Location of Arctic Basins assessed by the USGS.
The exploration of the Arctic for petroleum is considered to be extremely technically challenging. However, recent technological developments, as well as relatively high oil prices, have allowed for exploration. As a result, the region has received significant interest from the petroleum industry.
Since the onset of the 2010s oil glut in 2014, the commercial interest in Arctic exploration has declined.
Overview
There are 19 geological basins making up the Arctic region. Some of these basins have experienced oil and gas exploration, most notably the Alaska North Slope where oil was first produced in 1968 from Prudhoe Bay. However, only half the basins – such as the Beaufort Sea and the West Barents Sea – have been explored.
A 2008 United States Geological Survey estimates that areas north of the Arctic Circle have 90 billion barrels
of undiscovered, technically recoverable oil (and 44 billion barrels of
natural gas liquids ) in 25 geologically defined areas thought to have
potential for petroleum. This represents 13% of the undiscovered oil in
the world. Of the estimated totals, more than half of the undiscovered
oil resources are estimated to occur in just three geologic provinces – Arctic Alaska, the Amerasian Basin, and the East Greenland Rift Basins.
More than 70% of the mean undiscovered oil resources is estimated
to occur in five provinces: Arctic Alaska, Amerasia Basin, East
Greenland Rift Basins, East Barents Basins,
and West Greenland–East Canada. It is further estimated that
approximately 84% of the undiscovered oil and gas occurs offshore. The
USGS did not consider economic factors such as the effects of permanent
sea ice or oceanic water depth in its assessment of undiscovered oil and
gas resources. This assessment is lower than a 2000 survey, which had
included lands south of the arctic circle.
A recent study carried out by Wood Mackenzie on the Arctic potential comments that the likely remaining reserves will be 75% natural gas and 25% oil. It highlights four basins that are likely to be the focus of the petroleum industry in the upcoming years: the Kronprins Christian Basin, which is likely to have large reserves, the southwest Greenland basin, due to its proximity to markets, and the more oil-prone basins of Laptev and Baffin Bay.
| Year | Region | Milestone |
|---|---|---|
| 1964 | Cook Inlet | shallow water steel platform in moving ice |
| 1969 | North West Passage | first commercial ship (SS Manhattan) to transit NW passage |
| 1971 | Canadian Beaufort | shallow water sand island exploration |
| 1974 | Arctic Islands | shallow and deep water ice islands exploration |
| 1976 | Canadian Beaufort | 20–70 m water depth ice-strengthened drillship exploration (Canmar drillship) |
| 1981 | Canadian Beaufort | shallow water caisson exploration (Tarsiut caissons) |
| 1983 | Canadian Beaufort | 20–70 m ice-resistant floating exploration drilling |
| 1984 | US & Canadian Beaufort | shallow water caisson & gravity based structure exploration (SDC drilling) |
| 1987 | US & Canadian Beaufort | spray ice islands used to reduce cost |
| 1998 | Sakhalin | extension of Molikpaq caisson for early production in ice |
| 2007 | Barents Sea | subsea to shore LNG (Snøhvit field) |
| 2007/08 | Sakhalin | shallow water ice-resistant GBS production |
| 2008 | Varandey | 1st arctic offshore tanker loading terminal |
| 2012 | West Greenland | deepwater floating exploration drilling in ice |
| 2014 | Pechora Sea | 1st shallow water year-round manned GBS production in the Arctic (Prirazlomnaya platform) |
Canada
Extensive drilling was done in the Canadian Arctic during the 1970s and 1980s by such companies as Panarctic Oils Ltd., Petro Canada and Dome Petroleum. After 176 wells were drilled at billions of dollars of cost, approximately 1.9 billion barrels (300×106 m3) of oil and 19.8 trillion cubic feet (560×109 m3)
of natural gas were found. These discoveries were insufficient to
justify development, and all the wells which were drilled were plugged
and abandoned.
Drilling in the Canadian Arctic turned out to be expensive and dangerous. The geology of the Canadian Arctic turned out to be far more complex than oil-producing regions like the Gulf of Mexico.
