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№ 10 (October 2009)

Business Books: Arctic Melts, but no Big "Cold Rush" for Oil

The Arctic is thawing fast because of global warming but a big "Cold Rush" for offshore oil and gas looks unlikely because of icebergs and high costs, a new book says.

By Alister Doyle, Environment Correspondent, Reuters

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A retreat of Arctic ice in summers is changing indigenous peoples’ livelihoods and will threaten the survival of polar bears, writes Alun Anderson in "After the Ice" (HarperCollins), packed with anecdotes about shifts already under way.

"The Arctic is seeing a more dramatic change to its environment and ecosystems than any part of the planet has seen for many thousands of years," he writes in the book, subtitled "Life, Death and Geopolitics in the New Arctic".

Oil companies are looking north but Anderson, a former editor of New Scientist magazine, shows huge problems of icebergs, waves, cold and currents that would complicate drilling as well as transport of any oil or gas to shore.

"My bet is that the oil and gas boom will be short-lived and will not go far beyond the shallow seas of Russia and perhaps some of the regions close to the Alaskan shores," he writes.

Anderson, a former research biologist who lives in London, quotes experts as agreeing that prospects of a "Cold Rush" for riches of the central Arctic lie far in the future.

Still, Russia planted a flag in the waters deep beneath the North Pole in 2007 in a symbolic claim. And the U.S. Geological Survey estimated last year the Arctic could hold 90 billion barrels of oil — enough to meet world demand for three years.

Among offshore fields closer to land, Gazprom’s (GAZP.MM) is planning to tap the big Shtokman gas deposit.

And efforts to control global warming could also make oil and gas less attractive than renewable energies, he writes. A U.N. summit from Dec. 7-18 in Copenhagen will seek to agree a new pact to slow warming.

"We can be very confident that the Arctic is warming as a result of the rising levels of greenhouse gases in the atmosphere," he writes. The Arctic Ocean is likely to be ice-free in summers within decades.

Shipping could benefit from a new short-cut route between the Atlantic and the Pacific but will also face problems from lingering ice, he writes. And cargoes such as Japanese computers might not survive long exposure to freezing temperatures.

On land, there are also many changes. Herders are already finding it hard to move reindeer to new pastures, for instance, because rivers are still running long after they normally freeze.

Anderson also tracks Arctic history — noting how changing temperatures once taught Greenlanders to dance the foxtrot.

In the 1920s a shift in the Gulf Stream brought warmer water to the west coast of Greenland and new stocks of cod followed. Fish export earnings brought wealth to buy gramophones and music and "young Inuit took to the tango and the foxtrot," he writes.

Now, fish stocks may also shift and other creatures are likely to enter Arctic waters, he writes. "While the polar bear lingers on in a tiny part of his former kingdom…the new Arctic and its open summer waters will belong to the killer whale."

Copyirght 2009. Reuters. All rights reserved.


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