Evolution of Arctic Energy Development: A Timeline (1962-Present)
The seabed beneath the Arctic Ocean is home to some of the largest untapped oil and natural gas reserves on the planet. Owing to the newfound accessibility of a warming Arctic and technological innovations in deep-sea drilling technology, a number of major energy companies have flocked to the region in recent years to set up operations. These new arrivals join a long list of private sector interests who have traveled to the Arctic over the past several decades to try to unlock the region's energy-production potential.
The Arctic Council chairmanship has returned to Canada and the theme of the next Arctic Council meeting will be the "development for the people of the North, focusing on Arctic resource development, safe Arctic shipping and sustainable circumpolar communities."
The first ever Arctic Energy Summit will occur in Iceland. This event will bring together academics, scientists, community leaders, policy makers, and energy professionals to Akureyri, Iceland to discuss energy development in the Arctic.
By the end of 2013, Gazprom, a Russian natural gas company, plans to initiate drilling on the Prirazlomnaya platform in the Pechora Sea. This project is dubbed the "the first national project tapping the Arctic resources." This project has been delayed since 2012 due to finalizing the safety and environmental assessments of the platform. However, the platform is now considered to meet international standards and production in 2013 is expected to reach 140,000 tons of oil.
Yamal LNG Project: Novatek, a Russian energy company, has partnered with the French energy company, Total, and China National Petroleum Corp (CNPC) to build a liquefied natural gas (LNG) plant on the Yamal Peninsula in Russia. This project will cost US$20 billion and will send LNG to Asia via the Northern Sea Route, which only became open for international shipping four years ago.
The Shtokman gas and condensate field development project spearheaded by Vladimir Putin and Gazprom, a Russian natural gas company, was originally supposed to produce natural gas in Russia's Barents Sea and ship the LNG to customers domestically and internationally. However, this project was officially called off in July 2013 due to high costs, decreased European demand for LNG, and cheap shale gas in America.
US and Canadian coast guards conducted the first joint Arctic offshore oil spill drill near the Bering Strait. The Bering Strait separates Alaska and Russia and with increased commercial shipping, the US and Canada have expressed concerns over a potential spill in the region.
The Arctic Council met in Kiruna, Switzerland. The Kiruna Declaration from the May meeting recognizes the importance of the business community in Arctic economic affairs and sustainable development. Specifically, the declaration calls on the Arctic Council to "promote dynamic and sustainable Arctic economies and best practices, and decide to establish a Task Force to facilitate the creation of a circumpolar business forum." The Arctic Council also approved 6 new observer states: China, India, Italy, Japan, Singapore and South Korea.
ConocoPhillips suspends its plans to drill offshore near the US Alaskan coast in 2014 due to federal law and regulatory uncertainties.
The ruling Labour Party in Norway gave permission to open up the waters around the Lofoten islands for oil and gas exploration by approving an impact study. However, before the drilling begins in 2015 another vote is needed.
After getting permission to explore for oil in Alaska's Arctic, Shell Oil loses control of the Kulluk, an oil rig in the Beaufort Sea that ran aground on Kodiak island in the Gulf of Alaska. Shell proceeded to tow in the oil rig. Recently after, Shell Oil delays its proposal to begin exploratory drilling off the coast of Alaska for summer 2013 citing the need to make repairs to its Arctic machinery.
Russia's Gazprom, a natural gas company, completed the first successful shipment of LNG from Hammerfest, Norway, to Tobata, Japan via the Northern Sea Route, which goes along Russia's Arctic coast.
The Environmental Audit Committee of the British Parliament called for a halt to "reckless" oil and gas exploration and drilling in the Arctic.
Chevron Corporation and Statoil, a Norwegian oil and gas company, partnered up to launch a 3-D seismic program covering a 2,060-square-kilometre area in the Beaufort Sea in Canada's territory with the intention of making offshore drilling plans to present to Canada's National Energy Board.
Obama administration announces the five-year plan for offshore drilling from 2012-2017. The plan "makes more than 75 percent of undiscovered technically recoverable oil and gas resources estimated in federal offshore areas available for exploration and development" in the Gulf Coast and off the coast of Alaska.
