Oil reserves in the North Pole
Projections show that the area of land and sea that falls within the Arctic Circle is home to an estimated 90 billion barrels of oil and there's even more natural gas.
For over half a century, petroleum exploration in the Arctic has been accomplished, with several major geological basins having been explored. According to research carried out by the U.S. Geological Survey (USGS) back in 2008, over 20% recoverable oil and gas resources were thought to be located within the Arctic Circle. In fact, even today, projections show that the area of land and sea that falls within the Arctic Circle is home to an estimated 90 billion barrels of oil. Understanding the history of Arctic drilling and its difficulties are important to help understand its future.
The earliest Arctic oil discoveries were made by the Russians, or the Soviet Union as they were then known, back in 1962. They uncovered the Tazovskoye Field – located roughly 500 km Northeast of Salekhard. At this time, thanks to the geopolitical tensions induced by the Cold War, competition from the U.S. wasn’t far away. Later on, in 1969, the U.S. made their first Arctic oil discovery, in Prudhoe Bay in Alaska.
Who is interested?
The Arctic has become known for its resource potential, attracting many countries. Recently, several of them have attempted to stake their claim on what they know lies beneath the surface. Alongside the United States and Russia, Denmark, Norway and Canada have also shown great enthusiasm for the region. Additionally, China has been making some of the biggest Arctic discoveries. In 2019, a Chinese drilling rig unearthed almost 400 billion cubic meters of gas on the Russian Arctic shelf.
The difficulties faced
One of the most predictable difficulties encountered by petroleum exploration in the Arctic is unquestionably the treacherous conditions. This is drilling at the very extremes of what nature has to offer and can make things grueling for producers. However, the harsh conditions typically mean that production in Arctic regions is much higher than that of other, more accessible petroleum-producing areas.
Looking at Arctic Alaska, for instance, onshore O&G projects can cost up to a staggering 100% more than a similar project in Texas, for example. Consequently, when going into this dangerous area, you must be sure of colossal production potential for it to be worth your while.
It’s not just production expenditure either, the likelihood of operational dangers significantly increases when working in these sub-zero conditions. For instance, should a drilling vessel run into difficulty, it becomes much trickier to then get the crew out of it. With the arctic comes an amalgamation of ice that we wouldn’t deal with anywhere else. This substantially elevates the risk of drilling vessels running aground, and so a disastrous domino effect begins, as that increases the risk of an oil spill.
Oil or gas: Which is more prevalent in the Arctic Circle?
Though both resources are present, natural gas actually makes up the majority of remaining reserves within the Arctic Circle. Currently, it is accounting for around 75% of remaining reserves, with crude oil bolstering the remaining 25%.
Recoverable reserves elsewhere
Given the obstacles outlined above, though there might be significant potential within the Arctic Circle, most likely, the longevity of it isn’t viable. So, where else can large amounts of recoverable oil and gas be found? The obvious example is the Permian Basin, in the USA, which is what the majority envisage when they think of ‘drilling for oil’.
The Middle Eastern nations are also home to large reputable reserves. Saudi Arabia is well known for this, but Kuwait, the UAE and Iran also have sizable reserves. The country with the largest proven reserves, however, is Venezuela. Located on the northern coast of South America, this country has over 302 billion barrels of oils. That means a 17.5% share of the entire global resource and their economy relies almost entirely on oil exports.
Whilst many oil companies will continue to utilize their expertise in more conventional oil fields, there’s no doubt the ingenuity shown by producers across the globe will allow them to successfully unearth the potential of these Arctic regions.
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