Russia Moves to Drill in Arctic, Oil Companies Follow Suit
The prospect of drilling for oil in Arctic waters has long made Americans and Canadians queasy (if not their oil companies), and for good reason: the frigid cold, dangerous waters, and difficult-to-navigate coastal terrain. An offshore spill in the Arctic would be devastating, and exceedingly tough to contain. But faced with dwindling onshore supplies, Russia has made a concerted push to begin drilling in the Arctic, and in a highly publicized move, tapped none other than BP to help lead the charge. Now, Russia is accelerating its march towards the Arctic -- and a number of Western companies are following suit.Here's the New York Times:
Russia, where onshore oil reserves are slowly dwindling, last month signed an Arctic exploration deal with the British petroleum giant BP ... Other Western oil companies, recognizing Moscow's openness to new ocean drilling, are now having similar discussions with Russia. But as the offshore Russian efforts proceed, the oil companies will be venturing where other big countries ringing the Arctic Ocean -- most notably the United States and Canada -- have been wary of letting oil field development proceed, for both safety and environmental reasons.As would seem the intelligent thing to do -- we now understand the perils of offshore drilling better than ever before, and should be taking the proper precautions to prevent a repeat disaster, especially in conditions that could make such an event even worse. But, so as long as there's percolating global oil demand, someone's going to take those risks. And in this case, it happens to be Russia.
After the BP accident in the gulf last year highlighted the consequences of a catastrophic ocean spill, American and Canadian regulators focused on the special challenges in the Arctic. The ice pack and icebergs pose various threats to drilling rigs and crews. And if oil were spilled in the winter, cleanup would take place in the total darkness that engulfs the region during those months.
Russia is now the world's largest oil producer, having just surpassed Saudi Arabia -- which, in a bombshell last week was revealed to have possibly overestimated its oil supplies by as much as 40%. But even Russia's stores are draining, and it needs to set off in search of new frontiers to keep the flow steady. And with Russia blazing the trail and managing the business, companies like BP, Shell, and Exxon will be partly shielded from the PR storm of a potential catastrophe, and will likely be eager to participate.
And such trends will be the norm so as long demand remains unwaveringly high -- Exxon would send its exploration team into the heart of an active volcano if there was oil to be found amongst the magma. Which is why the only way to meaningfully prevent another major oil catastrophe is to curb the demand for oil itself on a large scale, with alternative technologies and prohibitive policies -- we can regulate all we want, but someone's always going take the risk to make a profit.