White House Arctic strategy: What's next for oil, gas drilling?
For all the energy prospects bandied about concerning the Arctic – including a new White House strategy paper for the region – oil drilling in US Arctic waters has come to a temporary pause.
Three major oil companies with operations in the region have pulled out for the year, citing harsh weather and regulatory difficulties.
Home to an estimated 13 percent of the world's undiscovered oil resources and 30 percent of undiscovered natural gas, the Arctic is sure to lure them back. How they return is crucial. If energy companies can show it's possible to recover those resources responsibly, it will have enormous consequences – for those companies' balance sheets, for the diplomatic relations of the eight nations whose borders fall within the Arctic circle, and for the health of the planet.
"Interest in the Arctic is not waning," Kara Moriarty, executive director of the Alaska Oil and Gas Association, wrote in an e-mail. "In fact, the interest is as strong as ever. Companies are already planning for the 2014 season and are working diligently to have the right equipment and plans in place to be successful." The group represents companies responsible for the majority of oil and gas activities in Alaska.
When companies return, they'll encounter a region caught in the middle of a multinational scramble for resources brought on by historic climactic change that is rewriting the rules of engagement.
The tension between commercial opportunity and conservation ethics are evident in the new Arctic strategy paper released by the White House Friday.
Offering few details, the paper calls for working together with fellow Arctic countries to balance resource extraction and environmental protection in a region heavily affected by a changing climate. These political dynamics add to the physical challenges of the Arctic.
"It’s a very difficult working environment," Heather Conley, director of the Europe program at the Center for Strategic and International Studies, said in a telephone interview. "Shell saw firsthand last summer just how difficult it is, and the level of scrutiny it attracts."
Unruly seas and severe storms plagued Shell's exploratory drilling last summer. In one headline-grabbing incident, a drill ship went aground while being towed for repairs. With memories of the BP Gulf spill still fresh, it sparked an immediate backlash and drew stern warnings from the Department of the Interior. The company, in turn, announced it would not drill in the Arctic in 2013.
Other companies followed Shell's lead. Norwegian oil giant Statoil announced it wouldn't drill exploratory wells in the Chukchi Sea, off northwestern Alaska, until 2015. ConocoPhillips said last month that it was suspending its drilling operations, citing regulatory uncertainties.
Surprisingly, regulations aren't necessarily an impediment. Norway has some of the highest safety standards in the industry and remains very attractive for the energy industry, according to Michael Byers, professor of international law at the University of British Columbia and author of the forthcoming book, "International Law and the Arctic." Low-regulation jurisdictions like Canada, meanwhile, are having difficulty attracting oil and gas companies.
"They saw what happened in the Gulf with BP and realized these can be bankruptcy-causing accidents," Mr. Byers said in a telephone interview, "and therefore want to share that burden with the government and be held to high safety standards."
It's evidence that safety, resource extraction, and conservation of the Arctic need not be mutually exclusive, Byers said.
But Byers and others stress the importance of remembering the long-term climatic consequences in the short-term race for resources. There's a strange circular paradox in Arctic drilling: The region's fossil-fuel extraction contributes to warming, which opens up drilling possibilities but also adds environmental turbulence that makes drilling so difficult.
Arctic ice melted at a record rate in 2012, which scientists attribute to rising temperatures from greenhouse gas emissions. While the changing conditions open up new opportunities in shipping lanes, the changing ice flows – along with unpredictable weather – make the Arctic a formidable place to drill for oil and gas.
When sea ice recedes, the choppy Arctic waters grow choppier, Byers noted, and coastal communities suffer from increased levels of erosion. Melting permafrost threatens the stability of buildings, roads, and pipelines.
"While moving forward in the Arctic, we need to ensure we’re doing it strategically, in a way that protects the region," Eleanor Huffines, an Arctic policy expert for the Pew Charitable Trusts, said in a telephone interview. "This pause is a really good time to take a deep look forward."
The White House's paper comes in advance of the Arctic Council ministerial meeting, taking place Wednesday in Kiruna, Sweden. Attendees are expected to vote on an oil spill response agreement and the assignment of a symbolic "permanent observer" status to various non-Arctic countries.
"The Arctic is one of our planet’s last great frontiers," President Obama wrote in the paper's introduction. "Our pioneering spirit is naturally drawn to this region, for the economic opportunities it presents and in recognition of the need to protect and conserve this unique, valuable, and changing environment."
Environmentalists expressed skepticism.
"It is great to see acknowledgement of the threat of climate change, just like it was great to hear the President talk about climate change in his [second Inauguration]," Dan Ritzman, Alaska program director at the Sierra Club, wrote in an e-mail, "but his climate legacy can not start until he stops facilitating Arctic drilling."
