Arctic Economics

Which is ahead, the Alaska or the Mackenzie gas pipeline?

The Canadian Industry Minister thinks the MacKenzie gas pipeline has a head start over the Alaska gas pipeline: MacKenzie Pipeline Enjoys "Head Start."

But what's this about the environment?: Arctic pipeline could threaten wildlife reserves: report:

The Harper government has been warned that the ecological "footprint" of the proposed Mackenzie Valley pipeline on an Arctic bird sanctuary that protects migratory birds and at-risk species such as polar bears could exceed the threshold deemed acceptable by Environment Canada, newly released documents reveal.

Canada's Sverdrup Basin Gas

There's gas under Canada's northern islands.  A recent study has said its economically feasible to get it out and to market (The Economics of High Arctic Gas Development: Expanded Sensitivity Analysis)  What's stopping production? 

Christopher Harrison of the Geophysical Survey of Canada surveyed exploration and development managers at six medium and large oil companies to find out: Industry Perspectives on Barriers, Hurdles, and Irritants Preventing Development of Frontier Energy in Canada's Arctic Islands.

Here's where it is.  Harrison's focus is the Sverdrup Basin at the top of the map:

Figure from Kenneth J. Drummond: Canada’s Discovered Oil and Gas Resources North of 60

Svalbard Islands Offshore Oil and Gas: Norway vs Russia

Norway and Russia disagree about Russian rights to explore for oil and gas around the Svalbard Islands.  Russia plans to do that in 2009  The Barents Observer reports: Norway challenged by Russian plans in Spitsbergen waters. 

In January 2007 the Norwegian Academy of Science and Letters held a conference on Politics and Law - Energy and Environment in the far north.  Legal scholars from Russia, Norway, and the U.K. offered different perspectives on the subsurface rights issue.  The papers are available from the conference web site.

Where will the money come from to develop Russia's Arctic assets?

Russia is going to need foreign capital and expertise to help it develop its Arctic oil and gas.  It'll be expensive and technically demanding to get those resources. 

The government's treatment of BP in the current fight over control of BP-TNK is going to give foreign investors second thoughts about helping: Russia reaches investors' tipping point after BP affair sours.

Andrew Osborn and Guy Chazan report that (BP Venture in Russia Hit as CFO steps down):

Throughout the conflict, all eyes have been on Russia's new president, Dmitry Medvedev. How the fight plays out is seen as a test of his attitude toward foreign investment and his commitment to the rule of law.

Outwardly, the Kremlin has stayed neutral, saying it was up to the partners to patch up their differences. Some people close to TNK-BP say the kind of regulatory and bureaucratic interference the company has faced would be unthinkable without some backing from senior Russian officials....

Shortly after the TNK-BP battle erupted this year, the company and its employees were subject to a wave of investigations by Russian tax authorities, labor regulators and prosecutors. Those probes focused particularly on foreign nationals working at the company. BP has accused AAR of orchestrating the pressure on TNK-BP's foreign staff, a charge the Russian partners deny.

Revised August 5.

Alaska's Senior Senator Indicted

Alaska's senior U.S. Senator, Ted Stevens, was indicted last week for failing to report gifts he received from the oil field services firm Veco and persons connected with it.  He wasn't indicted for bribery, or failure to pay income taxes on the gifts. 

The indictment (UNITED STATES OF AMERICA, v. THEODORE F. STEVENS) describes the gifts in some detail.  Between May 1999 and August 2007, Stevens received gifts from Veco and others connected with Veco that:

Alaska Backs TransCanada's Gas Pipeline

Both Houses of the Alaska legislature have passed the Governor's proposal to back the TransCanada gas pipeline, running 1,715 miles from Alaska's North Slope to southern Alberta.  Here's the route:

 

What's the Object of the Race for the Arctic?

Sheila McNulty points out that the recent US Geological Survey report on the size of possible undiscovered oil and gas resources in the Arctic suggests that the central Arctic isn't very interesting: Deep freeze entices energy hungry world:

Where Are The Arctic's Big Oil and Gas Deposits?

The U.S. Geological Survey estimates that 13% of the world's undiscovered technically recoverable oil, 30% of its undiscovered technically recoverable gas, and 20% of its undiscovered technically recoverable natural gas liquids, are in the Arctic.  Most of that gas is in Russia: Circum-Arctic Resource Appraisal (U.S.Geological Survey data released July 23, 2008):

Gazprom

With its interests in the Shtokman gas field in the Barents Sea, the Yamal gas fields, and the Nord Stream pipeline to bring Shtokman gas to Europe, the Russian gas company Gazprom is going to be an important Arctic firm.  Gazprom, the former Soviet gas ministry, is now - by far - the largest gas producer in the world.  It's integrated from exploration, through development, production, and distribution.

Nadejada Makarova Victor profiles Gazprom (Gazprom: Gas Giant Under Strain) in a January report from the Stanford Program on Energy and Sustainable Development's series on national energy companies.

Russia's New Arctic Resources Law

President Medvedev has signed a new law dealing with the allocation of rights to develop oil, gas, and mineral resources on Russia's continental shelf: Medvedev signs law on Arctic resources.  No auctions or tenders, the government will hand out rights administratively. 

Russian President Dmitri Medvedev signed a law Friday which determines how the country’s underwater Arctic resources will be tapped, Prime-Tass reports. The law, approved by the State Duma on July 4th and the Federation Council on July 11th,empowers the government to hand-pick companies to develop resource extraction on the continental shelf.

...According to the new legislation, permits to develop plots of the continental shelf will be handed out directly by the government without auctions or tenders....

Commenting on the cancellation of auctions in the Arctic development plan, Medvedev underscored that “This was done consciously to ensure rational use of this national wealth.”

While this story from The Other Russia implies the law applies to minerals as well as oil and gas, other stories only mention oil and gas (Russian president enacts law on Arctic oil work).  This story also says that other criteria in the law limit access to Gazprom and Rosneft:

Sechin [Russian Deputy Prime Minister - Ben] said only state-controlled energy companies with a minimum of five years experience of working on the continental shelf would be eligible to operate the projects, which would effectively leave only Gazprom and Rosneft.

Revised July 20.