Shale Presents Competition for Arctic Oil, Gas Development

The most important discoveries made in the Beaufort Sea were drilled in the mid-1980s, including the Amajuligak field. Ghoneim noted that exploration would have continued if oil prices hadn’t declined.

Russia, which has 70 percent of the world’s Arctic resources and 43 of the world’s 61 most significant oil and gas fields, will be a major focus point of Arctic exploration. This summer, Exxon Mobil Corp.– which took over from BP plc in its partnership with Rosneft – and Rosneft will drill the first of 14 wells in the Kara Sea.

Alaska in the United States is home to 14 percent of the world’s Arctic oil and gas, while Canada has 10 percent. The United States is expected to have Arctic specific regulations completed by this year. However, first oil and gas production from the Chukchi and Beaufort seas will not likely begin production until 2028 to 2029 after Royal Dutch Shell plc’s delay of its 2014 Arctic drilling plans offshore Alaska. Shell has put its plans to drill in the Chukchi Sea this year on hold. Shell will not likely drill there until 2015 to 2016.

Greenland also has significant oil and gas resources. ExxonMobil, Chevron Corp. and Shell are expected to drill offshore Greenland over the next few years.

The Arctic’s receding ice has opened up the region not only to shipping and adventure tourism opportunities, but to oil and gas exploration. However, new regulations, standards, recommended practices and guidelines are need for Arctic exploration and production, as well as infrastructure such as platforms, shore bases and pipelines, Ghoneim noted.

The industry also faces long lead times in developing Arctic projects. Offshore Arctic developments in less than 328 feet (100 meters) of water will likely need 14 years for completion, while deepwater Arctic projects will like take more than 18 years for completion of development.


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Doug Matthews  |  February 14, 2014
The 1980s slowdown in the Canadian Beaufort was the result of a combination of lower world prices and the end of Canadas National Energy Program, a program that provided significant public financial support to companies drilling in the Beaufort.