Like any other government, Ottawa is lured by the prospect of discovering deposits of oil and gas, and is well aware just how valuable the Arctic's natural resources could turn out to be. 'We know from over a century of northern resource exploration that there is gas in the Beaufort, oil in the Eastern Arctic, and gold in the Yukon. There are diamonds in Nunavut and the Northwest Territories, and countless other precious resources buried under the ice, sea and tundra', as Stephen Harper said on the eve of his visit to the region in August 2007. He emphasized how important these reserves could turn out to be: 'Whether it is the thawing of the Northwest Passage or the suspected resource riches under the Arctic seabed, more and more countries are taking an interest in the waterways of the Canadian Arctic.' Harper has also pointed out that exploiting these resources would create a lot of jobs, as well as providing the government with perhaps huge revenues: 'I think in the eyes of many Canadians, what defines us is being a northern nation. The north has tremendous resource potential', as he told one reporter. 'We're seeing a worldwide expansion in demand for mineral resources in particular, so we think it's important to take advantage of those opportunities, find work for people up there.'27
Although any government would naturally want to claim title over a region thought to be as energy-rich as the Arctic, Ottawa has more reason than most. While production in Russia, and other countries, is falling essentially because of a crippling lack of investment, Canadians fear that many of their best reserves have already been exploited and are nearing exhaustion. In recent years, the output from the Western Canada Sedimentary Basin has comprised nearly all of the national oil and gas production, but these wells are not expected to keep producing at the current rate for more than another decade. Although the energy industry has tried its utmost to find new deposits and develop new techniques to make the most of existing supplies, they have been unable to halt the downward drift of national reserves. Independent studies predict that the country will be able to meet domestic demand until at least 2030, but given that almost no one expects to make any very large discoveries on the mainland, the Canadian authorities have good reason to be worried, even if the industry does succeed in developing unconventional fuels.
This means that the Arctic's resources could conceivably provide Canada's energy sector with a form of long-term life insurance. But one problem is that the legal status of several places thought to be rich in natural resources is heavily disputed. One section of the Beaufort Sea, for example, that both Canada and the United States claim as their own, is also widely considered to be the home of large quantities of both oil and gas. The area's promise becomes clear from the large quantities of money that energy companies have been prepared to invest there. In July 2007, when Imperial Oil and its sister company, ExxonMobil Canada, bid C$585 million to win a large exploration block in the Beaufort Sea, its spokesmen emphasized that the commitment would not have been made 'if we didn't see some long-term exploration potential'.28
Another example is Hans Island, situated in the Nares Strait exactly halfway between Greenland and Canada. That anyone should be particularly interested in what is little more than a large lump of rock, measuring just half a mile wide, is surprising. As one description has put it, wryly, 'amenities are scarce but there is a tiny wooden hut with a cot, stove, two pans and some Tang drink crystals. Surveys indicate that restoring this most northern outdoor toilet is feasible. Vegetation includes red lichen and hardy Arctic moss'.29 What matters is the possible presence of oil and natural gas off its shores, and when the Canadian firm Dome Petroleum began to undertake some research there, in the late 1970s, interest in the region began to heat up.30 The dispute really dates back to 1973, when Denmark and Canada decided to create a maritime border through Nares Strait, running exactly halfway between their territories, but couldn't agree over who should have a right to rule the island. Although they decided to settle the matter at a later date, Dome Petroleum's unexpected interest in the area changed everything. In 1984 a contingent of Canadian troops visited the island, staying long enough to plant their national flag and leave behind a bottle of their native whiskey. A week later the Danes retaliated, despatching a government official, Tom Hoeyem, to hoist up their own national flag, claiming that Canada's had been blown away by the strong Arctic winds, and then left behind a bottle of Denmark's own best brandy.
Hans Island has remained a sticking point between the two countries despite numerous promises to resolve the issue. In the summer of 2005, for example, Canadian Defence Minister Bill Graham briefly visited the island and made some remarks that caused serious annoyance in Copenhagen: 'Our view is that it's part of Canada and we continue to be there, to go there. The Danes go there as well and we are making sure that the Danes know that this is part of the Canadian territory.' He added that 'it's a part of Canada. I'm really glad I went there'.31 But the Danes were unimpressed and, in a radio interview, a legal expert at the foreign ministry in Copenhagen argued that 'we consider Hans Island to be part of Danish territory and will therefore hand over a complaint about the Canadian minister's unannounced visit'.32 Canada's Foreign Minister, Pierre Pettigrew, and his Danish counterpart, Per Stig Moeller, met in New York less than 2 months after Graham's flying visit and agreed to resolve the dispute but still seemed no further forward when, soon afterwards, Pettigrew reiterated his belief that Canada has sovereignty over Hans Island.
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