles is often described as the last great wilderness. This is a strange turn of phrase, because in reality, the Arctic is anything but ‘barren’ or ‘empty’. It is bursting with life. Think of the BBC’s Frozen Planet series. So, when the big oil firms continue to drill for crude oil in the fragile environment of the Arctic, a debate ignites over the risk of pollution and the value of the ecosystem.
Drilling in the Artic presents challenges. In December 2012, Royal Dutch Shell’s offshore rig the ‘Kulluk’ beached onto an island in Alaskan waters as it was being towed back to the US. According to media reports, rough seas meant that towboats could not regain control of the rig and it hit rocks on a small island in the Gulf. Luckily, the Kulluk’s fuel tanks remained intact and no oil was spilt, but it’s another incident to suggest that the harsh conditions of the Arctic increase the risks for drilling. If a spill does occur, with low temperatures and storm events it may not be possible to begin clean-up operations for days or weeks - known as the oil spill response gap.
These operations in the Arctic Circle are made financially viable because of a high oil price, linked to our insatiable demand for the crude stuff. If prices fall, as in the financial crisis of 2008, the industry suffers too. Approximately 25% of the world’s remaining oil and gas reserves are found in the Arctic. Shell has invested nearly £3.1 bn to date on their Arctic drilling programmes, but as the events in 2012 showed, their success in the region has been limited so far and they were forced to halt operations in Alaska in February. Environmentalists were overjoyed.
Adding heat to the debate, governments in the US and the UK have played a regulatory role in Arctic oil, which has been met with public support. The US Department of the Interior launched a full investigation into Shell’s 2012 activities, concluding in March that the organisation was underprepared for the testing Arctic environment. The federal government report does not suggest that Arctic drilling is impossible, but that more time and money must be invested into the planning stage before drilling should occur. It sends a clear signal to oil firms that safety is key. MPs in the UK Parliament’s Environmental Audit Committee have echoed these concerns, calling for greater transparency and public scrutiny of Arctic drilling plans. Across the Atlantic, Greenland’s new administration has stopped issuing new licenses for drilling, in a move celebrated by Greenpeace and other NGOs.
Where does this leave the industry? Shell’s previously unrivalled reputation for technical expertise in harsh environments has been damaged by the episode in Alaska, but they are not the only one forced to re-think. The Norwegian state company Statoil cancelled its drilling strategy for Alaska in March, following the demise of Shell in the region, as revealed in an interview with Bloomberg news corporation. Statoil does not expect to make a decision on Alaskan drilling until at least 2015 now, with the potential for operations to kick start in 2020.
Controversially, while western governments cast doubt on the safety credentials of the big oil firms, drilling in the Russian Arctic is set to expand. In a press release on 8 April, the Russian energy giant Gazprom revealed that its subsidiary company, Gazprom Neft, was to sign an agreement with Shell for joint working offshore of the Siberian coast. Russian President Vladimir Putin and Dutch Prime Minister Mark Rutte were present at the signing in Amsterdam, owing to the scale of the new pact. This development has been criticised by leading conservation charity WWF, who see the move as exporting failures from the United States to Russia.
The developments in Arctic oil drilling prove that the regulation of oil reserves in the Polar Regions is marred by complexity. There are obvious issues such as: who owns the rights to Arctic resources? Who should have a say in their exploitation? And what are the risks of pollution? In times like these, governments must turn to international institutions like the Artic Council for reprieve. Through a global dialogue, national governments can decide whether drilling for Artic oil is a good idea at the present time, or if it’s even necessary at all. This is challenging for international relations and energy security, but it’s a crucial step that could determine the future of the last great wilderness. Until then, we can only hope that the oil doesn’t spill.