IN WHICH WE PONDER WAYS TO MELT ARCTIC ICE TO GET AT THE OIL. HOW ABOUT USING PLANELOADS OF SOOT?
SPREAD OUT ACROSS THE FLOOR IN FRONT OF US ARE A LARGE geological map of the Arctic along with a few seismic survey maps. Andrew Miall and I are down on our knees following the undulating lines that represent subsurface rock formations. He’s muttering about upfolds and anticlines, fault traps and stratigraphic traps, anything that might point to what we all hunger for—oil.
Miall is a veteran petroleum geologist and resident stoic at the University of Toronto. He spent many of his early years surveying the Arctic for oil and gas in the late 1960s and early 1970s. The reservoirs and wells he helped find were never exploited because of ice and climate. Forty years later, the search is on again and we’re trying to separate fact from fiction, reality from hype. “There undoubtedly is a lot there,” Miall says of the Arctic. The question is how much and where.
There are already more than four hundred known oil and gas fields above the Arctic Circle, mostly in Russia and along the north shore of Alaska. Total reserves in these fields are 40 billion barrels of oil and 1,136 trillion cubic feet of natural gas. The news from the exploration wells that creep over Russia’s vast continental shelf, which in some areas extends as much as 1,700 kilometers above the Arctic Circle and also out into the Chukchi Sea off the northwest coast of Alaska, is even more promising.
Brash economics drives Arctic development despite the global threat of climate change. Since the 1970s, the Alaska economy has been heavily dependent on the North Slope oil fields that look out over the Beaufort Sea. With no income tax or sales tax, the state funds about 90 percent of its budget from royalties and taxes on oil and gas producers. Since 1981, the oil revenue–endowed Alaska Permanent Fund has cut an annual dividend check to every citizen in an amount that varies with the price of oil. The dividend peaked in 2008 at $2,069 per resident and fell in 2009 to $1,305. For a family of four, that’s a substantial payout. In Alaska, oil is king.
While oil is the ultimate source of Alaska’s wealth, the Trans-Alaska Pipeline is the facilitator. Without the pipeline, the oil would not get to market in as timely a fashion. Since 1977, oil from the North Slope fields has flowed through the pipeline 1,287 kilometers south to the ice-free port of Valdez. At its peak, the pipeline was flowing at a rate of 2.1 million barrels a day. Today it flows at about 647,000 barrels a day, and the decline rate averages 6 percent a year. Alaska supplies about 3.3 percent of America’s needs. Alaska state senator Lesil McGuire, chairwoman of the Senate energy committee, says that if the flow rate falls below 500,000 barrels a day, the pipeline begins to run into trouble because the oil temperature dips below freezing. This causes ice buildup, which can crack underground portions of the pipeline. “That is only 145,000 barrels away,” she says.
With Alaska’s existing wells in decline, the state government believes its salvation lies offshore in the Chukchi Sea, where the United States Geological Survey estimates there are 25 billion barrels of oil. In 2008, the U.S. federal government sold $2.66 billion in oil and gas leases on the outer continental shelf of the Chukchi Sea to Shell Oil, Statoil and ConocoPhillips. Shell Oil planned to be pumping more than one billion barrels a year out of its leases by 2017. But those plans are on hold after the federal government slapped a moratorium on development of offshore leases in the Arctic following the Gulf Coast disaster. Normally, Alaska wouldn’t care. The owner of the offshore resource is the federal government; Alaska won’t collect a cent in royalties or taxes. But Alaska, McGuire says, needs that oil to keep the pipeline working. Thirteen thousand direct jobs rely on oil flowing through the pipeline.
There is one other reason Alaska wants the Chukchi oil to flow. Under Alaska’s North Slope lie an estimated 20 billion barrels of heavy crude oil, which belongs to Alaska. To get heavy oil to flow, you have to mix it with light crude. The Chukchi oil is ideal for heavy oil extraction, McGuire says. “The supply itself [of Chukchi oil] keeps that Trans-Alaska pipeline alive, keeps those jobs, keeps our state growing.” Without the Chukchi oil, she says, by mid-century Alaska will be a dying if not a dead oil and gas state. “We look to the Arctic as our future. I believe Alaska will continue to play a major role in the global energy picture.”
