Arctic oil deal

Some 13 percent of the world's untapped oil reserves and almost a third of untapped gas reservoirs are estimated to be stored in the Arctic - a region that was long deemed inaccessible to the machinery needed to extract the resources.

But since climate change has caused sea ice to melt, there has been a virtual oil rush by the industry's giants to tap these reserves. Rising oil prices and the desire to be independent from oil imports are adding to a growing wish to extract new sources of energy.

Cooperation in the cold instead of 'Cold War'

An agreement between Russian state group Rosneft and BP was cancelled last year. After a year of negotiations, Rosneft signed a deal Monday with American giant Exxon, agreeing to concessions in the field of energy taxes and tariffs.

"Experts describe the project as just as ambitious as manned space travel or the journey to the moon," Russia's Deputy Prime Minister Igor Sechin said at a presentation in New York.

Energy groups Exxon and Rosneft plan to invest a total of more than 380 billion euros ($502 billion) in their cooperation. At least 15 sea platforms would be built on the Arctic Kara Sea, Sechin told reporters. The Kara Sea is estimated to hold 36 billion barrels of recoverable reserves.

"Today Rosneft and Exxon Mobil enter offshore projects of unprecedented scale," said Rosnef President Eduard Khudainatov.

Environmental groups have warned about the dangers of a possible oil disaster in the region with its sensitive ecosystems. According to Greenpeace, the Arctic ecosystem is the ultimate loser in the deal between Rosneft and Exxon, which was initially made public in August 2011 and has only now been presented with all its details.

"An oil spill like the one we saw in the Gulf of Mexico would have far worse consequences in the Arctic," said Greenpeace's oil expert Jörg Feddern.

Scientists blame the chemicals that were used to dissolve the oil after the accident for reports about diseases and disfiguration of fish and shrimps in the Gulf of Mexico. And more than 20 years after the Exxon Valdez spill the waters in Alaska still carry traces of oil.

A study by the international insurance company Lloyds warned about the high risks entailed in economic endeavors in the Arctic. Charles Emmerson of the Chatham House think tank which conducted the study on behalf of Lloyds, said there are "imminent costs, environmental risks, and uncertainties" to developing the Arctic and that strong political guidance, risk management and enhanced scientific research are necessary to cope with the project's unique risks and challenges.

Education vs. extraction

John Farrel, CEO of the US Arctic Research Commission, said additional data about the Arctic needed to be collected. The region is warming up twice as fast as the rest of the planet and he added that research was losing in significance as the race for resources picked up speed.

Aqqualuk Lynge, a Greenlander and chairman of the Inuit organization Circumpolar Council, which represents some 160,000 Inuit who live in the Arctic regions of Alaska, Canada, Greenland and Chukotka (Russia) and calls for caution and sustainability when accessing the Arctic's natural resources, criticized the speed with which the project has been pushed forward. He said he doubted the technology was in place to drill safely in Arctic waters without harming seals and whales.

Infrastructure with flaws

Safety and infrastructure represent big challenges when drilling and transporting oil across the Arctic, according to Jörn Harald Andersen, a consultant with Norwegian Clean Seas Association (NOFO), which supports the operating companies in Norwegian waters in charge of cleaning away oil spills.

"The further north we go for work the less daylight there obviously is in winter," Andersen said, adding that the companies also have to deal with restricted visibility because of fog, low temperatures and a lack of proper infrastructure.

"We have to transport lots of equipment and staff there. There's hardly any local support and logistics is more difficult than elsewhere," he said. But he also said he is convinced that his group could cope with a potential oil spill in the Arctic.

Ecosystem under pressure

Environmental groups, however, disagree. WWF and Greenpeace both said they doubt the oil industry is sufficiently prepared for a large oil spill in the Arctic.

Signing a sea rescue operation agreement by the Arctic Council last year is not enough to guarantee safety when expanding oil exploitation and oil transport activities in the Arctic, according to Frida Bengtsson of Greenpeace Norway.

The Arctic's enormous territory is difficult to access, making it difficult to react appropriately in the event of an oil disaster caused by drilling activities or tanker transport, she said.

"I think it's the biggest imminent threat to the Arctic ecosystem," Bengtsson said.

Author: Irene Quaile / nh       
Editor: Sean Sinico