U.S. Should Take Advantage of Opportunity in the Arctic

February 9, 2017 in Blog, Featured

Recent reports have shown that interest in the Arctic remains strong from countries both in and outside of the region. As has been the case for several years, Russia continues to be the most active player in the Arctic, but others such as China and Norway have stepped up efforts in the region as well. It’s clear from the focus these countries are placing on Arctic development that there is still significant opportunity in the region, opportunity that the United States should not pass up.

Just over a week ago, Gazprom, Russia’s largest state controlled energy firm revealed that it plans to resume drilling in the Kara Sea . Additionally, Moscow has stated that it will invest heavily in establishing a domestic industry for engineering equipment and technology used in Arctic oil and gas production. According to reports, roughly 51.7 billion rubles (over $872.5 million) will be allocated for this project by the Russian Ministry of Industry and Trade:

“The Ministry will allocate 2.37 billion rubles budget and 11.7 billion rubles extra-budgetary funds for research and create [sic] of models of equipment for development of land and sea parts of the Arctic. As a result of the implementation of the project the payment of budget and extra-budgetary funds should amount to 51.7 billion rubles, according to the estimates.”

These are just two examples of the concerted effort Russia has made in developing the Arctic – and for good reason. All of this activity from Moscow has resulted in a 17 percent increase in production in Russia’s main Arctic oil regions, including from the offshore Prirazlomnoye field which accounted for over 17.74 million barrels.

Russia is not alone in its interest and activity. At the end of December, China began construction of a new 13,999 ton research icebreaker, after commissioning additional military icebreakers in December 2015 and March 2016. The country has even taken a $15 billion stake in the Russian Yamal LNG project, showing its long-term intentions in the region.

In Norway, the government recently announced its latest round of offshore leases in the Barents Sea – the country’s 24th round of leasing since 1965. Noting that “companies are taking a big interest” in extensive Barents Sea acreage, Oil and Energy Minister Terje Soeviknes stressed that Norway would maintain its policy of rapidly awarding licenses for new exploration sites.

In the United States, demand for Arctic development has also remained high, despite last year’s executive ruling “indefinitely” banning oil and gas production in 125 million acres of the Chukchi and Beaufort Seas. Multiple producers are actively working with regulators to move forward with operations in state and federal waters, as several others remain active in the small area of Arctic waters still open to offshore oil and gas activities.

The Arctic remains a key region of energy production for countries around the world, and recent actions have shown that this importance will not diminish anytime soon. With demand high and a sizable claim, it’s time for the Arctic ban to be overturned so that the United States can rejoin the world in taking full advantage of the substantial opportunity in the Arctic.