To McGuire, climate change is an issue, but only insofar as it might “disrupt polar bear patterns.”
Norway, Russia and Canada are different from Alaska only in scale. Each of their economies has become so reliant on oil and gas production that any sudden or even gradual decline would create hardship and potential social upheaval. Of Canada’s total exports to the United States in 2009, 54 percent were oil and gas.1 Like Alaska, the Canadian government can’t see its future beyond the oil patch.
Miall draws an imagined line with his finger along the continental shelves extending off the north shore of Siberia out into the Chukchi Sea. All continental shelves have potentially petroleum-bearing sedimentary rocks and Russia has the broadest continental shelves of all the Arctic nations, making up about half the total. “There has been quite a bit of exploration on the edge of the shelf here by the Russians and it has all been very, very promising. There are gas fields already producing from the edges of the shelf and you know it is quite reasonable to project these geological features out. So the potential of that area is quite clearly great. Nobody would ever dispute that the ownership of that is quite clearly Russian.”
In Canada and Greenland, oil exploration began with a frenzy decades ago and then suddenly stopped in the late 1980s as the ice and cold made it too expensive. The first well was drilled in Arctic Canada in 1961, and over the next twenty years oil companies found 1.6 billion barrels of oil and 31.2 trillion cubic feet of natural gas. Not big, but not insubstantial. The effort, however, was enormous. In some cases whole islands were built to support the rigs operating in shallow waters. In other cases, companies created floating ice platforms with half natural sea ice and half man-made ice to hold the 450-ton rigs. Billions were spent, much of it tax dollars, but only a fraction of the High Artic oil ever got to market. The wells were ultimately shut down and plugged because of high costs and bad climate. As the ice retreats, these orphaned oil fields beckon.
How much still awaits discovery? The figure bandied around is about 90 billion barrels of oil. It is an estimate that was originally made on July 23, 2008, by the United States Geological Survey in a study called “Circum-Arctic Resource Appraisal: Estimates of Undiscovered Oil and Gas North of the Arctic Circle.” The study claimed that in addition to the 90 billion barrels of oil there are 1,670 trillion cubic feet of technically recoverable natural gas, and 44 billion barrels of technically recoverable natural gas liquids in twenty-five geologically defined areas thought to have potential for petroleum. The study also said the Arctic “accounts for about 13 percent of the undiscovered oil, 30 percent of the undiscovered natural gas, and 20 percent of the undiscovered natural gas liquids in the world. About 84 percent of the estimated resources are expected to occur offshore.” In a world running out of oil, this was important news, even though the 90 billion barrels represents only three years of current global consumption. The study naturally produced headlines around the world. Arctic countries licked their lips and looked to buttress their claims.
A closer look at the numbers, however, tells a different story. David Hughes, a retired petroleum geologist with the Geological Survey of Canada, analyzed the detailed USGS data for the geological region of Baffin Bay, between Greenland and Canada. Here the USGS estimated reserves totaling 7.2 billion barrels of oil. Hughes said in a paper, “There is a 95 percent probability that at least zero oil resources exist, a 50 percent probability that 0.26 billion barrels exist and a 5 percent probability that 34.5 billion barrels exist. So the USGS rolls the dice and reports a ‘mean’ estimate of 7.265 billion barrels to the media, when this amount has likely a one in ten chance or less of existing.”
Miall, who is also a former president of the Academy of Science in Canada, says the USGS estimates often serve the oil industry’s political needs and what he claims is America’s myth of energy independence. “For an economy that’s built entirely on oil and gas and the clients they serve and the industry, the more oil and gas you claim is out there, the greater the likelihood that the government will spend money to go up there and search for it.”
In the end, however, does it really matter if the USGS is wildly off and a fairer estimate would be, say, only 50 billion barrels or 20 billion or even 10? Miall doesn’t think so. “The fact of the matter is, at one point we will have to exploit everything that is left unless there is a breakthrough in physics and we discover an entirely new form of energy. We are going to need the energy. There is just no way around it.”
Miall spent a good part of his early career looking for oil in the Canadian Arctic archipelago. As we continue to comb over the maps, he points out the structures.
