Arctic debate heats up

Climate change opens window on northern resources, Nunavut mulls first Arctic deepwater port

Gary Park

Petroleum News Canadian Contributing Writer

While scientists mull over the consequences of climate change in the Arctic, others are trying to figure out the impact on economic development, notably oil and gas, of a Big Melt.

And it may be that Canada’s smallest and newest jurisdiction will jolt the Canadian government into action.

Iqaluit, the tiny capital of Nunavut Territory, wants to get ahead of the curve by constructing Canada’s first deepwater Arctic port.

As a lengthening open water season raises the prospect of increased shipping through Arctic sea lanes, the city is preparing to make its case to the Nunavut and Canadian governments this fall.

Iqaluit economic development officer Kim Rizzi estimates that an expenditure of C$49 million could see a port operational by 2009, giving a lift to Nunavut’s economic outlook and bolstering Canada’s assertion of sovereignty over the Northwest Passage in the face of claims by the United States, Russia and Denmark that the passage is an international waterway.

Resources also an issue

But climate change could steadily reduce the amount of ice in Arctic waters, giving weight to emerging compressed natural gas technology.

A 2004 study by the Canadian Energy Research Institute suggested commercial development of High Arctic gas might be possible within 15 years, at gas prices of US$4.50-$5.67 per thousand cubic feet, using CNG vessels to a Mackenzie Valley pipeline.

The findings said that because CNG vessels have only about one-third the capacity of liquefied natural gas tankers they are better-suited to short-haul routes.

But the researchers concluded that LNG offered two options — one using a fleet of icebreaking LNG tankers to carry shipments to regasification facilities in Nova Scotia or New Brunswick in eastern Canada; the other would transship LNG from icebreaking tankers to conventional vessels in Western Greenland, minimizing capital costs for vessels and offering greater flexibility in the choice of markets.

Any one of those alternatives would benefit from a shorter freeze-up, while awakening interest in the immense High Arctic resources.

Nunavut’s Sverdup basin, which has been unable to attract any nominations in recent years, has posted 19 discoveries from the 1970s.

The National Energy Board has estimated proven reserves for that basin alone at 17.7 trillion cubic feet and calculated potential reserves at 50 tcf based on results from 120 wells.

By some reckonings, the overall Arctic region may hold 25 percent of the world’s oil and gas deposits, which gives added momentum to the debate over sovereignty and the need by countries to stake their claims.

Plan is for single berth

The tentative port plan involves a single berth large enough to accommodate oil tankers, cargo vessels and cruise ships.

Currently vessels are forced to anchor offshore, offloading their cargoes to barges.

The latest feasibility study estimates those shippers would save close to C$5 million a year if they could avoid that lengthy and environmentally hazardous procedure.

The Canadian government shelved an earlier deepwater port study in 1980, but Iqaluit’s population has since tripled to 7,000 and Nunavut has emerged as Canada’s third northern territory.

Although lagging behind its bigger neighbors in its Arctic activities, Ottawa announced in September that it will spend C$150 million over six years on polar research.

The United States is spending 10 times that budget allocation and Russia operates 12 icebreakers, compared with only one in Canada.

There is talk within the Canadian government of establishing a new department with exclusive responsibility for Arctic affairs, ending the current scattered approach in which 20 departments have an interest.