Canada's Push for Arctic Energy Not Heating UpVW Staff
Canada is one of the countries that have the opportunity to exploit the massive energy and mineral deposits within the Arctic circle. Others, include the U.S, Russia, Norway, Denmark (Greenland), Iceland, Finland, and Sweden. These are the main countries set to benefit from the multi-trillion worth region, and the majority of them have already started their plans toward raking massive profits in the next few years. Unfortunately for Canada, things are on a slow pace as compared to the others.
The area is believed to contain approximately 46 trillion cubic metres of undiscovered global natural gas, equivalent to 30% of the global figure. Furthermore, geological results indicate that the area has more than 90 billion barrels of undiscovered oil deposits, which is 13% of the global figure.
Interestingly, this massive wealth deposit in the Arctic has been in the frame of the various governments for decades, and yet, until now, none have been able to launch projects. The main reason has been an all time logistical challenge. None of them have been able to come up with a perfect navigational strategy. Additionally, the opposition from climate change and global warming activist organizations has been a major stumbling block for some of the countries, even up to the current date.
Ironically, while the environmentalists are tirelessly fighting to curb global warming and climate change, the Arctic circle is beginning to shed hope for the anxious oil companies waiting to pounce in a blink of an eye. The global warming and climate change is eliminating the navigational barrier, which has put off several oil companies, and as the writer in the financial post notes, this is just like a single piece of pizza. In one of our earlier posts, we highlighted the difficulties in drilling oil under such conditions, as well as tussles between governments and environmentalists involved. Indeed, what is keeping Canada at bay, it’s not just related to navigational troubles, as this challenge has already been minimized by an act of nature, or should we say “evil acts of men”?.
An article published in the financial post quotes Charles Emmerson, the writer of The Future History of the Arctic, now a senior research fellow at London-based Chatham House saying, “Climate change has reduced the barrier to entry — it is definitely an enabling factor.” Emmerson believes that the entire Arctic area could attract investments of more than $100-billion over the next ten years, primarily in oil and gas, mining, and shipping. Additionally, he said, “Other key drivers include improved technology. Secondly, the cost of producing the fields may be less than before, and more importantly, the price for oil is right — not so much for gas.”
The Arctic appears to be a haven for the future of man’s energy sources, at least for the next several years, as companies across the globe have almost exhausted drilling places. The companies are, therefore, looking to the north to pounce on the opportunity. Russian based companies will seem to have seized the opportunity ahead of others, as Moscow has already initiated plans.
Rosneft Oil (MCX:ROSN), Russia’s largest oil company will definitely be looking to take this opportunity in cementing its position in the country. Interestingly, energy exports account for up to 6o% of Russia’s revenue, as previously featured in our article, and Rosneft will be looking to up that figure with the current Arctic plans. However, Rosneft may not be up there alone, struggling Gazprom OAO (PINK:OGZPY) (FRA:GAZ) (MCX:GAZP), which we previously featured in our posts, will be looking to challenge.
Furthermore, we recently wrote about Russia’s acceptance of foreign companies in its Arctic projects. International giants, like British Petroleum Plc (NYSE:BP), have already struck a deal with Rosneft for a drilling project at the depth of the Arctic sea. Apparently, BP is reacting to Exxon Mobil (NYSE:XOM)’s initial steps of lobbying a partnership with Rosneft.
The Royal Dutch Shell Plc (NYSE:RDS), is another global giant that has ventured to drill oil in the Arctic circle, a project that could soar the company’s profits to an all time high. The project is scheduled to start sometime next month. However, just as initially feared, there are predicaments. CNN Money reported that the company’s ship had its anchor slip, something that raised questions on the plans on drilling at the Arctic circle. Luckily, no injuries or pollution incidences were reported.
Another U.S company planning to drill at the Arctic is ConocoPhilips (NYSE:COP), and as noted in the Biz Journals, the U.S Coast Guard will need to increase its operations to aid monitoring and supervision.
In relation to the question of how safe it is to drill at the Arctic, Emmerson believes Canada is the most palpable of a catastrophic environmental impact, if anything were to go wrong. He believes this to be one of the major reasons Canada is being “left in the cold”, as the financial post writer put it. Emmerson says, “When I look at Canadian Arctic energy exploration, in a sense I see a litany of missed opportunities in the past.”
Additionally, from a positive point of view, he says, “But that’s not necessarily such a bad thing. There are all kinds of environmental consequences of drilling for oil and gas. Canadian Arctic is one of the most remote parts of the Arctic. So if, something were to go wrong, it would be incredibly hard to deal with.” However, these fears are not shunning away companies from other parts of the world, as featured in earlier paragraphs, and they are willing to take the risk, though not within the Canadian territory.
The Canadian government is seen as not doing enough in its quest to maneuver through the challenge posed by the opposing environmentalists. Additionally, the meager pricing of gas, as compared to the cost implications in drilling, leaves a lot to be desired in terms of viability. The writer notes, as time goes, gas prices might go up, hence presenting Canada with the perfect opportunity to strike, as the thawing will also have advanced intensely.