An oil reservoir needs essentially three elements: a source of biomass, a so-called “kitchen” where the mass is cooked and turned into oil or gas, and a trap that basically pools the oil and gas into a reservoir, stopping it from being pushed by water up to the surface, where it would dissipate. Fossil fuels are formed from biomass that is cooked underground at about 70 degrees Celsius over hundreds of millions of years. The richest source is marine plankton. The fuel is pushed upwards by either geological activity or water or both. A reservoir forms when the petroleum is pushed against a trap that stops it from going to the surface. The best trap is a salt layer, formed millions of years ago by intense evaporation of huge bodies of seawater. “The salt itself is impermeable. Like plastic. If you get oil and gas pooling underneath, it makes a perfect seal.” Folded rock formations and impermeable faults where rock layers push up against each other can also serve as traps. Saudi Arabia has unusually effective traps and a massive biomass source deposited in the sand about 200 million years ago, when Arabia was part of the Tethys Ocean. As Africa drifted north against Asia, the collision with what is now Europe and Asia pushed up the seabed to create Saudi Arabia. (The same action created the Alps and the Himalayas.) The biomass that had been deposited at the bottom of the Tethys Ocean over millions of years pooled in giant rock faults under Saudi Arabia, creating large traps in which the world’s largest oil reservoirs formed.
Without all three factors, there is no chance of finding oil. Miall shows me the high-potential geological formations around the Mackenzie Delta. “There’s all sorts of nice things going on there,” he says, pointing to several rock traps on a seismic map.
The Arctic tectonic history is not well known, but the region doesn’t have the same dramatic faults and thrusts found in the Middle East. In fact, in the Arctic’s south-central and western islands, Miall says, the rock is flat-lined, meaning there is less potential for traps. In the eastern archipelago, the rock is too old. It’s igneous rock, formed from lava, and there is no oil in that.
Miall was first sent up to the High Arctic to look for oil in 1969 while his boss, the legendary cowboy oilman John Campbell (Cam) Sproule, tried to persuade New York investors that he could melt the Arctic. Sproule was a gifted promoter and succeeded in raising hundreds of millions of dollars from government and private investors eager to explore the next frontier. He founded PanArctic Oils, which became a major Arctic player. Its main shareholder was the Canadian government. Its leases were in the western High Arctic islands—the so-called Sverdrup Basin—where it spent more than $900 million drilling more than 175 wells and discovered about 17.5 trillion cubic feet of natural gas. It also discovered oil, and from 1985 to 1996 shipped 2.8 million barrels by tanker to Montréal, stopping only when the price of oil collapsed. It was a trickle in global terms, but it served the purpose of helping to establish Canadian sovereignty in the region.
“Cam Sproule, he was a little bit of a rogue,” Miall says. “For several years he made his money out of running ground surveys across areas that oil companies were interested in. There were a lot of speculative investments in landholdings in this area back in that time. There were American investors from New York, these big fat-cat guys, and they thought they were going to make a killing out of taking out oil and gas permits in the Arctic, hoping that … they could sell the drilling rights to one of the major oil companies. One of the conditions of taking the land permit was that you have got to actually do some work on it. So Sproule would send these field crews up into the Arctic for weeks and months at a time to do a local survey. I spent two summers, long, long, long summers, up there and was kept in the field far too long because he was making a per diem keeping us up there. We were stuck up there until late August, early September, when the snow started to fly and it was pretty questionable whether we would be able to get flown out.”
Miall taps his finger on an area of Ellesmere Island covered in glaciers and then recounts how Sproule tried to persuade New York investors to give him millions of dollars to melt the glaciers and drill for oil in the area, even though it was igneous rock. “He suggested that they would charter these Hercules aircraft and fill them full of soot and they would fly out over these glaciers and shovel the soot out the back onto the edge of the ice cap and the soot would sit on the ice and of course absorb the sun’s heat and melt the ice and then you could see what was underneath and actually do some exploration. I was in a meeting where he was seriously suggesting this. I couldn’t believe my ears.”
