Climate change, future Arctic Sea ice, and the competitiveness of European Arctic offshore oil and gas production on world markets

Sebastian Petrick,Christian Growitsch,Kathrin Riemann-Campe,Katrin Rehdanz,Rüdiger Gerdes,Sven Hoog,Hannah Schwind

doi:10.1007/s13280-017-0957-z

Abstract

A significant share of the world’s undiscovered oil and natural gas resources are assumed to lie under the seabed of the Arctic Ocean. Up until now, the exploitation of the resources especially under the European Arctic has largely been prevented by the challenges posed by sea ice coverage, harsh weather conditions, darkness, remoteness of the fields, and lack of infrastructure. Gradual warming has, however, improved the accessibility of the Arctic Ocean. We show for the most resource-abundant European Arctic Seas whether and how a climate induced reduction in sea ice might impact future accessibility of offshore natural gas and crude oil resources. Based on this analysis we show for a number of illustrative but representative locations which technology options exist based on a cost-minimization assessment. We find that under current hydrocarbon prices, oil and gas from the European offshore Arctic is not competitive on world markets.

Highlights

A significant share of the world’s undiscovered oil and natural gas resources is assumed to lie under the seabed of the Arctic Ocean
The European Arctic has largely been prevented by the challenges posed by temporary sea ice coverage, harsh weather conditions, darkness, remoteness of the fields, and lack of infrastructure such as Search and Rescue (SAR) facilities
We show for the most resource-abundant European Arctic Seas whether and how a climate change-induced reduction in sea ice might impact future accessibility of offshore natural gas and crude oil resources

Summary

Introduction

A significant share of the world’s undiscovered oil and natural gas resources is assumed to lie under the seabed of the Arctic Ocean. The European Arctic has largely been prevented by the challenges posed by temporary sea ice coverage, harsh weather conditions, darkness, remoteness of the fields, and lack of infrastructure such as Search and Rescue (SAR) facilities. The need for special equipment, suitable for winter operation, including ships and platforms, and the long distance to existing infrastructure make exploration and production activities in the Arctic Ocean especially costly compared to other, even non-conventional sources of hydrocarbons. Environmentalists see the pristine Arctic ecosystems in danger of pollution by oil and gas production facilities and associated infrastructure. The implications of additional production of energy resources from the European Arctic on the environment, energy markets, and geopolitics warrants a closer look on whether, where, and under which conditions additional Arctic offshore oil and gas production is desirable

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