22 Oil & Gas Journal | Feb. 10, 2014
mitted to development in the Arctic, they need to be honest
with their leaseholders who have already invested billions of
dollars seeking the opportunity to drill. Right now, they’re
looking to have it both ways.”
One environmental organization was not surprised by
Shell’s decision following the court’s Jan. 22 decision. “Giv-
en these recent events, [Interior] should reevaluate its Arc-
tic drilling efforts, including reconsidering Chukchi Lease
Sale 193 through a full new Environmental Impact State-
ment,” Alaska Wilderness League Executive Director Cin-
dy Shogan said.
geopolitically on Arctic
energy, Wilson forum told
Countries already are making geopolitical moves to secure
Arctic oil and gas resources despite actual development being decades away in most cases, experts agreed at a Wood-row Wilson International Center for Scholars forum.
China, India, Japan, and South Korea all have observer
status on the Arctic Council so they can keep close track
as member countries discuss issues, said Mikkal Herberg,
a senior lecturer on international and Asian energy at the
University of California at San Diego’s Graduate School of
International Relations and Pacific Studies.
“The Arctic opening feeds into Asia’s very serious energy
concerns,” he observed during the Jan. 29 event. “The notion
of more oil and gas supplies coming from someplace besides
the Middle East is attractive to them.”
Russia, meanwhile, can be expected to turn from pipe-
lines to tankers to export its oil and gas into new markets
because water-borne vessels are more economic than long-
distance pipelines, Herberg said. “The flow of oil and gas to
China would be good for both countries, although Russia
may wonder how much it wants to feed this economic force
that has become a behemoth,” he said.
Many countries already have an Arctic policy that ad-
dress boundary issues, according to Jim Slutz, president
and managing director of Global Energy Strategies LLC and
a board member of the Wilson Center’s Canada Institute,
which held the forum to launch a new book, “In Search of
Slutz said, “All understand the need to balance science and
environmental management to work in the Arctic. Coopera-
tion with native groups also is essential. It will be necessary
to provide a good quality of life for indigenous populations.”
“This truly is an extraordinary part of the globe we call
home,” said Rebecca Ranich, a former director of Deloitte
Consulting LLP’s Federal Energy & Resources Management
practice who spent several years in the Russian Arctic. “It’s
a rich, but extremely fragile, location.” Economics, geopolitics, and investment economics driven by changing business
models will all matter, she predicted.
Although the US is scheduled to assume the Arctic
Council’s presidency in 2015, the federal government is not
moving quickly to develop policies, participants generally
agreed. Alaska, meanwhile, is proceeding aggressively, a
state official said.
“Alaska has been in the oil and gas business longer than
the US has had a space program,” said Kip Knudson, Alas-
ka’s state-federal relations director. “It’s not new territory for
us. Oil revenue supplies 90% of total state revenue.”
Arctic energy resource discussions should not discount
global climate change and its impacts, suggested Joel Darm-
stadter, a senior fellow at Resources for the Future. New poli-
cies scenarios in many government forecasts reduce fossil
energy’s role significantly by 2040, he said.
“We have not moved very far in limiting carbon emissions,” Darmstadter said. “Undiscovered Arctic oil and gas
resources would only add to this carbon burden.” It’s unrealistic to expect every hydrocarbon resource to be produced,
he added. “We need the capacity to look at the implication of
continued use of one or another kind of fuel,” he said.
Slutz noted that shale energy, deepwater and offshore resources, and potential Arctic supplies will compete for US
attention. Opening the Arctic would take a long time with
progress occurring incrementally in any case, he said. “
Identifying and solving issues will take a long time,” he said, adding, “The market will determine how quickly it occurs.”
resources largest source of
US oil, gas growth in 2013
Unconventional resources in the US constituted the oil and
gas industry’s largest source of growth in 2013—a trend
that’s expected to continue into 2014, Ernst & Young indicated in its US quarterly outlook.
In the next 2-3 years, the US will look to become a net
exporter of gas, while dramatically reducing its dependency
on oil imports.
“The surge of the US energy market really was a game
changer in a relatively short time,” said Deborah Byers,
E&Y oil & gas leader. “And we think those changes will
continue to play out in 2014.”