In the Canadian Arctic, there are five main areas of interest: the Mackenzie Delta and corridor, the Sverdrup Basin, Baffin Bay and the Ellesmere margin, Hudson Bay, and eastern Labrador. According to Donna Kirkwood, the director of the Atlantic and western branch of the Geological Survey of Canada, their mapping so far indicates that these regions hold reserves of 28 billion barrels of oil and about 97 trillion cubic feet of natural gas. “These are very, very conservative estimates,” she says, based primarily on scientific assessments of “what we know about reservoir rocks and migration paths from source rocks to reservoir rocks.” In other words, they are not based on drilling information other than what was obtained in the 1960s and 1970s. About 40 percent of the Canadian Arctic has not been mapped to modern standards and Kirkwood says the more they survey the Arctic, the higher their estimates rise. While some are considerably higher than those published in 2008 by the U.S. Geological Survey, others are not. A case in point is the Sverdrup Basin. Canada estimates it holds at least five billion barrels; the USGS estimates are less than one billion. Canada says Baffin Bay and the Ellesmere ridge hold 11 billion; the United States agrees. The point is that before you start drilling, nobody knows the truth. But when the tide flows in favor of drilling, then drilling it will be.
The Sverdrup Basin, which experienced the most intensive drilling of any area in the Canadian High Arctic during the 1960s and 1970s, has the deepest sediment pile, over ten kilometers thick. Farther south, in the Mackenzie River Delta of the Yukon and Northwest Territories, just over one billion barrels of oil have been discovered. There is evidence that the Mackenzie is actually a young river geologically speaking, which reduces the likelihood of big oil finds.
Jack McMillan, the Canadian geologist who discovered the fossil forest in Hot Weather Creek on Ellesmere Island, speculated that a river system that flowed across the interior of northern Canada from the Rocky Mountains eastward deposited the thick quantities of sediment on the continental shelf off Labrador and probably off Baffin Island, which is why there could be substantial amounts of oil and gas there. In other words, the Mackenzie River flowed into Hudson Bay and not the Beaufort Sea, as it does today. The theory is that the ice age glaciers blocked this eastern flow and turned it north into what is now the Mackenzie River. Another geologist with the Geological Survey of Canada, Alejandra Duk-Rodkin, has since found ancient river channels and river terrace deposits that support McMillan’s theory.
Between 1974 and 1983, oil companies drilled twenty-eight exploration wells into the sediment off Labrador and three wells off the southern half of Baffin Island. They found five large fields with an estimated 4.2 trillion cubic feet of natural gas. The wells were all shut in. They are smack in the middle of iceberg alley, where the giant icebergs calved from Greenland’s and Canada’s glaciers congregate. The shelf in that area is pretty shallow and icebergs can easily tear out underwater pipelines.
Miall says the final untapped area that promises to be among the richest fossil fuel sources in the Arctic is the eight-kilometer-wide Lancaster Sound, which serves as the eastern gateway to the Northwest Passage. Here a major fault line with sediment more than four kilometers deep could hold structures that have trapped large amounts of oil and gas. The trouble—if trouble is the word—is that these waters constitute one of the most ecologically rich areas in the Arctic. Lancaster Sound teems with wildlife and the Inuit have used it as a hunting ground for centuries, if not millennia. Narwhals, beluga whales, walruses and seals, along with many species of birds, migrate to these waters in the summer. About 40 percent of the world’s belugas travel through the Sound to feed and give birth. This natural wildlife refuge has already created roadblocks not only for the exploitation of the immediate area but also for the exploitation of oil and gas all over the Canadian Arctic.
In 2008, the federal government gave the Geological Survey of Canada’s Geo-mapping for Energy and Minerals (GEM) division a five-year, $100-million budget to explore for oil and gas as well as mineral resources in the Arctic. In the summer of 2010, GEM joined with the Alfred Wegener Institute for Polar and Marine Research in Germany to hire a German icebreaker, the RV Polarstern, to conduct seismic surveys of the underwater structures in Lancaster Sound. The Germans said they wanted to explore the tectonic plate history between Canada and Greenland. They also wanted to gather data relating to climate change research, such as methane concentration in the water column and water and ice temperatures, which of course doesn’t require seismic equipment. The Canadian government maintained to the general public that they wanted to chart the boundaries of a $5-million marine park, which the Canadian environment minister at the time, Jim Prentice, had announced several months earlier. At the time, he called Lancaster Sound “one of the richest marine mammal areas in the world.” The announcement coincided with the government’s stated need to assert sovereignty over the Northwest Passage. When several Inuit communities in the region complained that the seismic surveys would threaten the health of the wildlife, another narrative emerged.