Cairn Energy, a British independent oil company, discovers hydrocarbons in Greenland. Following this discovery, Greenland grants its first offshore energy development license.
Rosneft, a Russian oil and gas company, initiated projects in the Barents and Kara seas after they received permission to explore Russia's Arctic shelf. In 2011, Rosneft and ExxonMobil agreed to jointly develop resources in the Kara Seas. Additionally, the two companies are cooperating to create the Arctic Research and Design Center for Offshore Developments in St. Petersburg, which will focus on researching the best methods and technology to develop Arctic resources.
In St. Petersburg, the Sovcomflot Group (SCF), a leading Russian shipping company, and China National Petroleum Corporation (CNPC) signed a long-term agreement to ship oil and gas from Russia's offshore fields to China.
On April 20, 2010 BP's Deepwater Horizon Oil Rig explodes off the coast of Louisiana killing 11 workers. Oil starts leaking from the rig at a rate of 5,000 bbl (barrels) a day causing the worst oil spill in US history.
Shortly after the BP Oil Spill, the White House temporarily stops expansion of offshore drilling until the root cause of the Deepwater Horizon incident is discovered.
The biennial Arctic Council meeting was held in Tromsø, Norway where, for one of the first times, energy was a major topic of conversation. The Tromsø Declaration dedicated an entire section to energy calling for Arctic countries to "recognize that environmentally sound oil and gas activities may contribute to sustainable development of the Arctic region."
The United States Geological Survey (USGS) released the very first assessment of Arctic oil and gas resources. The results found that there are approximately 90 billion barrels of oil, 1,670 trillion cubic feet of gas, and 44 billion barrels of natural gas liquids remain in the Arctic. Additionally, this survey found that the Arctic holds 13% of the world's undiscovered oil reserves and 30% of the world's undiscovered natural gas reserves, of which Russia holds more than half of the total Arctic resources.
Gazprom launches the Yamal Megaproject, which initiates the development of the hydrocarbon reserves in the Yamal Peninsula, Russia. In 2011, the construction of the first two natural gas lines began. By 2030, Gazprom has predicted that gas production will reach 310-360 bcm (billion cubic meters).
The tenth anniversary of the Arctic Council was celebrated at the Ministerial Meeting held in Salekhard, Russia. The Salekhard Declaration, the report from this meeting, explicitly mentions energy development and emphasizes the importance of cooperation among all Arctic countries to address "energy issues and their impact on human life and the environment."
Canada hosts the inaugural meeting of the Arctic council in Iqaluit. This first meeting established the Sustainable Development Program, which emphasizes the importance of sustainably cultivating the resources, culture, and economies of the Arctic.
The Arctic Council is formed by eight Arctic countries (Canada, Denmark, Finland, Iceland, Norway, Russia, Sweden, and the United States) as "a high-level intergovernmental forum to provide a means for promoting cooperation, coordination and interaction among the Arctic States, with the involvement of the Arctic Indigenous communities and other Arctic inhabitants on common Arctic issues; in particular, issues of sustainable development and environmental protection in the Arctic." The eight Arctic states agreed to transfer Chairmanship of the Arctic Council every two years. The biennial meeting is held in the Chairmanship's country beginning with Canada.
Norway opened the Barents Sea in the Arctic for energy exploration and Statoil, a Norwegian state-owned oil company, discovered the Snøhvit gas fields. After this discovery, Statoil and other international corporations drilled more than 80 exploratory wells up north.
During the 1970s, Canada issued the most exploratory and discovery wells in the country's history. Major discoveries were made in the Mackenzie Delta region, close to the Beaufort Sea, and currently, more than 250 million barrels of oil and 11 trillion cubic feet of natural gas have been discovered. Exploratory offshore drilling in Canada began in 1972 and, to date, about 90 wells have been drilled in the Beaufort Sea. Most of the exploratory offshore drilling in the Canadian Arctic stopped in the 1990s due to the economic environment.
Russia makes the first major Arctic energy discovery in 1962 by uncovering the Tazovskoye Field. Shortly after, in 1968, the first US Arctic oil and gas discovery was made in the Prudhoe Bay field on Alaska's North Slope.