In 2050, world energy demand is forecast to be twice as high as in 2000. The Arctic, with an estimated 13% of the world’s undiscovered recoverable oil and 30% of its natural gas, can help to meet some of that growing demand.
In recognition of the important role that the northern region will play over the next several decades — and the substantial public debate around the industry’s ability to work safely and securely in such a harsh and variable environment — OGP has created a new standing committee.
The Arctic Committee, chaired by Robert Blaauw of Shell, will:
- act as the E&P industry’s technical and advocacy focal point on issues related to upstream activities in the Arctic and cold region environments more generally
- develop a long-term strategy to address the key arctic issues for the upstream industry
- review and shape work of global importance being carried out within OGP standing committees and in other entities regarding the development of good practices and guidelines associated with working in arctic conditions
- monitor, review and contribute to international and regional regulatory and policy developments in relation to the Arctic
- establish and support industry positions with respect to regulatory developments and, through the OGP secretariat, advocate and communicate those positions in close liaison with national/regional associations
The Committee’s advocacy messages will focus on the strategic importance for Europe of responsible development of the Arctic. It will also address and correct mis-perceptions that arctic exploration is new; highlighting how safe operations are a primary focus for the industry. Another priority will be to communicate how the oil and gas industry can work with local people on the sustainable development of the region.
Strategic importance for Europe
As global demand for oil and gas continues to rise and EU indigenous production declines, the Arctic is growing in strategic importance for Europe. The responsible development of Arctic oil and gas over the next decades will mitigate Europe’s declining indigenous supplies of oil and gas – and maintain energy security for all consumers throughout the world.
The European Commission and Council have foreseen that oil and gas will account for 55% of the EU energy mix by 2030. The International Energy Agency (IEA), in its 2013 World Energy Outlook, indicates that Europe will become still more dependent on oil and gas imports by 2035. By then, EU net oil and gas imports will have increased from 60% to 80%.
As developing economies continue to mature, and competition for oil and gas increases, diversity of energy supplies is fundamental to Europe’s energy security. Europe is fortunate in that a large part of the Arctic potential is either located within the EEA or nearby, such as in the Russian Arctic.
The industry appreciates that the EU’s Arctic strategy supports development of the Arctic resources, and stresses that this must be done in a timely manner. As the IEA said in June 2010, “We must push forward with new investment.” Indeed, long lead times for oil and gas projects require commitment years in advance before new supply projects can come on-stream.
Security of supply is “not about an inadequate resource base in either oil or gas, but about timely and adequate investment,” the IEA maintains. Energy security – required for sustained economic growth over the next 30 years – will depend on maintaining a diverse energy supply; which in Europe’s case includes resources from the Arctic.
Almost a century of arctic exploration
Exploration for hydrocarbons in the Arctic is not new. Europe can build on almost a century of oil and gas activity there, starting with onshore exploration and production in Canada in 1920. Alaska’s North Slope on and offshore fields have been in production for over 30 years and in the Norwegian part of the Barents Sea, licence awards and consequent exploration date back to 1980. Independent research has shown that, since the 1960s, more than 10,000 wells have been drilled within the Arctic Circle.
Arctic operations come under relevant national legislation in addition to guidelines developed by the Arctic Council. Experience has shown that this is an effective governance system.
Safe operations are the industry’s priority
The industry recognises that the Arctic is a sensitive natural environment with specific challenges that must be overcome through site-specific solutions. These minimise risk and ensure the existence of a proper oil spill response for the unlikely event of an accident. Companies working in the Arctic use a step-wise and technology-based approach, venturing into further areas only once necessary technologies and competences are in place.
Extensive safe operations with a primary focus to avoid accidents remain the industry’s priority. To that end, decades of investment in research and development programmes continue to improve Arctic oil spill prevention and response. Depending on prevailing conditions, responses can include mechanical recovery, in-situ burning and the use of dispersants. These can accelerate the natural biodegradation of oil in Arctic waters.
Sustainable industrial development
Approximately four million people live in the Arctic region. All rely on its indigenous resources, including the vast oil and gas deposits. At the same time, they want to protect and preserve many aspects of their unique cultures and ways of life. Working closely with local communities, the industry helps to sustainably develop the region by understanding and managing the impacts of oil and gas exploration and production. This process will include drawing on the Arctic population’s own knowledge and experience.
In addition, as Arctic development progresses, there is and will be tremendous demand for technical, research and development support from international companies and organisations. These will be drawn from a wide variety of sectors in addition to the oil and gas industry, including environmental sciences, infrastructure development, communications and multiple services and suppliers.
The Arctic Committee works through four workstreams (Arctic Policy and Regulatory Advocacy, Oil Spill Prevention and Response, Operating in ice and Cooperation with Arctic Council) and a task force (Arctic Well Secure).
In meeting its objectives and effectively play its roles the Arctic Committee looks forward to work extensively with the other committees in OGP, notably the Communications, Environment, EU, Safety, Standards and Wells Expert Committee to name a few.