There is a conception of the Arctic as a region solely based on the environment—in fact, there isn’t much else other than the environment. And yet the Arctic is now a battleground over one of the most controversial resources of today—oil.
According to a 2013 United States Geological Survey, the Arctic contains an estimated 13 percent of the world’s undiscovered oil deposits and 30 percent of its natural gas reserves. But as a region shared by the United States, Canada, Finland, Greenland, Iceland, Norway, Russia, and Sweden, there is the question of how to determine who has the right to Arctic resources. And the risks of extraction in the Arctic are unknown, as are reactions of oil companies and governments to environmental concerns, especially in the wake of disasters like the Deepwater Horizon spill.
The statistics make it seem as though oil rigs and drills will soon characterize the Arctic landscape. However, while the resources may be plentiful, the process of obtaining oil and natural gas is complicated with geographical issues such as the borders of the Arctic and power players such as Russia and China, environmental concerns about oil spills and the rights of animals and indigenous people, and the complicated political relationship between oil companies and governments.
The discovery of oil deposits begs the question of just who governs different areas of the Arctic. Since the region is so rich with resources, establishing clear borders amid a changing environment is both crucial and yet impossible. Countries want to assert their dominance (and subsequently control resources).
The eight-member Arctic Council, composed of nations that hold Arctic territory, governs the Arctic, but borders in the region are not always clearly defined. Russia has claimed parts of the Northern Sea Route above Siberia, among other claims about the boundaries of its territory. The conflict over borders in the region has even led Russia to establish military infrastructure in the Arctic. While the development of military infrastructure is a warning sign, it remains to be seen whether the Arctic will be the site of the next arms race, and just how far countries will go to control their piece of the region.
With the discovery of the wealth of oil and natural gas in the Arctic, it is now especially necessary to clearly delineate the borders of territorial sovereignty. The Antarctic adopted such a measure in 1959 with the Antarctic Treaty, which outlines borders and bans military development. The treaty allowed for scientific investigation on Antarctica and freedom of information about Antarctica within the United Nations and other international organizations. Such a policy, which hasn’t been deemed necessary yet in the Arctic would decrease tensions in the region and allow nations to make separate decisions about Arctic affairs. But until disputes over boundaries are resolved, tensions will remain among Arctic countries—tensions that inhibit the industrial and policy development that would allow the highly sought after resources in the region to actually be extracted.
Of the nations with a stake in the Arctic, none have been as invested in the approval of oil and natural gas extraction as Russia. The majority of the oil and natural gas fields discovered in the Arctic have been in Russian territory (territory that is in the Arctic Circle within Russian borders). But Russia’s aggressive pursuit of interests in the region has led to some unease within the Arctic Council. The Council is meant to ensure cooperation and that no nation has too much control over the region. However with Russia’s territorial claims, plans for oil development, and buildup of military equipment, it seems like Russia is looking to gain more ground in the Arctic.
The Arctic’s importance to Russia has become clear in the wake of United States’ sanctions against Russia over the Ukraine crisis. The Russians had been collaborating with companies such as BP and Shell to work on technological and mechanical developments to prepare for drilling in the Arctic. After sanctions were put in place, US companies were forced to pull out of the region leaving Russia to wonder if they would be able to continue alone.
Russia’s state-controlled oil company, Rosneft, claimed that they would work towards drilling in the Arctic, with or without international assistance. However, like most oil companies, Rosneft lacks the knowledge of how to handle the conditions of the Arctic and has less experience in handling such large-scale projects. Russian officials have responded to their industrial disadvantage by announcing plans to “Russify” the oil industry, including the creation of a new oil services company.
Russia is somewhat of a wild card in the fight for the Arctic. While news reports may claim that Russia is well on its way to begin drilling, members of the oil industry are doubtful that the country could play catch-up so quickly. Experts are wondering whether the Arctic, which is such a volatile and unpredictable region, is the best place for Russia to test out new oil technology. The endeavor to replicate Western technologies might wind up being a huge drain on capital with little return. Russia could wait for better relations with the US to continue oil development in the Arctic but it seems as though, for Russia, it is important to act now while the wealth of resources is still up for grabs. While perhaps not the most diplomatic strategy, Russia is proving just how important Arctic oil is to them.
