Air Date: Week of November 24, 2006

A new oil and gas region is opening up for the American market and it’s in an unexpected place: the Arctic Circle. As Radio Deutsche-Welle’s Stephen Beard reports from Hammerfest, Norway, receding ice caps are making oil and gas exploration less expensive and easier.

Transcript

GELLERMAN: It’s Living on Earth. I’m Bruce Gellerman. Researchers believe a quarter of the world’s undiscovered oil and gas lies in the Arctic Circle. Until recently, it was considered too difficult and expensive to extract.

But now, the melting of the polar ice cap is making the search for oil and gas in the Arctic financially more attractive and technically feasible. Radio Deutsche Welle’s Stephen Beard reports from a small town called Hammerfest, on the northern-tip of Norway.

BEARD: For a town which lies deep inside the Arctic Circle, is whipped by icy winds every winter, and lives in twilight round the clock for two months of the year Hammerfest sounds pretty cheerful.

[LOCAL MUSIC FOLLOWED BY LAUGHING]

BEARD: At their weekly rehearsal, the Hammerfest Ladies Choir reflects the lighter mood. Gloom has lifted. After years in the doldrums this harbor town is bustling again. Most people here welcome the giant industry stirring just off shore.

WOMAN: I think it’s a good opportunity for Hammerfest to grow and it’s good. We are the only town in the northern part of Norway where we have no unemployment. And that’s a good thing.

WOMAN 2: People are a lot happier and a lot more optimistic about their future than they used to be.

[HISSING SOUND, PEOPLE SPEAKING NORWEIGAN]

BEARD: Here’s the source of the new optimism. Just off the coast a massive natural gas terminal called Snow White [Snohvit] is under construction. Three thousand workers from all over Europe have swelled the local population by 50 percent. The town is already getting an extra 20 million dollars in annual tax revenues. More money will flow when the terminal opens next year and the U.S. becomes one of Snow White’s biggest customers.

ROBBERSTAD: These two vast concrete storage tanks, they hold enough energy to keep about one million American homes going for ten days. And we’re looking at about 70 shipments….

BEARD: Knud Robberstad of the Norwegian energy company Statoil, which is building Snow White. He says that within a few years America could be getting up to 10 percent of its liquefied natural gas from this terminal. And this could be just the start. Snow White is a pioneering project, he says, in a new politically stable area of non-OPEC oil and gas exploration.

ROBBERSTAD: We are opening up a new oil and gas region in the Arctic areas of Europe. So, this is opening up a new and stable and long-term gas and oil province also for the American market.

BEARD: Statoil denies that the terminal depends on global warming. It would have built Snow White even if the polar ice cap had not begun to thaw. The terminal will draw its gas from the southern Barents Sea, which has always been ice-free. But Truls Gulowsen of Greenpeace says the terminal will likely play a part as Statoil pushes much further north.

GULOWSEN: Clearly, it has a big role in total strategy to open up the whole Arctic seas for oil and gas development the areas that are currently covered in ice but may open.

BEARD: As the ice recedes, he says, vast new energy fields could become accessible. U.S. government scientists agree. The U.S. Geological Survey estimates that one quarter of the world’s remaining oil and gas reserves lie in the Arctic. Like many environmentalists, Samantha Smith of the World Wildlife Fund in Oslo opposes any drilling in the high north. But she also fears that Snow White could be the beginning of an Arctic scramble that will intensify as the Arctic ice cap melts.

SMITH: You have to have service facilities, oil spill response, landing strips, places to keep helicopters, harbors and so forth along the coast of northern Norway. And if you build that out for Snow White then, presumably, it could also be used if there’s development farther north.

BEARD: Snow White, she says, is the thin edge of the wedge….the first step which will lead eventually to the ruination of one of the planet’s last unspoiled wildernesses.

SMITH: The Arctic is a place without a lot of human footprint. If, indeed, one is going to have this very large-scale rapid development for oil and gas it’s going to mean a huge development for infrastructure in many parts of the region. And in addition to infrastructure just for development itself you’re going to have to have a lot of transport. A lot of it will be by ship. A lot of those ships will be oil tankers. When you add all of these things up and you also add pressure on the region from climate change, it’s warming two to three times faster than the rest of the world, what you get is a region that will look very very different in terms of its environmental quality, in terms of the amount of roads, harbors, human activity and so forth within a generation.

BEARD: The oil companies are anxious not to be seen threatening the ecology of the Arctic, and certainly they do not want to be seen actually profiting from global warming. But there’s little doubt they’ve caught a whiff of big profits in the melting Arctic ice. Jan-Gunnar Winter of the Polar Institute, Norway’s main center for polar research, says he’s been contacted by half a dozen oil companies including Statoil, BP and Conoco Phillips, asking about the feasibility of drilling in the high north.

WINTER: They approach us more and more frequently. They ask for meetings. They ask for our views. There is a growing interest from oil companies. Of course, the oil price, which is very high currently, is a driving factor here. But even before the oil prices was at the level we see today there is an interest. And I think the main opening factors, the driving factors for a more active utilization of the Arctic from an oil company’s point of view is the climate change that will actually improve access to the Arctic, maybe quite dramatically in the coming years.

BEARD: No one knows for sure whether there is much or indeed any oil waiting beneath the ice. But the countries bordering on the Arctic are taking no chances. A kind of land grab is underway. Russia has already laid claim to half the Arctic Ocean floor. The Danes insist the North Pole belongs to them. And Norway is claiming more than 60,000 square miles of Arctic seabed.

[JACK HAMMER SOUND]

BEARD: There is some evidence that there may be energy riches beneath the polar ice. When scientists drilled this the first and only bore hole into the ocean bed not far from the North Pole, they found something to gladden the heart of any oilman.

BRINKHUIS: What we found were significant amounts of organic rich sediments. And that is one of the three key things you would need for oil accumulation.

BEARD: Marine biologist Henk Brinkhuis took part in that test drilling two years ago. They did not strike oil. Nor did they find all three conditions required for fossil fuels. But he says the sediment was rich enough to suggest there could be oil and in large quantities.

BRINKHUIS: That is really truly significant. That is really what you would need to have a good source rock. And the other indications are that it is vast, it is covering the entire Arctic Ocean.

[BIRD SOUNDS]

BEARD: The prospect of an Arctic oil and gas boom has brought new hope to Hammerfest. The price of real estate here has risen by 20 percent over the past year. The town’s unemployment rate has shrunk from over ten percent a couple of years ago to zero today. Support for Snow White is almost universal here. Almost.

VESTIK: I don’t believe that to produce gas and oil for the Americans are the only way to survive today in the world. So I am a bit critical.

BEARD: Local journalist Helle Vestik is the only dissident I discovered. She dismisses the economic benefits of Snow White. She doesn’t want to see her town in the forefront of arctic oil exploration benefiting from and adding to the problem of global warming.

VESTIK: How long can we live in this world if we are destroying the atmosphere around us and if we are destroying the nature?

[BANGING SOUND]

BEARD: Statoil is clearly nervous about an environmental backlash along those lines. As one official told me, “We’re already accused of melting the polar ice cap with our products. Now we’ll be accused of gaining more oil and gas in the process and making money from the meltdown.”

[BANGING FADES]

GELLERMAN: Our report on the Arctic thaw was produced by Stephen Beard and comes to us from Radio Deutsche Welle.

 

Links

Statoil: Snohvit – LNG project in Barents Sea

Norway Trade Portal on Snohvit