Opportunity and Global Politics:
According to a 2008 study by the USGS, over a fifth of the world’s undiscovered oil and gas lies above the Arctic Circle. Most of that is located offshore. Thanks to climate change, the Arctic is thawing, making the region more navigable and accessible to human activity. It has also become physically possible to extract the oil and gas resources that lie undiscovered in what is known to be one of the Earth’s harshest conditions. As a result, a vast international territorial dispute has begun to take shape. Russia is the most prominent country leading to develop the Arctic’s resources. Gazprom became the first company to produce oil offshore in late 2013 in the Pechora Sea – becoming the first commercial offshore oil development in the Arctic. Not to be left behind, other countries are quick to follow – the US, Canada, Denmark, Norway, Greenland, and Iceland are all investing in developing Arctic resource development.
The Arctic Environment:
Although the ice is melting, conditions in the Arctic still remain harsh and challenging for any exploration or development endeavor. There is a significant lack of infrastructure and the remote location of operational sites makes it necessary for strict contingency plans on the part of the operator. The largest offshore drilling risk is due to the presence of shifting sea ice. Onshore wells are typically drilled through a permafrost layer adding additional complexity drilling operations. It is also possible that methane hydrates lurk below the permafrost in some areas. Given these challenges, and the current low price of oil, it is not surprising that many oil companies have shelved offshore exploration plans.
US Arctic Regulations:
On July 7, 2016, the U.S. Department of the Interior announced final regulations for exploratory drilling activities. The new rules state that exploration operations must be designed and conducted specifically for Arctic conditions. For example, operations must account for shifting sea ice as well as lack of infrastructure. Other rules include requiring operators to have access to (and being able to deploy) containment equipment such as capping stacks and containment domes. The rules also state that operators must have access to a separate relief rig in order to drill a relief well in case of a loss of well control event. The operator must also develop and implement a comprehensive “oil spill response plan” that takes into account arctic conditions. The rules were jointly developed by U.S. Bureau of Ocean Energy Management BOEM and Bureau of Safety and Environmental Enforcement (BSEE).The American Petroleum Institute (API) and National Ocean Industries Association) NOIA feel these rules do not reflect current industry capabilities (for example, new response and containment equipment) and includes many unnecessary requirements – such as relief wells. Industry believes the rules will impede development and production, especially in light of the heavy cost to explore and drill in the Arctic.
Offshore Spill Prevention Research:
Research through the U.S. Department of Energy’s National Energy Technology Laboratory is focused on developing a scientific base for predicting and quantifying potential risks associated with exploration and production in extreme offshore environments. The overarching goal of all projects is to prevent and improve response efforts related to offshore hydrocarbon spills.
Overview of Arctic resources:
National Geographic - In the Arctic’s Cold Rush, There Are No Easy Profits
Department of Energy Library - Developing Alaskan Arctic Potential (pdf)
The DOI’s new rules and regulations:
Federal Register 2016-15699 (pdf)
Articles about the DOI’s new rules and regulations:
Oil and Gas Journal - US Interior finalizes Arctic exploratory drilling regulations
E&P Magazine - US Finalizes Drilling Regulations In Arctic Outer Continental Shelf
Spill Response Research:
Arctic Council Archive - Summary: Guide to Oil Spill Response in snow and Ice Conditions in the Arctic (pdf)
National Energy Technology Laboratory - Ultra Deepwater
Journal articles detailing challenges of drilling:
OnePetro - Exploring Cementing Practices Throughout the Arctic Region
Science - Assessment of Undiscovered Oil and Gas in the Arctic
We welcome your articles, comments and feedback for the quarterly newsletter publication.
Dr. Barbara Kutchko, Managing Editor
3rd Quarter 2016 submissions deadline is November 1, 2016
Please submit to