It is often assumed that the Arctic is uninhabited, however this is not the case. The Inuit people have lived and hunted in the Arctic for over 2,000 years. Oil drilling could threaten the lives and health of these indigenous people, including raising the risk of Type 2 diabetes, substance abuse, suicide, and asthma. Oil extraction also poses a risk for the animals living in the Arctic. Environmental groups have petitioned against oil companies stating they pose too much of a risk to endangered species in the Arctic such as polar bears and bowhead whales, especially if there were to be an oil spill. While indigenous communities do practice hunting, their impact is significantly smaller than that of an oil spill.
Officials from the US Department of the Interior have stated that the needs of these indigenous communities and animal populations necessitate clear and specific rules about the rights and requirements for oil companies coming into Alaska. These rules include a requirement of a relief well (a second well that is built to contain the flow of oil in the event of a blowout) and a specific end date to the drilling season every year.
While oil companies argue that these kinds of regulations are too strict and costly, they may just be the key to accessing the valuable resources of the Arctic, at least in the US. The tension between the interests of oil companies and the interests of environmental groups and others concerned with preserving the integrity of the Arctic acts as a deterrent for oil companies. There is already huge risk for oil companies operating in an entirely new region and additional regulation delays the process of actually extracting oil.
After the Deepwater Horizon oil spill, companies were in the tough position of earning back the trust of the public and government. Now companies are trying to petition for the right to drill in the Arctic by lobbying governments controlling the region of the Arctic where they would like to drill. And governments, in response, are already preparing for just what will happen if there’s a spill. The Arctic conditions—from the cold to high winds to the storms, intense waves and fog typical of the region—are red flags for oil drilling. Not only are companies unfamiliar with conditions in the Arctic, and what exactly these conditions mean for drilling, but also if there were to be a spill, cleanup would be near impossible. There is minimal infrastructure in the area necessary to support an oil spill response—roads, airports and housing—making it likely that spill response would be even slower than that for Deepwater Horizon.
Shell is currently negotiating with the US government to implement drilling in Alaska’s outer continental shelf and is arguing that their new methods and the Arctic environment will prevent oil spills. Shell has argued that they will use lower pressure in the extraction process, which would protect against spills and that, even if a spill were to occur, the shallow water of Alaska would enable divers to reach the site easily.
And yet even without environmental restrictions there are questions of the feasibility of drilling in the Arctic. As of August 2013, Shell had invested $4.5 billion in the exploration of oil in Alaska and had not created a single producing well. Shell has argued that the money has largely been invested in combatting legal challenges from indigenous populations and environmentalists, but despite years of work and countless dollars, there is little evidence of all the alleged fortunes to be had in the Arctic.
A panel organized by the National Research Council in April 2014 proposed that greater research was necessary before drilling should begin in the Arctic to better understand how proposed drilling would affect the people living there and the environment. Specific recommendations included better forecasting systems for ice conditions, better infrastructure for spill response, and more research on how oil drilling in the Arctic differs from other regions.
Oil companies are excited about all the potential for the Arctic. This excitement endures despite all the barriers because, in an industry that constantly seems to be depleting a limited supply, the barrels of oil to be extracted in the Arctic are an indispensible resource. Oil companies are investing millions and standing up to tough opposition from indigenous communities, environmental activists, and governments who worry about a potential spill. The potential to make money on oil are statistics that oil companies will probably never have again. But companies are nowhere near to bringing that oil to gas pump or heaters. There are technological challenges to determine just how to extract the oil, complicated even more by the questions of environmental and cultural safety and spillage cleanup capacity.
The Arctic Council is composed of nations with Arctic territory but interests in the region extend past borders. China repeatedly asked for observer status on the Council, giving China a presence in the Council’s affairs. The Chinese argument for observer status relied on the fact that, with the effects of global warming and climate change, Arctic affairs are international issues that affect countries around the world. Other countries that have been given observer status on the Arctic Council include the United Kingdom, Japan, and India, mainly due to either their proximity to the Arctic or their influence in world economic affairs.
