Musings: Arctic Book Puts Growing Region's Importance in Focus

One aspect of President Obama’s offshore drilling moratorium is the suspension of drilling permits for two wells Shell was planning to drill this summer off Alaska’s coast in the Chukchi Sea. 

Earlier in the spring, when President Obama announced his plan to suspend the offshore drilling moratorium off Florida in the Gulf of Mexico and along the lower portion of the East Coast, he suspended a lease sale scheduled for the Beaufort Sea in the Arctic region of Alaska.  These decisions reflect a view that the environmental risk of drilling these wells in the pristine waters off Alaska is too great to allow them to go forward. 

The USGS calls the offshore Arctic the biggest unexplored area for potential petroleum reserves left on Earth

The U.S. Geological Survey (USGS) calls the offshore Arctic the biggest unexplored area for potential petroleum reserves left on Earth.  As global warming trends have begun to open the waters of the Arctic Ocean on a year-round basis, neighboring governments have engaged in efforts to establish their claims to land in this virgin region. 

UKCS Exploration / Appraisal Wells January to June 2010

The Arctic Circle, which is a line encircling the globe at 66°33’39”North, encompasses an 8.2 million square mile area, or about 6% of the Earth’s surface.  Under international law, no country currently owns the North Pole or the region of the Arctic Ocean that surrounds it.  The five surrounding Arctic countries – Russia, the United States, Canada, Norway and Denmark (Greenland) are entitled to claim a portion of this area.  Nations with coastlines are limited to an exclusive economic zone extending 200 nautical miles (230 miles) adjacent to their coast.  Since the exclusivity area extends from the known coastal shelf or land under territorial waters out to 12 nautical miles, determining exactly where their respective shelves end will prove important in determining the 200-mile zones, and in turn, the amount of natural resources each country may ultimately claim.  The total coastal area within the Arctic region is estimated to encompass an estimated 2.7 million square miles under less than 500 meters (1,640 feet) of water.

Under international law, no country currently owns the North Pole or the region of the Arctic Ocean that surrounds it

On the 3.1 million acres of onshore acreage within the Arctic Circle that have been explored, roughly 400 oil and gas fields in Canada, Russia and Alaska have been discovered.  These fields account for approximately 240 billion barrels of oil and oil-equivalent natural gas, or about 10% of the world’s known conventional petroleum resources.  The USGS estimates that the total mean undiscovered conventional resources in the Arctic are approximately 1,669 trillion cubic feet of natural gas, 90 billion barrels of oil and 44 billion barrels of natural gas liquids, or about 30% of the world’s undiscovered gas and 13% of the world’s undiscovered oil, most of which lies offshore in less than 500 meters (1,640 feet) of water. 

The amount of undiscovered natural gas is three times more than oil in the Arctic and is largely concentrated in Russia.  It has the longest Arctic coastline of any of the Arctic states, representing about 30%-35% of the total in the region.  Russia must still prove the validity of its territorial claims to the UN Commission on the Limits of the Continental Shelf by 2011.  To enhance its claim, in April 2007 Russia sent a deep-sea submarine to the bottom of the Arctic Ocean to plant a titanium-flag beneath the North Pole.  Canada has been the loudest critic of Russia’s Arctic land grab and has been actively working to establish its own claim to substantial areas of this region.

UKCS Exploration / Appraisal Wells January to June 2010

To better understand the struggle over the Arctic region and its resources, we recently read Charles Emmerson’s  The Future History of the Arctic that details the past, present and possible future for the region.  Mr. Emmerson was formerly the Associate Director of the World Economic Forum and before that worked with the International Crisis Group, a foreign policy think tank.  The 320-page volume is noteworthy with its 63 pages of notes expounding on sources and issues explored in the book.  The book reflects the outcome of a life-long fascination with the Arctic Circle, a line Mr. Emmerson first crossed when he was 10 years old while accompanying his family on a vacation in Sweden.  At seven years old he had crossed the International Date Line and subsequently the equator and the tropics of Capricorn and Cancer on the way to Australia from Europe where he lived.  But this time, Mr. Emmerson was asleep when the train his family was riding in from Stockholm to Kiruna, Sweden crossed the Arctic Circle, the last line of geographic note for the young boy.  It was this missing event that seems to have driven his obsession to understand this virgin, yet challenging and complicated region of the world.