In 1987, the government had taken seismic surveys using dynamite, which the Inuit claimed had scared away the beluga whales for years afterwards. For the 2010 surveys, the scientists planned to use blasts from air guns, each one equivalent to about three thousand pounds per square inch of pressure, or 200 times standard air pressure. The Polarstern would tow an array of six to eight air guns floating horizontally six meters below the surface and firing off every fifteen to sixty seconds, generating a constant sound wave field strong enough to penetrate the earth’s crust many kilometers down to the top of its mantle.2 Modern ocean-bottom seismometers capture an incredibly clear and accurate picture of the deep rock formations. Detailed 3-D seismic is then used to zero in on potential oil and gas reservoirs within these formations.
GEM needed logistics support in Grise Fiord, where project director Gordon Oakey wanted to store a fuel supply for a helicopter and establish a field base. The Canadian government had obtained permission from the Nunavut government, but the hamlet councils of all the communities of Nunavut, including Grise Fiord, had not been informed.3 When the government delivered two hundred barrels of Jet B aviation fuel to Grise Fiord on the summer sealift with no advance warning to the community, the elders demanded to know what was going on. Oakey was sent up in September to explain the situation. He apologized to the community for the “breakdown in communications”4 and proceeded to explain what GEM was planning for the region. To a group of thirty Inuit hunters, he described the upcoming seismic surveys to be done off the Polarstern as well as the airborne magnetic and gravity surveys to map the fault systems of the sedimentary basins in Lancaster Sound. “I have been given the responsibility of identifying petroleum resource potential in eastern Nunavut … If naturally occurring oil seeps are identified, sampling will be carried out to retrieve rocks exposed at the seafloor,” he told them.
When the Inuit expressed concern about potential damage to the caribou herds posed by land-based operations, Oakey told them that it was Inuit-owned land and in many areas they held the subsurface resource rights. “If there are petroleum resources there, they belong entirely to the Inuit,” he said. They then raised concerns about the eventual impact of oil exploration on global warming. “Climate change is not my area of expertise,” Oakey told them. “But having worked in the Arctic for many years, I have seen changes in the extremity of the seasons, thinner winter ice … and earlier breakup of sea-ice in the spring. I remember in 2001, when I was on the Louis St. Laurent cruise in Nares Strait, the two students from Grise Fiord made the comment ‘I’ve never seen a mosquito before.’ ” When they questioned him about the impacts of the Polarstern seismics on marine life in Lancaster and Jones Sounds, he assured them that the seismic survey “has a significantly reduced impact on fish and marine animals compared with explosives.”5 The community didn’t buy it.
In the spring of 2010, five Inuit villages on or near Lancaster Sound went to court to stop the survey. The day before the Polarstern was scheduled to start work, the court ruled in favor of the Inuit and ordered the surveying stopped on the basis that the Inuit had not been properly consulted about the possible harm the air guns could do to the wildlife upon which they relied for food. The court ruling was based on precedents set since 2004 by the Supreme Court of Canada. While the Canadian government has the right to exploit the natural resources of the Arctic waters, the right of consultation implies that the Inuit have a degree of veto if a project violates their hunting and cultural traditions, which of course are closely connected to the health of the land and its wildlife. It was not enough to gain the support of the government of Nunavut, whose base is 1,500 kilometers south of the contested area; the government also has to consult with each community council. The government had ignored them. The Inuit fought back and won. A new element of Arctic sovereignty had asserted itself.
Federal lawyers advised the government that it could ignore the court ruling and carry out the surveying because the waters in question are far enough from the shoreline to be federal territory. But the government decided it didn’t want to antagonize the Inuit. Kirkwood confidently says the surveying will be done sometime in the next few years, but that will very likely depend on the Inuit hunters of Lancaster Sound and Grise Fiord.
