Arctic Discoveries, Part I: Oil & Gas

A survey by the US Geological Society, released last month, estimates that there are 90bn barrels of oil and three times as much natural gas in the Arctic. For a dose of perspective, that's three times the total known reserves in Mexico, Nigeria and Kazakhstan, or 13% of the world's undiscovered reserves. More detail can be found here. This is going to make life in the Arctic more interesting from both a geopolitical and environmental point of view.

In the area of geopolitics, there is of course the issue of the five-or-so Arctic countries that see this news as a huge opportunity. Almost thankfully, most of the resources already lie within pre-established territorial waters. The bulk of the oil is off the Alaskan shoreline so drilling remains primarily a domestic issue. Similarly, most of the natural gas is close to Russian territory. But as some of you will recall, this has not stopped the Russians from 'staking their claim' - planting a flag along the Lomonosov Ridge under the North Pole, last year. The Ruskies are also the best equipped for Arctic exploration and are letting everyone know it: military exercises over the Arctic are a regular affair. Canada has claimed it will respond to these overtures, but is woefully ill-equipped for the task.

Jeffrey Garten, an econ professor at Yale, has proposed (what else?) a sovereign body to control the region, with governments advising. This "Arctic Authority" would be autonomous, but would allow for input from governments, firms and NGOs. Rulings would be passed down from the joint Polar Bear - Walrus Council, with penguins from the South Pole acting in a consultative role. Okay, I made that last bit up. I mock because the Arctic Authority is the sort of unrealistic proposals that academics earn their living on: nation-states are reluctant to cede authority to international bodies at the best of times and it is clear from recent Russian behaviour in Georgia that they are not in the mood for sharing.

To his credit, Garten's proposals does help to illustrate the flaws in the the current arrangement. International legal jurisdictions are unclear and overlap one another. More importantly, the fragile Arctic ecosystem is threatened by prospective extraction. The medium-term benefits of the oil reserves (it will take a long time to get it out) need to be carefully weighed against potentially the devastating long-term environmental effects. Although, if everyone sits on their hands for a few years, global warming might make the whole thing a lot easier. This is an issue that will have to be followed closely - for now, we know what's up there and it's not going away any time soon.