It was discovered to be gas prone rather than oil prone (i.e. most of
the oil had been transformed into natural gas by geological processes),
and most of the reservoirs had been fractured by tectonic activity, allowing most of the petroleum which might at one time have been present to leak out.
Russia
In June 2007, a group of Russian geologists returned from a six-week voyage on a nuclear icebreaker 50 Let Pobedy, the expedition called Arktika 2007. They had travelled to the Lomonosov ridge, an underwater shelf going between Russia's remote, inhospitable eastern Arctic Ocean, and Ellesmere Island in Canada where the ridge lies 400m under the ocean surface.
According to Russia's media, the geologists returned with the "sensational news" that the Lomonosov ridge was linked to Russian Federation territory, boosting Russia's claim over the oil-and-gas rich triangle. The territory contained 10bn tonnes of gas and oil deposits, the scientists said.
Greenland
Greenland is believed by some geologists to have some of the world’s largest remaining oil resources. Prospecting is taking place under the auspices of NUNAOIL, a partnership between the Greenland Home Rule Government and the Danish state. U.S. Geological Survey found in 2001 that the waters off north-eastern Greenland, in the Greenland Sea north and south of the Arctic Circle, could contain up to 110 billion barrels (17×109 m3) of oil.
Greenland has offered 8 license blocks for tender along its west coast by Baffin Bay. Currently, 7 of those blocks have been bid for by a combination of multinational oil companies and the National Oil Company NUNAOIL.
Companies that have participated successfully in the previous license
rounds and have formed a partnership for the licenses with NUNAOIL are,
DONG Energy, Chevron, ExxonMobil, Husky Energy, Cairn Energy.
The area available, known as the West Disko licensing round, is of
interest because of its relative accessibility compared to other Arctic
basins as the area remains largely free of ice. Also, it has a number of
promising geological leads and prospects from the Paleocene era.
United States
Prudhoe Bay Oil Field on Alaska's North Slope is the largest oil field in North America, The field was discovered on March 12, 1968, by Atlantic Richfield Company (ARCO) and is operated by BP; partners are ExxonMobil and ConocoPhillips Alaska.
In September 2012 Shell delayed actual oil drilling in the
Chukchi until the following summer due to heavier-than-normal ice and
the Arctic Challenger, an oil-spill response vessel, not being ready on
time.
However, on September 23, Shell began drilling a "top-hole" over its
Burger prospect in the Chukchi. And on October 3, Shell began drilling a
top-hole over its Sivulliq prospect in the Beaufort Sea, after being
notified by the Alaska Eskimo Whaling Commission that drilling could
begin.
In September, 2012, Statoil
chose to delay its oil exploration plans at its Amundsen prospect in
the Chukchi Sea, about 100 miles northwest of Wainwright, Alaska, by at
least one year, to 2015 at the earliest.
In 2012 Conoco planned to drill at its Devil's Paw prospect (part
of a 2008 lease buy in the Chukchi Sea 120 miles west of Wainwright) in
summer of 2013.
This project was later shelved in 2013 after concerns over rig type and
federal regulations related to runaway well containment.
October 11, 2012, Dep. Secretary of the Department of the Interior
David Hayes stated that support for the permitting process for Arctic
offshore petroleum drilling will continue if President Obama stays in
office.
Shell, however, announced in September 2015 that it was
abandoning exploration "for the foreseeable future" in Alaska, after
tests showed disappointing quantities of oil and gas in the area.
On October 4, 2016 Caelus Energy Alaska announced its discovery
at Smith Bay could "provide 200,000 barrels per day of light, highly
mobile oil".
Norway
Rosneft
and Statoil made the Arctic exploration deal in May 2012. It is the
third deal Rosneft has signed in the past month, after Arctic
exploration agreements with Italy's Eni and US giant Exxon Mobil. Compared to other Arctic oil states, Norway is probably best equipped for oil spill preparedness in the Arctic.
Environmental concerns
Greenpeace have launched the Save the Arctic Project since the melting Arctic is under threat from oil drilling, industrial fishing and conflict.