Prime Minister Stephen Harper has claimed that unless Canada “uses” the Arctic, it will “lose the Arctic.” It is a bogus claim, experts say. Over more than a century, Canada has surveyed and mapped the entire Arctic as well as supported communities throughout the region. No country questions Canada’s claims to these lands. Harper went on to say: “We know from over a century of northern resource exploration that there is gas in the Beaufort, oil in the Eastern Arctic, and gold in the Yukon. There are diamonds in Nunavut and the Northwest Territories, and countless other precious resources buried under the ice, sea and tundra. But what we’ve found so far is merely the tip of the proverbial iceberg. Managed properly, Canada’s share of this incredible endowment will fuel the prosperity of our country for generations. And geo-mapping will pave the way for the resource development of the future.”
There is one other potential bonanza awaiting development in the Arctic. It is considered in the oil and gas business to be cutting-edge stuff. It’s called methane gas hydrates. These are bits of methane locked inside water crystals, often referred to as “frozen heat.” They are literally everywhere in both the ocean sediment and the deep permafrost. The trick is how to extract them. One of climate science’s worst fears is that the melting of the permafrost will release billions of cubic feet of methane into the atmosphere. The gas hydrates that interest energy companies, however, reside hundreds of meters below the surface, inside the permafrost and ocean sediments.
Yannick Beaudoin is a Canadian geoscientist and specialist in gas hydrates. He works in Norway for the United Nations Environment Program researching the possible environmental impacts of exploiting this rich reserve of energy. “We are just trying to see how different sources of unconventional hydrocarbons could fit into a sustainable global energy mix,” he says. “And again, sustainability is not just purely economic.”
The methane gas hydrate resource contains about twice as much organic carbon as all other fossil fuel reserves on Earth—an estimated 20,000 trillion cubic meters of gas. To put this in perspective, gas consumption in the United States in 2010 was 671 billion cubic meters. So the hydrate resource could keep America humming along at its current consumption rate for the next 29,000 years. It’s more than enough to replace all the coal-fired power plants in the world.
Canada has been researching gas hydrates for the last eight years. The estimates are still wildly imprecise. In the Sverdrup Basin, they range from 671 billion cubic feet to 21 trillion cubic feet. In the Mackenzie Delta and corridor, the range is 300 billion to 350 trillion, Kirkwood told a meeting of energy experts in Montréal in 2010.
The gas is found pretty well everywhere in the Arctic’s deep subsurface permafrost, as well as in most ocean sediments throughout the world. Extracting the gas safely and economically is still a challenge, but only because not much work has been done in this field. There is no real economic pressure to drill for it. This means we have time to try to find methods of extraction that are environmentally safe. This has not been the case with any fossil fuel exploitation to date. The recent revolution in shale gas exploitation is a case in point. Environmental concerns arose only after the drilling started. “Shale gas went very quickly,” Beaudoin says. “They went from discussion to commercialization. A lot of that was proximity to consumers. And infrastructure. We certainly have a different situation in the Arctic. It certainly gives us a fantastic opportunity to look at it as a clean slate.”
There is so much money invested in conventional natural gas and in shale gas exploitation that there isn’t much interest in gas hydrates, which is regarded as an energy source for the future. The exception is in countries such as Japan that depend heavily on foreign oil and gas. The Japanese are hoping that gas hydrates buried beneath Japan’s continental shelves will help reduce their dependency on foreign supplies, and they are working with the Geological Survey of Canada in the Arctic to test extraction methods.
They first wanted to determine if conventional oil and gas drilling can extract the natural gas from the hydrates. They drilled two exploratory wells, both in the Northwest Territories. In the first well, the Japanese simply drilled down and waited for the gas to flow. They quickly ran into problems, as mud clogged up the works. The second well proved successful, but only after they used heat and compressed air to free the gas from the ice. They proved you can flow the gas, but the question remains as to whether it can be done economically. Canada and Alaska are hoping that gas hydrates can make Arctic communities, which now burn diesel fuel that has to be trucked or shipped in, energy independent.
For Beaudoin, however, the question is still whether it is environmentally safe. Will the drilling release more methane into the atmosphere? Most oil and gas wells have what they call fugitive emissions. They leak. Thousands of leaking gas hydrate wells would multiply the greenhouse gas problem, and accelerate global warming.