International Endowment Oil & Gas prospects for countries in Arctic region

By Lada Ponomareva, September 7, 2013

of oil per day.

Canada

At present, there is virtually no commercial production in the Canadian sector of the arctic offshore area, except for seven fields in the north of Canada. According to the study of the Institute of Energy Strategy (IES) [“Role of the Arctic Region in the Energy Development of the Northern American and Scandinavian Countries: Current status and prospects”], they include four gas fields and an oil field in the southern area of the north-western territory, the oil field Norman Wells in the central valley of the Mackenzie River, and the gas field Ikhil.

United States of America

Approximately 30 billion barrels of oil are accumulated in the sector of another major player in the Arctic region – USA (state of Alaska). This region includes the Arctic National Wildlife Refuge (ANWR), Central Arctic region, National Petroleum Reserve in Alaska, the outer continental shelf of the Beaufort Sea and the outer continental shelf of the Chuckchee Sea. It should be mentioned that, in spite of large volumes of potential oil reserves in the Arctic region of Alaska, the indicators of the proven oil reserves in the state are declining steadily. According to the IES information, in the last 30 years volumes of the proven resources dropped 2.5 times, and the share of Alaska in the total proven oil reserves in the USA as of 2010 dropped to 15 percent (almost twice).

As the EY experts stress, at present the USA are involved mostly in projects on oil exploration and production, but in future, probably, they will pay more attention to natural gas production.

One of the tasks the USA need to solve is to provide the resource base for the Trans-Alaska oil pipeline, less than a half of the throughput capacity of which is utilised now, significantly reducing the pipeline economic efficiency. Potential sources for the required volumes of transportation could be oil and gas pools in the Beaufort and Chuckchee seas, where the start of production is planned in 2020 and 2022 respectively. The Beaufort Sea looks more attractive for this purpose, as it is located much closer to the existing infrastructure compared to the Chuckchee Sea.

Now it is difficult to safely say how the oil and gas sector in Alaska will be developing in the near future, as the cost-effectiveness of development of shale fields in the USA at present is much higher compared to the Arctic fields – the technologies for hydrocarbon production from shale pools are becoming more available and cheaper, while costs of the infrastructure construction and provision of the necessary technologies for the Arctic region stay at the same high level.

Denmark (Geenland)

Formation of the oil industry in Greenland is one of the strategic areas of development of the island, the government of which is striving to reduce their dependence on the Dutch subsidies and create a reliable basis for its economic development. The British oil company Cairn Energy found the first real significant prospects for these goals, when the