Wednesday, November 28, 2012

In Search of Arctic Energy ~ Canada Institute


In Search of Arctic Energy

July 12, 2012 // 9:00am — 12:00pm
European Studies
Program on America and the Global Economy
Environmental Change and Security Program
Kennan Institute

We would like to thank ExxonMobil Corporation for its contribution to In Search of Arctic Energy. 
Charles Emmerson, senior research fellow, Energy, Environment and Development Programme, Chatham House
Zachary Hamilla, principal Arctic analyst, Office of Naval Intelligence
Jed Hamilton, senior Arctic consultant, ExxonMobil Upstream Research Company
Robert Johnston, director, Eurasia Group
Julia Nanay, senior director, PFC Energy
and moderator
Jim Slutz, president and managing director, Global Energy Strategies LLC
Oil and gas companies have been searching for energy resources in the Arctic for more than 80 years, said Jim Slutz of Global Energy Strategies. The United States Geological Survey estimates that the Arctic contains 30 percent of the world’s natural gas and 13 percent of the world’s oil. As traditional oil supplies dwindle across the globe, demand for Arctic energy will increase exponentially. In order to navigate the numerous Arctic challenges, energy companies must assess community impact, social issues, local benefits and concerns in addition to applying the latest technology to reduce the environmental risks to ensure the productive and responsible extraction of Arctic energy resources.
Shrinking oil supplies in traditional fields, coupled with major leaps in drilling techniques and technology, have pushed an increased Arctic energy exploration and production, said Charles Emmerson of Chatham House. However, to more accurately assess Arctic energy development observers must recognize a number of factors unique to the region. First, Emmerson said, there is not one “Arctic” but rather many “Arctics,” and each has different topographies, environments, and varying levels of infrastructure investment. In the past, these factors, combined with unpredictable government intervention, abundant conventional oil reserves, and primitive technology, made Arctic energy development a dangerous and unprofitable proposition. However, diminished sea ice due to climate change, technological advances in extraction techniques, and skyrocketing crude prices have turned oil companies’ focus towards the Arctic. While the physical and financial environment has improved for Arctic energy extraction, the severe conditions still entail exceptionally high costs on companies, barring all but the largest oil and gas producers from investing.
Emmerson dismissed the idea that 2012 is the “tipping point” of true energy development in the Arctic. However, he noted that the current trends of energy consumption and improved exploratory conditions will quickly accelerate Arctic energy development over the next few years, pushing any “tipping point” into the future. Most countries and corporations involved in Arctic energy exploration are in agreement regarding their rights and social responsibilities, noting the reputational and political risk, should there be an accident, could kill off the industry in the Arctic. More informal cooperation between Arctic countries could include the sharing of operable ice breakers, which could ensure a peaceful and rapid expansion in Arctic energy development.

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