China was eventually admitted as an observing member in 2013, which is key for two main reasons. Fishing is a significant part of the Chinese economy and is governed by the delineation of different waterways as owned by a specific country or as international territory. Since the Arctic waters are constantly in flux due to climate change, they offer an opportunity for the Chinese to utilize Arctic waters for fishing. Since the Arctic Council determines the territorial rights of these waterways, sitting in as an observer on a meeting could mean important changes for China’s economy.
Additionally the Northwest Passage and Northeast Passage trading routes, which connect Europe and Asia through the Arctic, provide a much quicker and more efficient way to trade with the rest of the world, reducing the distance to 8,000 miles, compared to the traditional route of 15,000. (These paths have become navigable because of climate change.) As the biggest exporter in the world, China obviously has an interest in utilizing the most cost-effective trade route.
China’s Arctic interests have led the nation to sponsor research initiatives to learn more about the effects of climate change on shipping, fishing, and other issues of concern to the nation. China has built a research icebreaker and is planning to launch three expeditions to the Arctic this year.
The case of China demonstrates just how wide-reaching and complicated decisions about the Arctic are. China is miles from the Arctic and yet has clear interests in any outcome in the region. By this standard, the Arctic Council may start to have an influx of new members, perhaps including oil-producing countries in the Middle East whose wealth would be threatened by oil extraction in the Arctic. A decision about an American or Russian oil rig is not just one about the environmental effects of such an initiative or the impact on the indigenous population, but a decision with worldwide consequences for industry, trade, and international borders.
The Arctic remains one of last few unexplored regions on this planet. This leaves the region open to tremendous opportunity but also to great risk. There can be no assumptions that oil drilling, or any other activity, will be the same in the Arctic as anywhere else in the world. And as one of the few remaining purely natural places in the world, there must be especially strong efforts to maintain the environmental integrity of the Arctic.
There is serious concern about the effects that drilling will have in the Arctic. While of course this concern is warranted, there are many obstacles that exist before the Arctic loses its reputation as an expanse of ice and snow. There are still border disputes among different Arctic nations, particularly with Russia, and Russia’s efforts to develop oil infrastructure have been thwarted by sanctions. To resolve these disputes there must be new legislation or policies that clearly delineate borders and other key issues in the Arctic, acknowledging the fact that the region is now highly economically desirable. Current policy in the Arctic is fit for a region that doesn’t have much global influence or controversy; due to the discovery of oil, this is clearly no longer the case and updates are necessary.
Adding to the problems facing oil drilling in the Arctic is the backlash development from environmental groups and indigenous populations, as does the pressure on oil companies to develop operations with safety as a first concern, in light of recent oil spills. Before the discovery of resources in the Arctic, the area was an environmentalist’s paradise. The area was much as it had been for hundreds of years (apart from the effects of climate change). The idea that there were companies who would contaminate the region was unthinkable. Now with the new challenges to the Arctic environment, there needs to be serious discussion between governments, companies and environmentalists about just how resources from the Arctic can be utilized without damaging the land or its inhabitants.
And lastly there is the factor of the rest of the world. Melting ice means new waterways and new trade routes. And the discovery of oil means that the world is now focused on the Arctic, not only for environmental, but for economical reasons as well. While most people never have and never will go to the Arctic, the region is of worldwide importance because it remains one of the few preserved natural areas in the world. Oil is an exhaustible resource, and the discovery of that oil opens the potential for available resources for more years to come at lower prices. However, the Arctic environment and lifestyle cannot be threatened. While one person has negligible power against an oil company, advocacy on behalf of safe and responsible extraction will make a difference. Oil rigs are a ways away from the Arctic landscape and when they do appear, it’s important that they integrate into the Arctic that has existed for thousands of years (apart, perhaps from the effects of climate change), rather than detracting from it.