The region north of the Arctic Circle could hold about 22 percent of the world’s undiscovered conventional oil and natural gas, an Oct. 19 report from the U.S. Energy Information Administration says.
This isn’t the freshest of news. The EIA report is based on a U.S. Geological Survey assessment released in 2008 that included the 22 percent estimate.
The 18-page EIA report rehashes the USGS findings and lays out the challenges of developing whatever oil and gas might be under the globe’s frosty cap.
“The Arctic presents a ‘good news, bad news’ situation for oil and natural gas development,” the EIA report concludes. “The good news is that the Arctic holds about 22 percent of the world’s undiscovered conventional oil and natural gas resources, based on the USGS mean estimate.”
The bad news is that the Arctic resources are believed to be more gas than oil, and that extreme risk, long project lead times, unresolved Arctic sovereignty claims, and costly environmental protections will make production of the resources very difficult, the EIA report says.
Distribution of resourcesThe EIA report says the area above the Arctic Circle encompasses about 6 percent of the Earth’s surface area. Eight countries have some jurisdiction in the Arctic: Canada, Denmark (Greenland), Finland, Iceland, Norway, Russia, Sweden and the United States.
“The allure of the Arctic is great because of the significant oil and natural gas deposits that have already been found and the large areas that have not yet been explored,” the EIA report says.
The report says 61 large oil and gas fields — fields exceeding 500 million barrels of oil equivalent — have been discovered within the Arctic Circle. Of these, 43 are in Russia, 11 are in Canada’s Northwest Territories, six are in Alaska, and one is in Norway.
The USGS mean estimate of undiscovered, technically recoverable, conventional Arctic resources is 412 billion barrels of oil equivalent, with 78 percent expected to be natural gas and natural gas liquids.
The resources are believed to be concentrated in “just a few sedimentary provinces,” the EIA report says.
The Eurasian side of the Arctic is more gas-prone, while the North American side is more oil-prone, the report says.
“The Arctic Alaska region is estimated to hold the largest undiscovered Arctic oil deposits, about 30 billion barrels,” the report says. “The second largest oil province in the Arctic is the Amerasia Basin, located just north of Canada, and estimated to have about 9.7 billion barrels of undiscovered oil.”
No go for Arctic gas?As testament to the challenges of developing Arctic oil and gas, the report notes that 15 of the 61 large oil and gas fields already discovered still haven’t gone into production. Most of the undeveloped fields were discovered in the 1970s and 1980s.
“The high cost of doing business in the Arctic suggests that only the world’s largest oil companies, most likely as partners in joint venture projects, have the financial, technical, and managerial strength to accomplish the costly, long-lead-time projects dictated by Arctic conditions,” the EIA report says.
With respect to natural gas, the report notes the long distance of Arctic gas from consumer markets. It adds that the relative importance of Arctic resources “is likely to be affected by the growing realization that shale beds in existing petroleum provinces around the world might be capable of producing 5,000 to 16,000 trillion cubic feet of natural gas.
“This potentially large shale gas resource could significantly defer the future development of Arctic natural gas resources.
“Of course, there could be exceptions.”
The EIA report is posted online at www.eia.doe.gov under “What’s New.”