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Page added on November 30, 2013
Large-scale Arctic oil and gas drilling decades away
* Arctic estimated to have 90 billion barrels of reserves
* Statoil does not expect major production before 2030
* High development costs, harsh weather are big obstacles
* Some wells cost $500 million to drill, firm says
Norway’s Statoil said it would be decades until drilling begins for much of the Arctic’s vast untapped oil and gas reserves due to the challenges of working in one of the world’s harshest environments.
State-owned Statoil hopes to tap into the reserves of about 90 billion barrels of oil equivalent that the U.S. Geological Survey estimates lie in the Arctic, amounting to almost three years of total global demand or a third of Saudi Arabia’s remaining petroleum reserves.
But the company’s exploration chief, Tim Dodson, said the likely costs involved, regulatory complexities and harsh weather conditions meant drilling in much of the Arctic would move at a slower pace than first thought.
“We don’t envisage production from several of these areas before 2030 at the earliest. More likely 2040, probably not until 2050,” he said, without elaborating on the timeframe.
Dodson, speaking at a conference in London on the Arctic and climate change, said the complications of drilling in many parts of the area were significant but could be overcome.
“I think what we have to realise is that the challenges our industry face in the Arctic are at least as significant as we thought they were just a couple of years back, but they’re not insurmountable,” he said on Thursday.
One of the biggest challenges was the cost of drilling at exploration levels in some of the less accessible areas of the Arctic, the price of which Dodson described as mind-boggling.
“There’s almost no prospectivity on this planet that can support drilling exploration levels for half a billion dollars each. And that’s what we’re talking about, half a billion dollars for some of these wells.”
INDUSTRIAL CHALLENGE
Dodson said for Arctic drilling to be a success, collaboration across the oil industry was key and Statoil was working with its peers to share information.
“What we’re facing is, from my perspective, an industrial challenge, it’s not a company challenge. If one of us fails, we all fail,” he said.
In 2014, Statoil plans to drill wells at two sites 400 km off the Norwegian shore, the furthest north ever drilled in the country, in what Dodson described as laboratories and stepping stones for future drilling.
Environmental groups say Arctic drilling threatens a unique nature reserve, and firms scaled back exploration plans after the grounding of a Royal Dutch Shell drilling rig off Alaska last year caused a public uproar.
Greenpeace says Statoil’s plans threaten the Bear Island, a wildlife sanctuary and home to polar bears. It has labelled the company an “Arctic aggressor”.
Dodson did not comment on this but Statoil said earlier this month that it understood the concerns of green groups and that it was sure about the safety of its work.
8 Comments on "Large-scale Arctic oil and gas drilling decades away"
Plantagenet on Sat, 30th Nov 2013 12:59 am
The US developed a giant oil field in the Arctic at Prudhoe Bay more than 30 years ago. The USSR also already has major oil developments in the Arctic
Exploitation of oil in the Arctic isn’t 30 years away—its already been going on for decades.
eugene on Sat, 30th Nov 2013 1:08 am
Always amused by “estimates” of reserves. Estimates equals guesstimates in my book. But we do live in the age of infinite optimism.
BillT on Sat, 30th Nov 2013 1:40 am
Plant, those developed fields are on land. The ones today are off-shore in ice filled waters. Huge difference. On land, huge state-sized ice floes do not regularly threaten to take out your rig, permanently. Ask Shell.
I doubt the Arctic will ever be developed. The conditions are too harsh and expensive.
Norm on Sat, 30th Nov 2013 3:17 am
The global warming will melt all the ice, just in time to drill in the Arctic and keep the Humvee travelling down the interstate between the 5-acre spread, and Albertson’s, to get a loaf of bread.
rockman on Sat, 30th Nov 2013 2:05 pm
Offshore oil development is a long term game plan regardless of the conditions…always has been and always will be. The DW GOM, which some think of as a relative new play, began producing over well over 30 years ago.
Arctic conditions are rough…so are conditions of the eastern Canadian cost: History of Hibernia Field:
•1979 – The field is discovered
•1997 – The completed platform was towed to the Hibernia oil field and positioned on the ocean floor in June
•1997 – Began producing oil in November
And the process continues today. And this isn’t the light sweet stuff the world craves today:
“It’s about time someone got around to developing Hebron…next door neighbor to Hibernia Field. The giant heavy oil field was discovered way back in 1981. Finally this week ExxonMobil and its partner have agreed to move full speed ahead to bring it online.
The plan is for Hebron to be putting out 150,000 bpd of heavy oil (20-degree API) by 2017. Exxon pegs the total cost of Hebron’s development at $14 billion. That’s triple what the estimates were back in 2008. So just how expensive is $14 billion? Well Exxon says the prize at Hebron is roughly 700 million barrels. That means development costs will be on the order of $20 per barrel.
Ghung on Sat, 30th Nov 2013 3:04 pm
….about 90 billion barrels of oil equivalent that the U.S. Geological Survey estimates lie in the Arctic …. amounting to almost three years of total global demand…”
Three whole years of relatively crappy oil. This is what most of my friends and relatives fail to understand; the shear scale of consumption, globally. They haven’t bothered to do the math; just latch on to claims of “a hundred years of this or that”. Don’t worry … be a happy con$umer. Blame OPEC, speculators or environmentalists for high prices.
Why would we even be discussing exploiting oil in such a harsh and remote environment if we aren’t at or approaching the peak? Just askin’.
shortonoil on Sat, 30th Nov 2013 4:41 pm
“about 90 billion barrels of oil equivalent that the U.S. Geological Survey estimates lie in the Arctic”
I believe these are USGS F5 estimates, that is, there a 5% chance that 90 Gb lie in the Arctic. As Colin Campbell said, “there is a 5% chance that I’m a frog”!
adamc18 on Sat, 30th Nov 2013 7:01 pm
‘A third of Saudi Arabia’s remaining reserves” . Well, 90billion barrels is a third of the 270 Bn that SA said they about 15 years ago. Thy have been pumping around 10 million bpd, 55 Billion barrels in all – and they still have the original 270 billion left -amazing!