Ice-Breaking: U.S. Oil Drilling Starts as Nations Mull Changed Arctic

(From National Geographic / by Joel K. Bourne Jr.) – On the same day, however, a high-powered group of politicians, oil industry executives, shipping magnates, and investors gathered to discuss how best to exploit their good fortune.

“I will be one of those persons most cheering for an endless summer in Alaska,” Peter E. Slaiby, vice president of Shell* Alaska, told luminaries at the Arctic Imperative Summit at the Alyeska Resort in Girdwood, August 25-27. Slaiby’s company has thus far spent $4.5 billion over the past seven years in a much-delayed effort to explore for oil and gas in the Beaufort and Chukchi Seas in Arctic Alaska.

The wait ended at 4:30 a.m. Sunday, Alaska standard time, when Shell’s rig, the Noble Discoverer, began drilling a 1,400-foot (427-meter) pilot hole on its first exploratory well in the Chukchi Sea, the company said in a written statement.  It was the first time a drill bit had touched the sea floor in U.S. territory in the Chukchi Sea in more than two decades, Shell said. The company also was in the process of anchoring a rig in the Beaufort Sea to begin drilling there later this week. Shell was allowed to begin drilling after it received a waiver from U.S. air pollution regulations for generators on its drill ship on Friday. But the company still is barred from drilling into the oil-bearing zone before its repurposed oil spill recovery barge, the Arctic Challenger, passes U.S. Coast Guard inspection and is towed to its station near Barrow, Alaska between the two drilling sites. Sea trials of the barge were underway off the coast of Bellingham, Washington; the Coast Guard has raised concerns over a range of issues, from fire protection systems to the vessel’s ability to withstand Arctic seas, and the company was cited for small leaks of hydraulic fluid while in port.

If the barge passes inspection it will take about two weeks to be towed to Barrow. Because of these delays, Shell has asked federal regulators to extend its drilling window into oil-bearing zones past the September 24 deadline in its permit. The Department of the Interior has yet to rule on the company’s request.

Scramble at the Top of the World

Climate scientists have long said there will be winners and losers from climate change. Nations with territory in the Arctic, where temperatures are warming four times faster than the global average, could be the biggest winners by far. The Arctic could contain as much as 22 percent of the world’s hydrocarbon deposits, with some 29 billion barrels of oil and more than 200 trillion cubic feet of natural gas thought to lie off the Alaska coast alone. North America’s largest oil field, Prudhoe Bay, in comparison, held an estimated 25 billion barrels.

Until recently those offshore deposits have been locked up by thick Arctic ice that no drill rig could withstand. But with the Arctic Ocean now projected to be ice-free during the summer by mid-century and the price of oil stabilizing at about $100 a barrel, nearly every Arctic nation is prospecting for black gold in its rapidly warming Arctic waters. Russia, with its fleet of 33 icebreakers, is leading the way. The U.S. by contrast, has only one operational icebreaker, and another 40-year-old ship coming out of mothballs.

One indication of the geopolitical stakes: Russian President Vladimir Putin has taken a personal interest in the Arctic, chairing two regional summits on the topic and declaring the region Russia’s “strategic reserve for the 21st Century.” “We must make sure Russia is in the lead in exploring the Arctic and its shelf,” Putin declared last April, essentially declaring the start of an oil race to the far north.

Oil and gas prospecting is just one of the new industries Arctic leaders hope to attract. Last year 34 cargo ships passed through the Northern Sea route off the coast of Russia, up from four ships in 2010, opening the prospect of a new summer shortcut across the top of the world. The route cuts as many as 4,000 miles (6,400 kilometers) from European ports to those in Asia, potentially cutting shipping costs 40 to 60 percent, according to Felix Tschudi, chief executive officer of the Tschudi Group, a Norwegian shipping company, another speaker at the Arctic Summit.. Such increased ship traffic could also make vast mineral deposits in the Arctic commercially viable, including some of the world’s largest deposits of gold, coal, zinc, lead, copper, and rare earth minerals. The U.S. Army Corps of Engineers is currently studying the best location to build a new deepwater port in the Alaskan Arctic to service the expected boom.

“Decades from now, this could be a very, very different place,” said U.S. Deputy Secretary of State Thomas R. Nides. “New cities could ring the Arctic, driven by industries we can’t even imagine today . . .  New population centers will need to be tied to national interiors by rail, power lines, roads, and political cultures. As this happens we will have to face the challenges of migration and environmental issues.”

No Easy Answers on Safety

Shell’s Slaiby said his company could effectively clean up an oil spill in the Arctic with heated booms and in situ burning, The efficacy of those methods, however, remains in doubt in the minds of many, including U.S. Coast Guard Vice Admiral Paul F. Zukunft, who served as the federal coordinator for the BP Deepwater Horizon spill in the Gulf of Mexico. “I would never be confident [we could handle a major spill],” Zukunft said. “You’ll never get all the oil. It’s just not feasible. But that’s the expectation here.”

That sentiment was echoed by Marilyn Heiman, director of the U.S. Arctic Program for the Pew Environmental Group. “We need the safest standards in the world,” Heiman said. “It’s one of the most dangerous places to operate on the planet and we have no proven methods for cleaning up oil spills in ice. Try using a skimmer in slush ice. It just doesn’t work. In fall you have really extreme weather, it’s dark all day, and the seas can get 20 feet. There are many days when [oil spill] response is just not possible. Pew is not opposed to drilling. But we’ve got a lot to do to figure out how to do it safely.”

George Noongwook, a soft-spoken whaling captain from St. Lawrence Island, listened to the discussion intently from the back of the room at the posh Alyeska Resort. Noongwook chairs the Alaska Eskimo Whaling Commission, the group responsible for managing the bowhead whale hunts that are the foundation of Inupiat culture. Is he worried about the impact on the notoriously skittish whales?

“We are concerned about the level of activity escalating,” Noongwook said. “There’s no easy answer. Ecological changes are happening so fast. Sea ice is coming later and later and the ice is thinner. There’s more wave action, which means less opportunity to conduct our hunts in a safe manner. Our people are adapting to the ecological changes that are happening. But it’s a learning curve.”

In 2009, the U.S. Army Corps of Engineers identified 176 coastal Alaskan villages threatened by climate-induced erosion. Noongwook considered the question of what the Arctic would look like in 50 years. “It all depends on the upbringing of our children,” he said. “The roots of our culture will be there. It will change over time with the emerging economy, but I’m optimistic.”

He paused for a moment and then added quietly, “I have to be.”

* Shell is sponsor of National Geographic’s Great Energy Challenge initiative. National Geographic maintains autonomy over content.