Economy: Global Warming Creates New Oil Rush in Arctic

Melting ice caps leaves Arctic oil up for grabs. But at what cost?

Melting ice caps leaves Arctic oil up for grabs. But at what cost?

As the climate warms and the ice-caps melt in the Arctic, a trillions of dollars of oil are becoming accessible to oil drilling rigs. In July 2008, the US Geological Survey released data estimating that 90 billion barrels of oil — 13% of the world’s untapped oil resources – were locked in the earth of the frozen North. By June 2009, however, the Circum-Arctic Resource Appraisal programme had revised that estimate to be around 160 billion barrels of oil, or 35 years worth of US oil imports. That much oil could supply the entire globe for five years and would be worth more than 18 trillion dollars at current market price.

Arctic Pioneers

Cairn Energy, an Edinburgh oil exploration company that was founded by rugby player Sir Bill Gammell, was the first in this new wave of oil drilling. Last year’s three oil wells all struck out, but the company is hoping to strike oil this time with four wells in Baffin Bay, off of the west coast of Greenland. Following close on Cairn’s heels is Shell, an energy giant that has spent billions on seabed leases to start their exploration in July 2012. Shell is making plans for up to 10 wells in Beaufort and Chukchi seas off the coast of northern Alaska. This region, according to the US Geological Survey, is estimated to have 25 billion barrels of oil.

Not to be outdone is the world’s largest company, ExxonMobil, which last week announced its $3.2 billion partnership with the Russian state oil group Rosneft. Their goal is to seek out oil on the other side of the Artic, off the coast of Sibera in the Kara Sea. ExxonMobil is taking the place of BP, which was blocked from Rosneft partnership its own existing Russian partners this May. A spokesperson from BP said that it, too, was actively looking for opportunity in the Arctic.

Environmental Concerns

These developments are spurring on a growing concern from environmentally conscious consumers who have not forgotten last year’s BP spill in the Gulf of Mexico. It is especially irksome for environmentalists that global warming, thought to spurred on considerably by fossil fuel use, is what is making the Arctic now vulnerable to drilling and possible environmental catastrophes. Ben Ayliffe of Greenpeace says that “to use the retreating sea ice as a business opportunity is frankly madness.” His organisation continues to try and disrupt oil rigs in the Arctic because, as he explains, “The risks of drilling and producing oil in this fragile and pristine natural ecosystem, one of the last great wilderness areas of the planet, are terrible.”

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