In the summer of 1990, a leading Canadian geologist was flying by helicopter to a research station near the Borup Fjord on Ellesmere Island. Glancing down at the terrain hundreds of feet below, he noticed that part of a huge ice formation had a distinctive yellow tarnish, and after landing nearby, he drove to the area to take a closer look.
At the offices of the Geological Survey of Canada, colleagues looked at the samples he had taken and confirmed what he already suspected: that the tinge was caused by hydrogen sulphide, induced by sulphur-oxidizing bacteria thriving within the glacier. Among members of the scientific community, this revelation caused a flurry of excitement. Experts at NASA, who had spent years investigating the terrain of other planets in the solar system, were taken aback by the possible significance of the discovery: if there is life in the depths of an Arctic glacier, they asked, could there not equally be some forms of life on the frozen environments of outer space? For the geologist, the news meant something else entirely: the presence of sulphur is often an unmistakable sign of underground petroleum. Ellesmere Island, in other words, suddenly seemed to promise oil.
In the summer of 2008, a leading scientific research organization, the United States Geological Survey (USGS), published a report, formally known as the 'Circum-Arctic Resource Appraisal', which had taken 4 years to complete and whose conclusions had been eagerly awaited, not only in the scientific world but also by many groups. The matter had once been academic, but since the late 1990s, it has started to become important for one simple reason: the ice is retreating and opening the way for underwater exploration, and exploitation of resources. Although this has always promised to be an immensely complicated task, the contemporary oil industry has considerable technological expertise at its disposal. 'For a variety of reasons, the possibility of oil and gas exploration in the Arctic has become much less hypothetical than it once was', emphasized Donald Gautier, a chief USGS geologist, when the report was published.1
The agency's findings seemed to make a compelling case that the Arctic is set to become a new frontline for oil and natural gas exploration. Using the latest scientific methods and instruments, the geologists argued that the region has as much as 90 billion barrels of undiscovered oil reserves, and 1,670 trillion cubic feet of natural gas. This is equivalent to around 13 per cent of the world's total undiscovered oil and about 30 per cent of its undiscovered natural gas, while the researchers also reckon that the region holds a huge quantity of natural gas liquids, amounting to perhaps as much as 44 billion barrels in total.2 The 'extensive Arctic continental shelves', the researchers argued, 'may constitute the geographically largest unexplored prospective area for petroleum remaining on earth'.3
In particular, the scientists emphasized one very important aspect of these findings. These reserves were not the total quantity of underground oil, known in the industry as 'oil in place'. Instead, they were an estimate of how much of this 'oil in place' is actually 'recoverable'; in other words, how much of it can be lifted out of the ground using methods and technology that are already being used elsewhere in the world.
This is a crucial difference, and the scientists were well aware of how much weight international governments might be tempted to give their findings. 'Before we can make decisions about our future use of oil and gas and related decisions about protecting endangered species, native communities and the health of our planet, we need to know what's out there', said the director of the Survey, Mark Myers. 'With this assessment, we're providing the same information to everyone in the world so that the global community can make those difficult decisions.'4
The revelation that the Arctic can boast natural resources on such a vast scale has fostered speculation that the region will be the setting for future 'resource wars'. The confrontational rhetoric of some political leaders, as well as provocative actions such as the flag-waving underwater expeditions made by Russian submarines in August 2007, have only helped to fuel fears that the Arctic could be a future battleground for oil and natural gas. But such talk is misleading. There are many reasons why this worst-case scenario is - in theory at least - most unlikely to ever come about. A much more complicated picture is likely to emerge.
Oil and natural gas are very different commodities, surrounded by quite different issues, but this chapter will focus purely on oil.
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