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Oil companies prepared to risk environmental disaster in Arctic

despite the risks, most of the world’s biggest oil companies are eyeing the Arctic. US giant ExxonMobil has signed an exploration deal for the Russian Arctic with Rosneft, as have Italy’s Eni and Norway’s Statoil. Statoil is also working in the Norwegian Arctic and is partnering Cairn Energy off Greenland

Risky business: oil giants chase Arctic bounty http://www.theage.com.au/world/risky-business-oil-giants-chase-arctic-bounty-20121001-26vew.html#ixzz28AfLRrIN October 2, 2012 Emily Gosden Energy companies are looking at the potential riches, but one is breaking ranks. DRILLING for oil and gas has always been a risky business; overcoming technical, political and environmental challenges is part of the job.

But last week, Christophe de Margerie, chief executive of French oil giant Total, declared that when it came to the Arctic Ocean, the risk of a spill was simply too high.
In the Alaskan Arctic, where Royal Dutch Shell began drilling offshore
last month, temperatures drop to minus 20 degrees in summer. Gale
force winds move giant ice floes – Shell’s drilling rig has already
had to get out of the way of one block bigger than Manhattan.
”The drilling conditions facing oil companies operating in the Arctic
are some of the most challenging on Earth,” Greenpeace argues. ”The
hostile weather, freezing conditions and remote location present
unprecedented challenges for dealing with a spill.”
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Any spill uncapped before winter could become frozen underneath
individual ice floes – floating hundreds of kilometres away before
being released into the ocean in the spring.
Yet, despite the risks, most of the world’s biggest oil companies are eyeing the Arctic. US giant ExxonMobil has signed an exploration deal for the Russian Arctic with Rosneft, as have Italy’s Eni and Norway’s Statoil. Statoil is also working in the Norwegian Arctic and is
partnering Cairn Energy off Greenland.
The US Geological Survey estimates that the Arctic may hold 90 billion
barrels of oil – almost three times annual global consumption and some
13 per cent of the world’s undiscovered reserves. There may also be
1669 trillion cubic feet of natural gas – 30 per cent of global
undiscovered reserves.
In the US, questions remain over political tolerance for drilling.
‘You have had some senior Democrat senators requesting that the Arctic
be removed from the interior department’s leasing program over the
next five years,” says Mark McClelland of risk consultants
Maplecroft. But most of the governments in the Arctic region are
eyeing the potential riches.
Meeting the high standards required to drill in the Arctic does not
come cheap. Shell has so far spent $US4.5 billion without even gaining
permission to drill into oil-bearing rocks.
Meaningful production is unlikely to emerge until well into the next
decade at the earliest. But, says Stuart Joyner of Investec, the
challenges will eventually be overcome. ”Technology is moving on and
the industry is becoming more capable.”

October 3, 2012 - Posted by Christina Macpherson | general