OPPORTUNITIES AND CHALLENGES FOR ARCTIC OIL AND GAS DEVELOPMENT
Regulators, as well as social and environ-mental groups, have been outspoken about the dangers and risks linked to Arctic energy development. Bearing in mind the enormous challenges of cleaning up an oil spill in icy conditions, the greatest concern is what kind of impact such a disaster would have on the fragile Arctic ecosystem. In an effort to hedge against such an event, national regulators are assessing additional safety and environmental protection measures that have the potential to
add considerable additional time and nancial
costs and reduce access to resource opportu-nities. Considering these heavy costs, tech-
nology requirements, and potential nancial
liabilities, the players best suited to exploring and developing these resources are interna-tional oil companies (IOCs). Those with strong
balance sheets and signicant offshore ex
-ploration experience will be favored; in fewer cases, well-funded and experienced national oil companies (NOCs) may also participate. In a number of cases, cooperation agreements have been struck between NOCs and IOCs.
The Arctic represents the nal frontier of
conventional hydrocarbon development. Ac-cessing these resources and bringing them As climate change renders the Arctic increas-ingly accessible, there has been a substantial uptick in industry interest in the region; it is believed an estimated $100 billion could be invested in the Arctic over the next decade.
The Arctic contains vast oil and natural gas re-serves—the U.S. Geological Survey estimates the Arctic could contain 1,670 trillion cubic feet (tcf) of natural gas and 90 billion barrels of oil, or 30 percent of the world’s undiscovered gas and 13 percent of oil. Energy companies are certain to be at the forefront of Arctic de-velopment and investment. Climate change has played an important role in expanding access to the Arctic region, although there have been fewer opportunities to access lower cost oil and gas plays. As conventional production has declined, industry
has had to focus more on difcult-to-access
and unconventional oil and gas plays through-out the world, including those in the Arctic. Exploration and development in the Arctic requires expensive, tailored technologies as well as safeguards adapted to the extreme climatic conditions. In the wake of the 2010 Deepwater Horizon incident, there have been additional costs associated with emergency response and containment requirements.