WASHINGTON – Oil production in Alaska has been declining largely because of the hostile environment and high costs, but the Arctic grabbed the attention in Washington recently as Arctic countries and even those far south of the Arctic Circle are trying to play in this region.
The United States has abundant oil and gas reserves in this almost untapped region. The Cook Inlet Region of Alaska contains undiscovered gas resources ranging from 4.976 trillion to 39.737 trillion cubic feet, undiscovered oil from 108 million to 1,359 million barrels, according to USGS website.
However, tapping oil in Alaska has risks. Unlike Norway, where the water is clear of ice, Alaska is faced with the presence of thick ice, extreme temperature, fragile ecosystem and remoteness. Experts say despite the challenging environment, there are geopolitical concerns involving Arctic drilling.
“The U.S. should have less interest in Arctic oil,” said Matthew Huber, assistant professor of public affairs at Syracuse University. “Yet, the U.S. has geopolitical rivalries with Russia, and thus, probably wants a voice and control in Arctic oil development if simply to manage or prevent the Russians from getting most of the access.”
The pressure of moving to the Arctic also comes from Norway, whose revenue is reliant on oil and gas exports. Norway remains the seventh largest exporter of oil and the second largest of gas. To maintain the position, in June 2012, Norway’s Ministry of Petroleum and Energy announced a new licensing round for oil and gas exploration.
Ola Borten Moe, the minister for Petroleum and Energy, said on Nov. 9 in a presentation at Brookings that of the 86 blocks ready to open up, 72 are in the Barents Sea, north of the Arctic.
“The cheap and easy oil are gone,” Moe said, noting that Norway would maintain a stable and high-level activity and offer more northern region for drilling.
While the Arctic remains under the governance of the eight nations – Norway, Russia, Canada, United States, Finland, Iceland, Sweden and Denmark, representing Greenland and the Faroe Islands, Huber said that the critical question is that whoever will own the oil under the Arctic Ocean can make contracts with any oil company, such as Shell or Sinopec or other Chinese national oil companies. And Russia could make deals with Chinese oil companies, he added.
Chinese oil companies are actively involved in the Arctic. In Greenland and Canada, Chinese companies are acquiring interests and financing for small companies to access to Arctic energy development, according to an earlier New York Times story.
The activity of non-arctic countries like China mirrors the fact that Arctic is becoming a strategic frontline. Six non-Arctic European countries also cast their influence as observers to the Arctic Council.
Amid controversy over environmental protection, the United States announced in November that up 4.5 million acres of Arctic land would be open for oil and gas exploration.
“There is no doubt that the importance of Arctic is growing,” Moe, Norway’s Petroleum and Energy minister, said.
