Oil companies of the world have cooled to the Arctic
Material posted: Publication date: 03-06-2013

Oil companies are rapidly losing the interest to work in the Arctic for fear of financial and reputational risks.

The Arctic accounts for 13 percent of the world's untouched oil reserves and 30 percent of gas reserves, but a series of accidents and mishaps forced the company management to turn to traditional sources of energy and shale oil and gas.

The turning point probably was the accident drill ship of the company Royal Dutch Shell, ran aground off the coast of Alaska in the New year's eve. The incident caused a flurry of claims against the company, spent in the Arctic $4.5 billion since 2005, forcing her to cancel plans for drilling offshore Alaska in 2013.

"The problem, Shell has set back all plans for the Arctic, especially the American part," said Reiter Chu Chau Ben, CEO of the world's largest manufacturer of drilling rigs Keppel.

Other companies have learned lessons from the crash caused extensive damage and triggered the oil spill.

"Interest in oil and gas production is very high, however, there are increasing concerns about ecology and risks," said Harald Norvik, member of the Board of Directors of ConocoPhillips and former CEO of Norwegian Statoil is a pioneer in the development of the Arctic.

"We focused on the Arctic, but now our priorities are such places as Tanzania, Argentina and Texas. This is a logical development. The reality is that in the future the telltale signs of climate change in the Arctic will affect policymakers and company management, and now I see it more clearly than it was five years or three years ago," said Norvik.

As climate change is the rapid melting of Arctic glaciers.

Problems in the Arctic has not only Shell: Cairn Energy spent $1.2 billion on drilling near Greenland not find hydrocarbon reserves, and Gazprom has stopped the development of the giant Shtokman field due to excessive cost. ConocoPhillips, in conjunction with Keppel attempting to create a drilling vessel ice class, has frozen the project and canceled plans to begin drilling in the Chukchi sea next year.

"No one is interested in drilling ice-class vessels. All attention is given to shale oil.. and there are many poorly studied regions, such as Mexico, where, probably, not less oil and gas than in the Gulf of Mexico," said Chu from Keppel.

Shale oil is quite expensive, but no more expensive deep water projects and shale gas is only a few years to satisfy demand in the U.S. is likely to become popular in other countries.

"There are cheaper stocks with higher probability of success. Shale oil and gas gaining market share at the expense of low risks and costs," said James Rogers, CEO of the largest U.S. power provider Duke Energy.

"It's not so cheap, but competes with deep-water projects and not as risky. The shale oil and gas will grow much faster than now, it will start in Russia, China, South Africa, Argentina and around the world," agreed with him Norvik from ConocoPhillips.

The abundance of shale gas and oil in the U.S. reduces the interest of Washington to the shelf of Alaska, but not to say that work in the Arctic is completely stopped. For example, NOVATEK and Total plan in 2016 to run the plant on production of liquefied natural gas, Yamal LNG, and Rosneft recently signed an agreement with ExxonMobil on joint work in the Arctic ocean.

"I think that Russia will act faster than any other country, because she has a long-standing interest in the development of the Northern territories," said Chu.

Norway also continues its work in the Arctic, although the conditions for this in the relatively warm Barents sea is more favorable.

"There are many different Arctic with different characteristics, is a heterogeneous region. Statoil, the priorities haven't changed, although in other countries there were problems", - said the Director of Statoil in the Arctic Rooney Hansen.

But the oil companies sure will ever return to the region.

"If it is possible to work safely, there's no reason not to do it," said Rogers of Duke Energy.


Balazs Koranyi. Translated By Denis Pshenichnikov

Source: http://ru.reuters.com/article/businessNews/idRUMSE95201T20130603?sp=true

Tags: assessment , Arctic , resources , oil