Roughly seven years ago, Royal Dutch Shell vastly outbid competitors to obtain drilling rights in the Chukchi Sea. This news flew somewhat under the radar until Shell’s recent announcement that they were calling it quits in the Arctic region. Results from a key test well have lead to what some are calling a victory for the environment, others a disappointing day for an energy dependent world.
The biggest loser is Shell itself, spending 7 billion dollars and only completing the single well over seven years due to regulatory obstacles, legal challenges, and some bad luck with equipment in the field. Shell has since stated that it is done with its Arctic exploration for the foreseeable future. However Shell’s early attempt to unlock the wealth of the region is no indication of the value of Arctic exploration moving forward in the 21st century.
First of all, what Shell was looking for (and much more) is still up there. 22% of the world’s exploitable yet unexploited minerals (such as gold, silver, copper, iron) and mass reserves of valuable energy resources (oil and natural gas) are located within the Arctic seabed – an estimated 13% of the worlds undiscovered oil reserves and 30% of undiscovered natural gas. Second, as an ice cap formed roughly 3 million years ago, the harsh Arctic landscape and climate that makes exploration expensive and dangerous are no longer permanent. Many believe that the ocean will be completely free of ice during the summer months within 40 years, and even if projections like these are off, there is no arguing that the ice is melting, and melting fast.
Resources are only one of the reasons the world is interested in the Arctic. Take shipping routes for example. Mass shipping from Amsterdam to Japan, one of countless partnerships of massive international trade by sea, would see trip time cut by large increments using the Northwest Passage rather than the Panama Canal (by 60% in this particular example). Again, that’s not all.
In the realm of international relations, during a time of tension on the international stage, the Arctic serves as a key arena for power projection. Besides Canada, Arctic coastal countries consist of Russia, the United States (Alaska), Finland, Greenland, Iceland, Norway and Sweden. These countries – some more than others – are fighting tooth and nail to further their position and sovereignty northward of their respective borders. The melting Arctic is invaluable to these countries for political, geographic, militaristic and even economic purposes aside from resources. That is why Shell’s departure is nothing more than a minor setback. That is why it is only a matter of time before the Arctic is further occupied and exploited.
Motivated by oil alone, a single company’s failed efforts are far from an accurate litmus test on what the future holds for exploration in the Arctic. The sheer volume of human activity in the region is going to rise exponentially. The successful extraction of oil from the northern seabed will be only a single chapter in the Arctic’s future, despite Shell’s recent failures.