Tens of degrees below zero during winter and home to endangered species and remote infrastructure — the Russian Arctic is emerging as a new promised land for oil companies, despite clear obstacles.
“The Arctic is one of the world’s largest remaining regions of undiscovered conventional oil and natural gas resources,” ExxonMobil chief executive Rex Tillerson said during a major industry conference in Moscow two weeks ago.
Tim Dodson, a senior executive at Norwegian group Statoil and who also was speaking at the World Petroleum Congress, said the Arctic “is one of the very few remaining areas with the potential to make huge discoveries.”
Photo: Bloomberg
More than 20 percent of the world’s hydrocarbon reserves yet to be discovered are thought to be situated in the Arctic, according to a 2008 report by the US Geological Survey government agency.
Such reserves are predicted to be located primarily in Russia, stretching from Western Siberia to the extreme east of the country.
While Tillerson emphasizes that the Arctic “is not unfamiliar territory” for the oil industry — large fields have been explored and exploited for decades in Alaska, the north of Norway and in Russia’s Sakhalin region — Dodson is quick to point out the challenges.
“The climatic conditions are probably the most visible challenge. Ice, snow, cold and darkness all contribute to an environment that can be both hostile and beautiful,” Dodson said. “To unlock the full potential of the Arctic and also to make Arctic projects commercially viable and globally competitive, we need new technology and innovative business models.”
Oleg Mikhaylov, vice president for oil and gas production at Russian group Bashneft, said that exploration of the Russian Arctic “would require significant support from the Russian government, in addition to investments by private corporations.”
“If you envision full-scale development of the Arctic, you have to envision moving millions of tonnes of supplies to one of the most remote regions of the world,” he said.
Mikhaylov said this would require expansion of railroad infrastructure and the building of a network of ports, in addition to other major constructions.
Global warming has in recent times caused the Arctic ice cap to melt and open new navigation routes leading to previously inaccessible raw materials.
Yet there are clear risks and according to Mikhaylov, dealing with an oil spill offshore in the Arctic “would be an even more daunting challenge” than the 2010 BP oil disaster in the Gulf of Mexico.
Environmental groups such as Greenpeace are eager to highlight such threats, occasionally putting themselves in danger to do so.
Russian security forces in September last year detained 30 Greenpeace activists and journalists and seized their Arctic Sunrise ship following protests against an offshore oil rig owned by Russian energy giant Gazprom.
The 30, including four Russians, were detained for about two months before being bailed out. Eventually, they benefited from a Kremlin-backed amnesty.
Nongovernmental organizations such as Greenpeace claim that Arctic oil and gas exploration not only harms a fragile ecosystem — home to endangered species such as polar bears and cetaceans — but also accelerates climate change.
Faced with such obstacles, energy companies need to achieve technological breakthroughs or see the high costs associated with such exploration potentially end certain Arctic projects, analysts and industry leaders said.
For now, though the drilling continues.
For example, Statoil is in the process of designing a new class of drilling ships, specially adapted to withstand extreme Arctic weather conditions.
Meanwhile, French group Total has for a number of years worked with Gazprom to find a cost-effective way of exploiting the giant gas field of Shtokman in the Barents Sea.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to