Exploring Arctic oil and gas
Recent area activity and perspectives
Each country in the Arctic region has its own perspective on oil and gas recovery.
Russian Arctic opportunities may in fact be the big prize. Over the last few years, Russia has intensified the development of the vast hydrocarbon resources of its continental shelf, through state incentives aimed at stimulating offshore oil and gas production.
The area of Russia’s shelf and continental slope totals 6.2 million square kilometers, with the vast majority in the Arctic area. The defined area of the continental shelf may be increased as Russia prepares an application to extend its borders over 1.2 million square kilometers of Arctic waters, an application expected to be finalized by the end of 2013.
Canadian geologists long believed that the Arctic north had significant potential for petroleum discoveries. In 1967, a partnership between government and industry resulted in the formation of Panarctic Oils Ltd., and in the 1970s and early 1980s, the Canadian government invested in Arctic oil and gas exploration.
Following a regulatory update on oil and gas drilling regulation in the Canadian part of the Arctic Beaufort Sea, industry heavyweights Chevron and Statoil have joined forces to explore leases in the area this year.
Oil exploration in Greenland dates back to the late 1970s, but six test drillings in 1976, 1977 and 1990 failed to prove the potential for profitable exploitation, and the high cost of accessing reserves in waters and land that are icebound for most of the year deterred investors.
But the potential for profitable exploitation changed in the summer of 2010 when British independent oil company Cairn Energy discovered hydrocarbons in Greenland for the first time. Following the Cairn discovery, in November 2010, Greenland awarded its first offshore oil and gas exploration licenses to oil companies, opening up this Arctic frontier to future oil and gas production.
Norwegian oil and gas production is concentrated on the Norwegian Continental Shelf (NCS), with activity in the North Sea, the Norwegian Sea and the Barents Sea. The country is the world’s fifth-largest oil exporter and the second-largest exporter of natural gas.
After first starting production from the North Sea some 30 years ago, output peaked in 2001 at just over 3.4 million b/d and has declined since then — a situation reflected more generally across the region — even though recent significant discoveries have boosted confidence in slowing output decline rates.
The North American side of the Arctic is estimated to hold about 65% of the undiscovered Arctic oil and 26% of the undiscovered Arctic natural gas. Specifically, it is projected that the Alaskan Arctic region holds the largest undiscovered Arctic oil deposits (approximately 30 billion barrels).