Oil rush begins as Arctic ice melts

The idea that we're going to go and use the retreating sea ice as a business opportunity is frankly madness. Photo / ThinkStock

It's the melting of the Arctic ice, as the climate warms, that makes it possible - and you can understand why they're all piling in.

In July 2008, the US Geological Survey released the first publicly available estimate of the oil locked in the earth north of the Arctic Circle.

It was 90 billion barrels, representing an estimated 13 per cent of the world's undiscovered oil resources. If you're an oil company, or an oil-hungry economy, that's more than enough to make your mouth water.

But wait. Less than a year later, the geologists involved in the Circum-Arctic Resource Appraisal programme had radically revised their estimate - upwards.

In June 2009, they said the Arctic might hold as much as 160 billion barrels, which would amount to more than 35 years of American oil imports, or five years of total global oil consumption, and be worth, at current prices, more than US$18 trillion ($21.6 trillion). Forget mouth-watering. Think drooling.

In the opening up of the frozen north, hydrocarbons are the greatest prize (there is likely to be even more natural gas than there is oil).

No matter that the polar regions are the most inhospitable parts of the globe. And no matter that the Arctic is the world's most untouched ecosystem. The oil industry's motto has always been "can do" and in the Arctic, it's already doing.

Cairn Energy, an Edinburgh oil exploration company founded by the former Scotland rugby player Sir Bill Gammell, was the first in: it is now in the process of drilling four test wells in Baffin Bay, off the west coast of Greenland (it began last year with three wells, none of which struck oil).

Next year, Cairn will be followed into the high north by Shell: the Anglo-Dutch giant has already spent more than US$2 billion on seabed leases and hopes to start a programme of oil exploration in July next year, with up to 10 wells in the Beaufort and Chukchi seas off the north coast of Alaska, a region that, according to estimates, holds 25 billion barrels of oil.

Shell will be followed by the biggest of the oil "supermajors" - ExxonMobil.

Ten days ago, it was announced Exxon had formed an Arctic exploration partnership worth US$3.2 billion with Rosneft, the Russian state oil group, to look for oil in the Kara Sea off the coast of Siberia.

In doing so, Exxon was taking the place of BP, which had done essentially the same deal with Rosneft in January, only to have it fall apart in May when it was blocked by BP's existing Russian partners.

BP will be back, though. It was "actively looking for opportunities" in the Arctic, a spokesman said.

Yet this great surge of development is producing a great surge of concern, as environmentalists contemplate the possibility of a repeat of BP's catastrophic Deepwater Horizon spill in the Gulf of Mexico last year - in the even more unforgiving conditions of the frozen north.

What especially angers green groups is the fact that the melting of the Arctic ice through global warming is what is paving the way for the region to be exploited.

In mid-September 2007, Arctic Ocean ice cover dropped to a record low, at half its average extent over the years 1979-2000, and it is approaching a similar low this month.

Ben Ayliffe, an Arctic campaigner for Greenpeace, said: "We've seen how our actions are changing the world, and the idea that we're going to go and use the retreating sea ice as a business opportunity is frankly madness. The risks of drilling and producing oil in this fragile and pristine natural ecosystem, one of the last great wilderness areas of the planet, are terrible."

Greenpeace has taken the lead in opposing the new oil rush with its traditional non-violent direct action.

This northern summer, it sent two ships, the Esperanza and the Arctic Sunrise, to disrupt Cairn Energy's drilling operations in Baffin Bay, and its activists did so briefly, until they were arrested and Cairn secured an injunction against the group.

In addition, Greenpeace has persuaded Greenland's government to publish Cairn's 200-page oil-spill response plan, which the group subjected to a fierce critique, based on an analysis by Professor Rick Steiner, a marine biologist at the University of Alaska.

In a list of criticisms, the analysis pointed out that the plan itself admitted that oil clean-up operations after a spill would not be possible during an Arctic winter and alleged that a "worst-case" spill from a Cairn well would be very much worse than the company was allowing.

A spokeswoman for Cairn said: "This plan has been reviewed and approved by third parties including Oil Spill Response, the Danish National Environmental Research Institute and the Greenland Government. All are satisfied that the plan is robust and appropriately designed to deal with an incident in this area."

- Independent