U.S. has significant interests in untapped mineral wealth in Arctic
According to the U.S. Geological Survey, the Arctic region is the largest unexplored prospective area for petroleum remaining on earth with an estimated ninety billion barrels of undiscovered oil reserves, and 1,670 trillion cubic feet of natural gas. In addition, the unpredictability of the Persian Gulf region makes the Arctic region even more attractive for exploitation.
Quicktabs: Arguments
The U.S. Geological Survey estimates that the Arctic might hold as much as 90 billion barrels (13 percent) of the world’s undiscovered oil reserves and 47.3 trillion cubic meters (tcm) (30 percent) of the world’s undiscovered natural gas. At current consumption rates and assuming a 50 percent utilization rate of reserves, this is enough oil to meet global demand for 1.4 years and U.S. demand for six years. Arctic natural gas reserves may equal Russia’s proven reserves, the world’s largest.1 (See Table 1.)
The Russian Ministry of Natural Resources estimates that the underwater Arctic region claimed by Russia could hold as much as 586 billion barrels of unproven oil reserves.2 The ministry estimates that proven oil deposits “in the Russian area of water proper” in the Barents, Pechora, Kara, East Siberian, Chukchi, and Laptev Seas could reach 418 million tons (3 billion barrels) and proven gas reserves could reach 7.7 tcm. Unexplored reserves could total 9.24 billion tons (67.7 billion barrels) of oil and 88.3 tcm of natural gas.3 Overall, Russia esti- mates that these areas have up to 10 trillion tons of hydrocarbon deposits, the equivalent of 73 trillion barrels of oil.4
In addition to oil and gas, the Arctic seabed may contain significant deposits of valuable metals and precious stones, such as gold, silver, copper, iron, lead, manganese, nickel, platinum, tin, zinc, and diamonds. The rise of China, India, and other developing countries has increased global demand for these commodities.5
In 2008, for the first time in 17 years, the U.S. Minerals Management Service began selling oil and gas leases for drilling rights in the Outer Continental Shelf to meet escalating energy demand.58 U.S. and interna- tional corporations are flocking to the High North. Arctic development is generating considerable revenue for the U.S. government. British Petroleum is pursuing the Lib- erty Development Project, a drilling project in the OCS. In February 2008, Royal Dutch Shell paid $2.1 billion for 275 lease blocks in the Chukchi Sea Lease Sale 193. A total of seven companies partici- pated in the Chukchi Sea lease sale, which spans an area covering 5,354 blocks.59 In October 2009, the Interior Department approved two leases to Shell for exploration in the Beaufort Sea,60 conditioned on meeting strict environmental standards.61
One future change in the Arctic region is greater accessibility to, and availability of, natural resources, including offshore oil and gas, minerals, and fisheries. The Arctic contains 10 percent of the world’s known petroleum reserves and approximately 25 percent of its undiscovered reserves.18 The U.S. exclusive economic zone has a potential thirty billion barrels of oil reserves and 221 billion cubic feet in natural gas reserves.19 Minerals available for extraction in the Arctic include manganese, copper, cobalt, zinc, and gold. Coupled with a rise in global demand for natural oil and gas resources and improved accessibility, the Arctic has become a new focus for oil companies looking for untapped resources. Already $2.6 billion has been spent on active oil and gas leases in the Chukchi Sea.20 Yet the extraction of these minerals and petroleum reserves depends heavily upon development and deployment of resilient technology that can function in such harsh conditions, marked by lack of infrastructure and long distances to markets.
Determination of who owns the Arctic Ocean and any resources that might be found beneath those waters will have significant economic implications. The U.S. Department of Energy predicts a decline in petroleum reserves and, despite oil prices topping $146 in June 2008, the demand for oil is growing.6 In addition to the vast mineral resources, the unpredictability of the Persian Gulf region makes the Arctic region even more attractive for exploitation. Russia and Norway have already submitted their claims to the Commission on the Limits of the Continental Shelf (“the Commission”), while Canada and Denmark are collecting evidence to prepare their submissions in the near future.7 All of these nations can gain considerable oil and gas resources as a result of the Convention.
However, one Arctic state has so far failed to join the race. Unlike the other Arctic nations, the United States has not ratified the Convention. Although the United States has complied voluntarily with the Convention, the failure to ratify the Convention could foreclose its ability to tap into potential energy resources. This failure could prevent significant contributions to American energy independence, and increase security threats. Thus, the best way to guarantee access to the Arctic’s resources and to protect other economic and non-economic interests is for the United States to become a party to the Convention.
According to the U.S. Geological Survey, the Arctic region is the largest unexplored prospective area for petroleum remaining on earth.21 The agency estimated that the Arctic may hold as much as ninety billion barrels of undiscovered oil reserves, and 1,670 trillion cubic feet of natural gas.22 This would amount to 13% of the world’s total undiscovered oil and about 30% of the undiscovered natural gas. With an average consumption rate of eighty six million barrels per day, “the potential oil in the Arctic could meet global demand for almost three years.”23 The Arctic’s potential natural gas resources are three times bigger, which is equal to Russia’s gas reserves, which are the world’s largest.24
The economic importance of the energy resources trapped under the Arctic seabed is difficult to overstate. In 2007, Alaska produced 722,000 barrels of oil per day.96 This is only a fraction of the state's 1988 production peak of 2,017,000 barrels of oil per day.97 Today, Alaskan oil production accounts for more than sixteen percent of all U.S. production; in 1988, it was more than a third. Natural gas is a significant energy resource in Alaska (433.5 billion cubic feet are marketed from Alaska per year) but contributes only 2.2% to the U.S. market.98 U.S. Arctic oil exploitation pales, however, in comparison with that of the other Arctic nations.99 Norway, for instance, has produced dramatically more oil from its Arctic sea beds than the United States has over similar periods. In 2007, Norway produced 2,564,884 barrels of oil per day compared to Alaska's mere 722,000 barrels per day; approximately 500,000 barrels per day more than Alaska's 1988 peak.100 The other Arctic nations each produce significant quantities of oil as well.101