Drilling for oil in the Arctic: risks and rewards

Fran UlmerChair, US Arctic Research Commission

UNH Oil Spill ForumOctober 2014

Rapidly changing Arctic

• Less sea ice

• Warmer temperatures

• Thawing permafrost

• Vulnerable species

• Increased human activity

• International interest

Economics…major driver for Arctic change

• Region is increasingly accessible due to technological advances and climate change

• Increasing global demand for resources

• Arctic is resource rich

4

Thule AB

= Chokepoint

Potential Arctic Shipping Routes

Bering Strait

13% oil

30% natural gas

20% natural gas liquids

2009 USGS CARA report

Arctic has much of world’s remaining “undiscovered”

oil and gas

Energy companies active in the Arctic

RosneftNovatekGazpromStatoil NunaoilExxon ShellConoco-PhillipsBPENIAnd many others

Oil and Gas Development

8

Challenges of working in extreme environments:cold, dark, remote, little infrastructure

• Severe & cold weather requires specially designed equipment & vessels & training

• Inadequate aids to navigation and marine charts

• Changing soil conditions (permafrost)

• Some deposits are hazardous (gas hydrates)

• Limited airports, marine ports & exportation options; long supply lines & extensive transport

• High costs to develop reserves

• Distant and limited USCG assets

What does this mean to Arctic residents?

Impacts to subsistence foods and cultural practices

Impacts to coastal villages and basic infrastructure

Possible regional/village economic opportunities

Many different expectations

• Local people want no negative environmental impact, respect for local subsistence activities, local jobs and business opportunities, shared revenues and services

• People more remote from the region may be more interested in general economic activity/state revenues and domestically produced oil and gas

• Shareholders, small businesses, unions, scientists, environmentalists, regulators, others… all have expectations

• Concern about oil spills

UNCLASSIFIED

…oil spills in ice-covered waters…

Deepwater Horizon Oil Spill Commission: Recommendations for the Arctic

• Drill with utmost care: sensitive Arctic environment

• Develop comprehensive research program: scientific information

• Lead in developing int’l drilling standards: best practices

• Raise liability cap

• Address gaps:– Oil-spill response– Containment– Search and rescue

What’s happened since DWH?

• BSEE/BOEM/ONNR• SEMS Regs adopted• DOI’s Energy Coordination• Increased research $ in Arctic• ICCOPR revitalized• NOAA’s Arctic ERMA• Arctic Specific Regs developed• BSEE finished “Oil Spill Response Gap in Arctic”• National Arctic Strategy adopted

• ICCOPR, IARPC, NRC, Industry research efforts have increased• Reports have been produced• Conferences are being held• International efforts, like Arctic Council, IMO and Barents 2020

Forum to provide cooperation, coordination and interaction among the 8 Arctic States, Permanent Participants, Observers Projects on sustainable development and environmental

protection in the Arctic Six working groups that focus collaborative research Negotiated agreements on SAR and oil spill response

The Arctic Council

Ottawa Declaration 1996

• Arctic Offshore Oil and Gas Guidelines (PAME)• Guidelines for Transfer of Refined Oil in Arctic (PAME)• Systems Safety Management and Safety Culture (PAME)• Guide on Oil Spill Response in Snow and Ice (EPPR)• Recommended Practices for Arctic Oil Spill Prevention (EPPR)• Arctic Marine Shipping Assessment (PAME 2009) and

Implementation Report (2013) and IMO Polar Code

Bilateral cooperation: Norway and Russia

Barents 2020 Project

Develop standards to be used internationally to ensure safe oil, gas and maritime operations in the Barents Sea for people, environment & asset values

Create predictable HSE framework for companies and contractors regardless of nationality

7 teams of international experts worked together with DNV (plus Norwegian Foreign Affairs Ministry, Rosneft, Statoil, and many more)

Prevention: reduce risk

• Arctic standards appropriate to the circumstances and level of risk ( probability + consequence)

• Industry led safety culture enhancement and data sharing (build on COS and examples like Barents 2020)

• Identification of important ecological areas and protection strategies (avoid, minimize, mitigate hierarchy)

• Increased investment in technology, training, protocols, communication, infrastructure, capacity and regulatory competency/effectiveness

• Incorporate performance based regulatory approach• Cooperation in all aspects of prevention, preparation and

response at all levels of gov’t and industry

4 million people live in the Arctic

US Arctic Research Commission

• Environmental Change• Arctic Human Health• Civil Infrastructure• Natural Resource

Assessment & Earth Science

• Indigenous Languages, Identities, Cultures

USARC’s daily “Arctic Update”

newsletter

Subscribe at:www.arctic.gov