The book reflects the outcome of a life-long fascination with the Arctic Circle, a line Mr. Emmerson first crossed when he was 10 years old while accompanying his family on a vacation in Sweden

The book is divided into five sections: Vision that details the origins of the idea of the Arctic region; Power that outlines the historical struggles that shaped the borders of the modern Arctic; Nature that highlights the importance of the Arctic for understanding the evolving impact of climate change; Riches that focuses on the role natural resources in the Arctic have played in its developing history and where and how they are likely to be exploited in the future; and finally Freedom that discusses the choices facing the smaller Arctic nations as they seek to choose their own future as independent countries.

There are a number of critical issues explored that come from the histories of the various countries bordering the Arctic region.  For example, we learn about the laser-focus of Lenin and Stalin on developing the Arctic from strategic, geographic and economic points of view for Russia.  The defeat by the Japanese in the 1904-5 war highlighted the importance of developing Russia’s Arctic region.  After the defeat of the country’s Pacific fleet, Russia was compelled to send its Baltic Sea fleet half-way around the world to relieve its besieged Pacific garrison based at Port Arthur, only to have the fleet defeated due to the strain of its travels.  Had Russia developed an Arctic coastal route that was not only shorter but had coaling stations, the outcome of the Russo-Japanese war might have been different, which would have altered the history of the Pacific region.  Recognition of its need to develop the Arctic led to Russia’s widespread use of political prisoners as a cheap and captive labor force.  The prisoners were initially employed to dig the White Sea Canal that ultimately proved to be a waste of both human and capital resources.  Following that failed effort Russia used prisoners to populate and develop the economic resources of Siberia and the rest of the nation’s Arctic region.  The prisoner effort initiated the development of gulags written about so dramatically by Aleksandr Solzhenitsyn in The Gulag Archipelago.

We learn about the laser-focus of Lenin and Stalin on developing the Arctic from strategic, geographic and economic points of view for Russia

There is also a detailed history of the purchase of Alaska from Russia by the United States and known as Seward’s “Folly.”  That transaction was transformational in that it helped drive the creation of the Canadian union as the nation’s eastern provinces agreed to admit British Columbia, which then led to them including all the less-populated western prairies and the Northwest Territories.  Along with the political aspects of the evolution of North America, the development of the oil and gas industry in Alaska and Canada – both the Normal Wells discovery and the Mackenzie Delta successes – are covered in the book.

Mr. Emmerson is a strong believer in global warming and, as such, spends time investigating the case for it and discussing its implications on the future environment of the Arctic.  He does acknowledge, however, that the Arctic Ocean was relatively ice-free in earlier periods before CO2 was a significant factor.  In fact, Mr. Emmerson discusses the response of the United States in the 1950s to the Russian launch of its Sputnik satellite that put it ahead of the U.S. space effort.  The U.S. responded by sending the USS Nautilus, the nation’s first nuclear-powered submarine, on a trip traversing the entire Arctic Ocean underwater including sailing directly under the North Pole.  We vividly recall this trip as the ship’s crew disrupted an honor for our 1958 All-Star baseball team that had just finished fourth at the Little League World Series.  Several weeks after the tournament, we were being feted by the New York Yankees at Yankee Stadium.  We were scheduled to go into the Yankees’ locker room and eventually into their dugout before the game and to be introduced to the crowd, but that evening the crew of the USS Nautilus arrived in New York City and were accorded those honors over a group of eager 12-year olds.  We were introduced during the game. 

The book is an easy way to grasp the significant issues and their context that have shaped and are continuing to shape the politics of the Arctic

The Future History of the Arctic is well researched and written.  It is based on extensive interviews conducted by the author that provide information supporting the book’s themes he explores.  The book is an easy way to grasp the significant issues and their context that have shaped and are continuing to shape the politics of the Arctic – one of the last great energy frontiers remaining on the planet.  While the current U.S. offshore drilling moratorium is a setback for Alaska drilling, the issue of what drilling and how it is done in the Arctic region – in the U.S., Canada, Russia, Norway, Greenland and Iceland – will become front page news in the not too distant future.  We urge you to consider adding Mr. Emmerson’s book to your summer reading list.

G. Allen Brooks works as the Managing Director at PPHB LP. Reprinted with permission of PPHB.

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