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Page added on September 27, 2012

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The Peak Oil Crisis: Oil & the Arctic Meltdown


Last week brought the news that this summer the Arctic icecap shrank to an all-time low of roughly half the size it was in 1980. While this is the lowest ever seen since satellite monitoring began 33 years ago, some experts are saying that the summer of 2012 was probably the smallest the icecap has been in the last million years. The announcement triggered a spate of newspaper and magazine stories pondering the meaning of this development.

It now appears that the arctic is melting much faster than the models have been predicting: that the ice cap would stay intact during the summer for another 40 years. Some of the stories have been downright scary such as the one in the Guardian in which Professor Wadhams, Cambridge University’s arctic expert, predicts the final collapse of the Arctic sea ice during the summer will come within four years. The professor terms this event as a “disaster’ for the Arctic as it will result in much faster warming of the Arctic Ocean, the seabed, and the permafrost along the Arctic shoreline.

Most of the hundreds of articles commenting on the event reached the unsurprising conclusion that our global weather was going to get worse – perhaps much worse. At the extreme, some argued the case that so much methane will be released into the atmosphere as the permafrost melts that life on earth will be extinct by the end of the century. Others speak of the tipping points, that once past will set off such an avalanche of disasters that the world will take centuries or millenniums to recover.

Our interest here, however, is about what the end of the Arctic’s summer ice cap will mean for oil production – in the Arctic and elsewhere. This question would seem to have two sides. The obvious one is if and how quickly oil companies can move to exploit the 90 billion barrels of oil (about three years of global consumption) and 44 billion of natural gas liquids that the U.S. Geological Survey believes is somewhere under Arctic waters. Indeed, the rush to exploit has already started with Shell receiving a permit to drill off the coast of Alaska. Although drilling did not get started this year due to a series of delays related to safety, preliminary work is being done so that Shell’s drilling program should be ready to start up in 2013. ExxonMobil, ENI of Italy and Norway’s Statoil are preparing to drill in Russia’s Arctic waters. However, Russia’s Gazprom recently announced that it was shelving it massive arctic Shtokman natural gas project due to excessive costs.

With a minimal permanent ice cap, much of the Arctic ocean may be open to shipping, and drill rigs may be free to operate during the summer months. Drilling in the Arctic, however, is not in the same league with drilling in the Gulf of Mexico where only the occasional hurricane can cause disruptions. Gulf support bases, helicopters, and numerous support ships are only hours away from the drill rigs. In the Arctic a drillship is largely on its own, for until very expensive support bases are established there is little help offshore.

Even if much of the permanent ice cap melts away in the next 5-10 years, strong winds can still blow large ice blocks around, threatening drilling operations. This August, a large storm settled in the Arctic for many days and was partly responsible for the breaking up much of the permanent ice cap. Storms over water can be far more fierce than over ice caps making the risk of drilling even higher. The CEO of French oil giant, Total, recently stated the belief that it is too dangerous to drill in the Arctic and that the risk of oil spills is not worth the reward.

Then of course we have the issue of just who owns the Arctic’s seabed. The U.S., Russia, Canada, Norway and Denmark are all seeking to claim part of the continental shelf. As the US still has not signed the Law of the Sea convention and recently 34 Republican senators indicated that they are opposed, the US’s position of exploiting resources beyond the 12 mile limit is in limbo. Russia, however, has moved stake claims deep into the Arctic in regions it says are extensions of its continental shelf.

Even with relatively ice free waters, the big problem may turn out to be the availability of drilling rigs and ships that are robust enough to withstand encounters with Arctic ice. The upshot of all this is that there are so many factors inhibiting the widespread drilling for oil in the deep arctic, it is doubtful that much of this will take place in the next five to ten years. During this time frame, the odds are high that global oil production will begin to start down due to depletion of the best fields, and it seems unlikely that Arctic resources can be brought into production quickly enough to offset most of this decline.

The other side of this issue is just how much climate change will a near term disappearance of the permanent Arctic ice cap cause. Here there are no shortages of informed opinions. All agree that without polar ice to reflect incoming sunlight, the average temperature of the Arctic Ocean and surrounding land masses will rise sharply. In the Arctic, snowfall will likely increase thereby forming a protective blanket on whatever ice forms, preventing it from becoming thicker. There will be more storms in the region that will tear up coastlines.

Again the bottom line is that there will likely be an increase in droughts, storms and floods that will cause great damage across the world. How this will affect economic activity or the demand for increasing amounts of oil is hard to say. For now it looks as if while it may be easier to get at Arctic oil in coming decades, the costs of doing so and the demand for the product may not be worth the price.


7 Comments on "The Peak Oil Crisis: Oil & the Arctic Meltdown"

  1. BillT on Thu, 27th Sep 2012 1:45 am 

    And the beat goes on…

    Iceberg strikes BP platform, all lives lost and oil is pouring into the open sea. No repairs possible until Spring.

    Floating oil reaches shores of every nation bordering the Arctic. So ends the Arctic ecology system. Seals, polar bears, krill, fish, etc.

  2. Tony Tan on Thu, 27th Sep 2012 2:02 am 

    Already the Global Warming has melted so much ice in Arctic that 1,000 ships are crossing thru the polar route.

    Now with more drilling and ice breakers breaking the snow and ice, the melting will accelerate.

    There is higher chance of oil spill if there is any avalanche or ice breakup. And if it happens in winter, the fix will take place only in spring and by that time, the spill will spread all over. Since there is no need to pay any damages, the spill may be left as it is.

    Highly dangerous.

  3. IanC on Thu, 27th Sep 2012 2:09 am 

    Mother nature will have to set limits for us because, I’m convinced, we cannot do so for ourselves.

  4. SolarDave on Thu, 27th Sep 2012 2:30 am 

    I predict:

    First negative EROI on large scale oil production will be the Arctic.

    It’s comeuppance time.

    Posted while pedaling, powered by me!

  5. BillT on Thu, 27th Sep 2012 6:42 am 

    Ian, don’t worry, Mother Nature is going to set things right … by wiping homo sapiens off of the map. She will then rebuild the earth over the next million or so years and nothing we have done will be left. Even our cities will be gone in the first 10,000 years. Maybe the pyramids will survive, as well as the foundations at Balbek and other ancient sites, but nothing else.

  6. Arthur on Thu, 27th Sep 2012 8:55 am 

    Expect the bulk of humanity to be thrilled about the prospect of shorter shipping lanes, new possibilities for cruises and fossil fuel drilling. Yeast people, indeed.

  7. SOS on Fri, 28th Sep 2012 3:45 pm 

    Negative EROI is the hallmark of alternative supplies.

    This author uses misleading data on ice to formulate a “fact” about the future. A future that is conveniently in line with the authors own views.

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