on explorationand probable development of Canada’s Arctic energyresources. The price of natural gas has recovered fromits recent lows and is now on the upswing, with no end insight. With conventional natural gas production already indecline in the mature Western Canada Sedimentary Basin,no one can predict when and where the price of gas willstabilize. Oil has long passed the $100 psychologicalbarrier and currently sells at nearly $140 a barrel, gettingever closer, in absolute dollars, to levels not reached sincethe oil shocks of the 1970s. The world’s largest oilfieldsare in decline, starting with Saudi Arabia’s mammothGhawar field, one of many giant oil pools from Mexico,Russia, and the Middle East discovered during the heydayof hydrocarbon exploration in the 1960s and 1970s. Con-ventional supplies are declining as China and India growat breakneck pace, and our American neighbour shows nosign of losing its thirst for energy, although the ongoingwoes of the U.S. economy are likely to reduce energyconsumption in the short term.Against this backdrop, only remote frontier areas suchas the Canadian Arctic offer any hope for large newconventional discoveries. The North American Arctic isclearly in the cross hairs of the industry, and it is only amatter of time before the starting gun of a new era ofenergy exploration in the Far North is heard in corporateoffices. While supply, demand, and the price of commodi-ties will loom large in the mind of industry decisionmakers the day they decide to go North, many other factorswill also have to be examined before industry commitsbillions of dollars in capital investment to go after Arcticresources. One of the least worrisome aspects of Arcticenergy development is probably the resource itself. Largegas discoveries were made during the first round of explo-ration three decades ago. There is enough gas in the threelarge fields of the Mackenzie Delta—Taglu, Niglintgak,and Parsons Lake—to feed the yet elusive MackenzieValley pipeline for at least 20 years. Huge quantities of gaswere also found in the Arctic Islands, and a number ofstudies suggest that shipping this gas to market is indeedpossible. While oil was the prime reason for the earlyround of exploration, the paucity of sizeable oil discover-ies from these initial efforts was disappointing. However,Devon Canada’s discovery of 250 million barrels beneaththe Beaufort Sea in 2006 and Imperial Oil and ExxonMobil Canada’s massive $585 million bid for a hugeoffshore block in 2007 signaled that the Arctic oil flamemay have been rekindled. Confirmation came in June ofthis year with British Petroleum’s record-breaking $1.2billion bid for offshore land dispositions in the BeaufortSea adjacent to the Imperial-Exxon-Mobil acquisitions.Companies are now preparing for the move northward.These include ConocoPhillips Canada and Chevron Canada,which acquired some offshore land dispositions in 2007and 2008. Petro-Canada is also a key player, as it ownslarge portions of the Significant Discovery Licenses in theArctic Islands. However, beyond finding the resources inthe ground, above or below the sea, companies still face aseemingly endless list of challenges: a regulatory processviewed as overly complicated and in the thrall of too manyinterests, an environment that is harsh and unforgiving,political ramifications that seem far more complicatedthan they used to be, and a warming climate that is playinghavoc with infrastructures. On that front, and converselyto the popular belief that the melting of Arctic ice due toglobal warming will be a boon for exploration, there ismuch uncertainty about the extent to which a warmingArctic environment will add significant cost to the alreadyhefty bill for conducting exploration in the Far North. Still,the challenges may not be insurmountable when comparedto those posed by the earth’s few other remaining areaswith substantial hydrocarbon potential. These are oftenwar-torn countries, forsaken by democracy, where corrup-tion and terrorism rule the day. In the end, the regulatoryproblems in the North may be insignificant when com-pared to dealing with warlords or with governments will-ing to renege on sealed deals and signed contracts. Goingafter the few giant conventional hydrocarbon fields left tobe discovered will be costly and risky.These current and anticipated developments are inter-twined with, and are bound to exacerbate, the issue ofCanadian Arctic sovereignty, one of the most emotionallycharged and misunderstood issues surrounding the Cana-dian North. Arctic sovereignty is truly about control. Noone challenges Canada’s control over its Arctic lands. Theone minor exception is the ownership of Hans Island, a tiny