Profiteering from the Arctic Thaw
- From: "Jason P" <jaspetr@xxxxxxxxx>
- Date: Tue, 15 Jan 2008 06:14:20 -0800
GLOBAL WARMING
Profiteering from the Arctic Thaw
By Erich Wiedemann
Global warming isn't necessarily the catastrophe it's made out to be -- at
least not for multinational oil companies. Shrinking ice caps would reveal
the Arctic's massive energy sources and shorten tanker routes by thousands
of miles.
Ice-cap melting may be bad news for the polar bears in Manitoba (more...),
Canada, but it is great news for Pat Broe of Denver. When the ice melts in
the Arctic, the polar predators have to search for new hunting grounds or
starve -- but Broe doesn't mind. He figures global warming will make him
around $100 million a year.
His friends laughed at him when he bought the run-down port in Churchill --
a tiny outpost of a thousand souls on the Hudson Bay. What could he possibly
want with a harbor in one of the most deserted places on the planet that's
frozen over a big chunk of the year?
Wait and see, said Broe. He only paid a symbolic price of seven dollars --
not a bad price for a port. He knew that time was on his side. Temperatures
in the Northern Hemisphere are rising twice as fast as in the southern half.
The summers are getting longer and the pack ice is getting thinner. By 2015
the North Pole is expected to be navigable for normal ships six months out
of the year. It's then that a golden age will dawn upon Churchill.
Via Arctic waterways, an oil tanker only needs a week to make it from the
Russian port city Murmansk on the Barents Sea to the east coast of Canada.
That's only half the time it takes from Abu Dhabi on the Persian Gulf to
Galveston, Texas. And from Churchill to Chicago on the Hudson Bay Railway,
it's not much further than from Texas to the Windy City. Tankers from
Venezuela to Japan can even save some 12,000 kilometers (7,500 miles) by
traveling over the pole.
Of course, with rising ocean temperatures comes an increased danger of
icebergs, but at least the Arctic oil fields aren't in a region plagued by
political instability. No suicide bombers, no kidnappings, no explosions.
What risk there is up north, is nothing big oil companies aren't happy to
take on.
The first cargo likely to be transported via the Northwest Passage is
Russian oil from Siberia destined for North America. The melting ice will
also make it easier to get to oil and natural gas fields that are still
blocked by pack ice.
The Arctic is a giant treasure trove for energy multinationals. A quarter of
the world's oil and gas reserves are estimated to be hidden underneath its
rapidly shrinking ice. At current market values they would be worth $1.5 to
$2 trillion. There are even proven oil deposits at the North Pole itself.
No icebreakers needed
The big breakthrough might come even earlier than Pat Broe expects. Last
August, the Russian steamer "Akademik Fyodorov" became the first ship to
reach the North Pole without the help of an icebreaker. Norway's state-owned
energy company Statoil and Russia's Gazprom want to tap the Stockman
Field -- with an estimated 3.2 billion cubic meters, the largest natural gas
deposit in the world. The gas will be pumped via undersea pipelines to the
warm-water ports in Murmansk and Hammerfest in Norway's far north. From
there it will be transported onward to energy-hungry Western Europe.
Before the latest oil boom, Murmansk was a dying city, losing 10,000
inhabitants a year. The partial mothballing of Russian northern fleet
destroyed the local economy. But the discovery and tapping of new oil and
gas fields has given the gray city on the Arctic Circle new hope. The new
gas liquefaction plant alone will create thousands of jobs.
The Russian Duma might have ratified the Kyoto treaty on climate change, but
only with the disapproval of President Vladimir Putin. Global warming leaves
him cold. There's no reason to get excited, he says. If Russia was two or
three degrees warmer, parts of Siberia could become blooming landscapes and
his citizens wouldn't have to buy such expensive winter coats.
The Norwegian might already be well off, but the northern thaw would also
benefit them. In Hammerfest, a ?6-billion gas liquefaction facility is
already being built to serve the particularly hungry North America energy
market. The project is appropriately named Snohvit -- Snow White.
Five Arctic rivals
Five nations are competing for their very own lucrative chunk of the frosty
north: Norway, Russia, Denmark, Canada and the United States. The Arctic
might be a vast place, but the various rival claims pose plenty of potential
for conflict. According to maritime law, the borders of national economic
zones are delineated by the continental shelf, however, it's unclear where
the shelf ends and the open sea starts.
The first attempt to draft land-rights of the Arctic, which could divvy up
ownership, goes back to Soviet dictator Joseph Stalin. On a world map he
tried to carve out a huge area for the "Soviet Arctic" stretching from
Murmansk and the Chukchi Peninsula to the North Pole. But the Russian claims
were met by protests -- especially from Norway. The oil fields in the North
Sea that form the basis for the Scandinavian country's wealth will dry up in
the coming decades, leading the Norwegians to place great hope in new
sources underneath the Arctic ice.
The old seafaring dream of the Northwest Passage will also soon be a
reality. It will cut the distance between Hamburg and Yokohama nearly in
half. Instead of traveling via the Suez Canal, shipping traffic between
Europe and the Far East will likely take the polar route off the costal
waters of northern Siberia.
The repercussions for Europe's industry could be immense: lower transport
costs will only magnify the effects of globalization as cheap goods from
Asia flood Western markets. A decade ago, China wanted to build a fleet of
icebreakers in order to allow its growing number of cargo ships to take
advantage of the shorter route over the Arctic. Now that will no longer be
necessary.
-- © SPIEGEL ONLINE 2006
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