Editorial: Lolloping Into Necessity's Black Gold Rush
"Nothing is more active than thought, for it travels over the universe, and nothing is stronger than necessity for all must submit to it."– Thales of Miletus (c. 624 – c. 546 BC)
Yesterday the US government conditionally granted Shell approval to recommence its drilling activities in the Arctic circle. Shelved in 2012 after the emergency containment system aboard the Arctic Challenger failed during deployment testing, and its Kulluk drilling rig ran aground in high seas, Shell’s controversial plan for the drilling of as many as six exploratory wells in the Chukchi Sea has been officially endorsed.
In 2008, Shell spent $2.1 billion on acreage in the Chukchi Sea, where as much as a billion barrels of economically recoverable oil reserves were reported in place. Six years later, the Bureau of Ocean Energy Management (BOEM) more than quadrupled that estimate to 4.3 billion barrels.
Lying in between Siberia and Alaska, the Chukchi Sea not only contains as much oil as the proven reserves of Vietnam, but is also one of the lynchpins of world’s marine ecosystem. In 2012, the US-based Cold Regions Research and Engineering Laboratory (CRREL) discovered the Earth’s largest oceanic phytoplankton algal bloom in this marginal sea.
Arctic drilling has long been seen as the next Black Gold Rush for the oil and gas industry, but with the value of crude at less than $60 per barrel, the rush has become somewhat of a lollop. Earlier this year, Russia’s Rosneft even announced that it would cease drilling in the Kara Sea after its partner, ExxonMobil, backed out of their joint project due to international sanctions.
Flying in the face of prohibitions and price downturns, Russia's only operational Arctic offshore oil project - Gazprom Neft’s Prirazlomnoye field in the Pechora Sea - produced 2.1 million barrels last year and is set to double its output in 2015. Rather than purely desire for revenue, the arctic represents a future for Russian oil production that unchains the nation from the depleting stocks of the Western Siberian oil basin.
With as much as 90 billion barrels of oil entombed in arctic waters, if we all must all eventually submit to necessity, is it not best to be the first in genuflection?...
Tim Haðdar is the Editor In Chief at Oil & Gas IQ. Reach Him At Twitter Or OGIQ
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