Arctic Economics

Alaska's flower exports

Source: Wikipedia

It turns out that during the last 10 years Alaska has found a market niche exporting late summer peonies. Elizabeth Bluemink reports on developments for the Anchorage Daily News: Peony Paradise:

Scientific American Polar Coverage

Scientific American has posted several short articles on polar topics on its web site: The Future of the Poles.  A couple have economic content and Arctic implications:

A sober look at the Northern Sea Route

Claes Lykke Ragner of Norway's Fridtjof Nansen Institute has written an excellent, short (8 pages) up to date (2008) status report on Russia's Northern Sea Route:The Northern Sea Route.

The Russian's opened the Northern Sea Route to transits by foreign ships in 1991.  It has not been used much (I'm only pulling his discussion of cargo carrying transits here, not his discussion of local traffic or non-commercial and cruise ship transits):

Russia's Shallow Arctic Seas and Straits

The Northern Sea Route cuts 39% off the shipping distance between Hamburg and Yokohama, but that doesn't help much if you have to make four separate trips to move the same amount of stuff. 

According to researchers at the U.S. Army Corp of Engineers Cold Regions Research & Engineering Laboratory (CRREL, in 1996), depth limitations in important straits and ports limit the size of ships that can use the route to vessels with a cargo capacity 25% of the vessels using more southerly routes.  It would take one of these ships four trips to move the cargo that a larger vessel can move in one trip.

Northern Sea Route prospects

When you look at a globe it's clear that trans-Arctic shipping routes between Europe and Northeast Asia are short compared to alternatives through the Panama and Suez Canals.  But trans-Arctic shipping may not spring into existence as the ice cap shrinks as quickly as some expect. Once you begin looking more carefully at the routes various challenges become clear (Old ice and the Northwest Passage).

The Northern Sea Route runs from the Barents Sea, across Arctic Russia, to the Bering Straits and the Pacific.  But some of the Route's infrastructure has decayed, and trans-Arctic shipping may not be economical on it anyway.

Source: Maritime Market.  The Northern Sea Route expects active maritime traffic

The aging U.S. icebreaker fleet

 

USCGC Healy.  Source: Henry Dick Woods Hole Oceanographic Institution / NSF

The U.S. Coast Guard only has one modern icebreaker - the Healy.  It has two older icebreakers, the Polar Sea and Polar Star, but these have passed their original design lives.  Ronald O'Rourke explores the U.S. options for the Congressional Research Service: Coast Guard Polar Icebreaker Modernization: Background, Issues, and Options for Congress.  A fourth, smaller, icebreaker, the Nathaniel B. Palmer, is leased by the National Science Foundation from a private company. 

How many icebreakers do we need?  Should we fix up the Polar Star and Polar Sea?  Should we replace them?

From the abstract:

Canada's back door

" Canada's Northern Transportation Company Limited (NTCL) is developing a water route from Asia to the oil sands region in central Alberta.

This map and the post are based on a story in the June 2008 issue of the NTCL newsletter The Link.

As the map shows, if the Northwest Passage becomes viable NTCL may provide service from Europe as well.

NCTL has formed a joint venture with "heavy-lift experts Mammoet Canada to move very heavy, very large modules to the Fort McMurray, Alberta area for Oil Sands development projects."

Mammoet Canada is a subsidiary of a Dutch company.

The joint venture, the Arctic Marine Inland Transportation Ltd. (AMIT) "...can provide marine transportation services through the NTCL arm of the company, and the critical heavy-lift expertise and equipment through the Mammoet arm."

The market:

"Oil Sands companies wishing to take advantage of lower-cost steel manufacturing services outside of North America, perhaps in Korea or China..." 

The route:

"...can have the heavy modules needed for processing and upgrading facilities transported by ship across the Pacific and north to Point Barrow, Alaska.  From there, the route to Fort McMurray would follow along the North Slope to the Canadian Beaufort Sea, south along the Mackenzie River to Great Slave Lake, across the lake to go south on the Slave River to the Peace River, east on the Peace for a short distance to Lake Athabasca and then south on the Athabasca river to Fort Mackay, the route’s terminus."

The division of labor between the joint venture partners:

"NTCL would manage the marine portion of the trip, while Mammoet would handle the portage required to skirt the rapids on the Slave River at Fort Smith as well as all other land transportation from the Fort Mackay landing to the Oil Sands development site."

"NTCL and Mammoet, together and individually, have been promoting the idea of a southern inland marine route to Fort Mackay for about three years. To prove the route’s viability, NTCL did a test run with the Marjory and a 600-series barge in 2006..."

Jack Danylchuck wrote about this demonstration trip in the Oilsandsreview: Transport from the north.  Voyage of the Marjory demonstrates possible opportunity to ease oilsands logistics.  Here's how the portage was done on this trip.  To be portaged: "...the Marjory with two barges and a light cargo of vehicles, fuel, and close-grained red and black granite blasted from the Canadian Shield...."

What else can go wrong in the Arctic?

A few days ago I posted a brief list of the scenarios the Canadian Forces are practicing this August in their Northern Operation Nanook 2008 training exercise: What sorts of things can go wrong in the Arctic?

Gary Rice, a retired Canadian colonel, adds to the list in a 2007 paper "Four Selected Intrusion Scenarios."   The paper is in Defence Requirements for Canada's Arctic which is published by the Canadian Conference of Defense Associations Institute.  Each scenario is laid out on detail.  The four:

• Rescue and evacuation.  February 2010. A foreign commercial cargo/passenger aircraft makes an emergency landing.
• Terrorist attack. August 2008. A non-state terrorist group smuggles a nuclear device into a northern port.
• Sovereignty challenge.  July 2009. A foreign nation with the intent to transit the North West Passage without prior notice.
• Civil unrest and domestic sabotage.July 2013. A radical separatist group barricades a highway and sabotages a gas pipe-line and oil and gas wells.

This may be the ugliest:

Renovating the eastern abutment of the Arctic Bridge

 

Murmansk Harbor from Wikipedia

The "Arctic Bridge" is a shipping route connecting Murmansk with Churchill, Manitoba.  The Russians plan to invest heavily in port infrastructure in Murmansk: New deep-sea port for Murmansk:

Canada plans to extend its Arctic maritime regulatory structure

The Northwest Passage - at least the more southerly route - is open again this year: Arctic shortcuts open up; decline pace steady.

Yesterday the Canadian Prime Minister, Stephen Harper, announced that the government will be taking steps to extend Canadian jurisdiction in the waters around its coasts (PM announces government of Canada will extend jurisdiction over Arctic waters). 

The Prime Minister proposed new legislation and regulatory changes:

"The Prime Minister announced that his government will be introducing changes to the Arctic Waters Pollution Prevention Act as part of its fall legislative agenda. Currently the Act allows the Canadian Government to regulate all shipping in zones up to 100 nautical miles from the nearest Canadian land in order to guard against pollution of the region’s marine and coastal environments. Under the proposed new law, this jurisdiction will be extended to 200 nautical miles.

"In addition the Prime Minister announced that his government will establish new regulations under the Canada Shipping Act, 2001 that will require mandatory reporting from all ships destined for Arctic waters within the same 200 nautical mile limit."