The Arctic has Approximately One-Quarter of the World's Undiscovered Technically Recoverable Oil and Gas Resources

Thursday 13 October 2011, Amsterdam

The Arctic region contains about 6% of the Earth's landmass and is estimated to have approximately 22% of the world's undiscovered oil and gas resources that can be recovered using the currently available technology. The region accounts for about 30% of the world's undiscovered natural gas, 13% of the world's undiscovered oil and 20% of the world's undiscovered natural gas liquid (NGL).

The hydrocarbon riches of the Arctic has been long known to the world but have remained unexploited due to its thick ice cover, harsh climatic conditions, lack of appropriate technology, and the high cost of recovering oil.

Due to declining oil production from the existing onshore fields and the declining number of significant onshore discoveries, the oil producing nations and companies are turning to untouched areas with high potential for oil and gas resources. The high oil prices prevalent in the current market scenario and access to advanced technology are encouraging countries and oil and gas companies to exploit hydrocarbon resources in the Arctic region.

Receding Polar Ice-Caps Leading to Disputes Between Countries in the Arctic
Climate change is causing the polar ice-caps to melt and this is freeing area from under the ice for exploration and navigation in the Arctic region. The Arctic littoral countries, the US (Alaska), Canada, Greenland, Iceland, Norway and Russia have territorial waters in the Arctic Ocean that extend for 200 nautical miles from their respective coast lines. These countries are vying to extend their territories beyond the allotted extents to claim a greater area of the resource-rich Arctic region. This has given rise to disputes between these countries.

The ice in the Arctic region is expected to melt and free more land in the future. The Arctic region is believed to currently contain about a quarter of the world's hydrocarbon resources and other precious metals. The melting ice will also free crucial navigation paths between Europe and East Asia. The melting ice in the Arctic region has resulted in a race between Arctic countries to secure more land. Arctic littoral countries are increasing their military presence in the region to secure their Arctic territories, while also exerting ways to extend these territories.

Disputes between Arctic littoral countries are a result of the ice-caps melting and the global urgency to locate more oil and gas resources as the existing levels fall.

International Oil Companies are the Key Players Vying to Increase their Presence in the Arctic Region
Construction of infrastructure in the Arctic region for oil and gas exploration requires huge investments due to the climatic conditions and the remote location of the region. Conducting exploration activities in the Arctic requires advanced technology that can withstand the harsh conditions of the Arctic, whilst minimizing damage to the environment. This will increase the cost of exploration and development in the region.

Oil and gas exploration in the Arctic region is a high risk, high gain proposition for companies in the long run. Operating in the Arctic region will require highly experienced players that have the capacity to take and sustain risks. This will mostly restrict activities to large international companies with years of experience in oil and gas exploration.

The Arctic has Harsh Climatic Conditions and Lacks the Adequate Infrastructure for Oil and Gas Development
Although rich in oil and gas resources, the Arctic region has harsh climatic conditions, a fragile ecosystem and lacks adequate infrastructure. Rough seas, strong winds, below freezing temperatures, thick levels of ice for most of the year and its remoteness make exploration and operations difficult in the region.
Offshore drilling in the Arctic for oil and gas requires specialized technology to withstand the harsh climatic conditions, severe cold and freezing sea water. Most metals under such severe cold tend to snag, ships operating in the region require special fuels that will not freeze under low temperatures and people requires special protective gear which impedes movement.

Exploratory drilling in the Arctic requires a better oil spill prevention method, as an incident like the Gulf of Mexico spill in the Arctic could ruin the Arctic marine ecosystem. Oil and gas exploration activities usually have to be carried out during the short summer window, which lasts for three to four months. In the case of a spill before the onset of autumn, the cleanup will become an impossible task for the season, rendering the spread of oil unstoppable for the year. The lack of sunlight in the Arctic will also prevent the evaporation of spilled oil on the ocean surface.

The harsh conditions and the remoteness of the region make the construction of infrastructure challenging in the Arctic region. For example, the design of pipelines in the Arctic requires the consideration of certain challenges that do not apply elsewhere, such as ice gouging by pressure ridges and icebergs in shallow waters, strudel scour, permafrost thaw, and upheaval buckling.


About the research:
"Oil & Gas Exploration In the Arctic Region - Analysis of Exploration & Development Plans in this Environmentally Sensitive Area" is the latest report on Arctic Oil & Gas Exploration, published on ASDReports.com.
The report highlights the oil and gas exploration potential of the Arctic region, providing details of the key exploration areas, major companies exploring the Arctic and the drivers and challenges of oil and gas exploration in the Arctic. The report discusses the leasing and exploration activities in the US, Greenland, Canada, Iceland, Norway and Russia, detailing concessions awarded, new licensing rounds, companies involved and the drivers and challenges to development.