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Quotes from "Exploring Energy Resources in the Arctic Ocean"

October 18, 2012

I ask myself if the Arctic Ocean will become just a regular ocean, from which these resources will certainly be produced sooner or later.

The assumption that it is inevitable that we will extract hard-to-get-at fossil fuels carries its own danger. Once a company has invested in the infrastructure to extract, it is locked in. Then it must change or maintain the political economy such that continued extraction of that fuel is profitable. This is incompatible with our management of dramatic climate change.

I would like us to have a conversation with those proposing to extract in the Arctic in which we ask them what the financial logic behind the proposal is.

There is no reason to assume that there will not be a blowout in the Arctic. At least one assessment suggests that there's a one-in-five risk that there will be a blowout even just at Shell's two spots in the Arctic.

Can you actually balance the cost-risk equation of drilling in the Arctic?

The Arctic states need to specifically cite peace and stability as goals in their Arctic strategies.

Russia clearly recognises that there are major opportunities for shipping, fisheries and extraction, and that the Russian state will be the biggest economic beneficiary of increased industrial activity in the Arctic.

There is now trust and capability in the Arctic states to deal with difficult issues like preventing conflict. The concept of peace can be made concrete with strategies that promote cooperation and with those that prevent conflict. They are two sides of one coin. To date, the Arctic states have focused on strategies to promote cooperation, but have shied away from discussing strategies to prevent conflict.

The politics, cultures and economics of Arctic states and communities are fundamentally changing because of the melting ice.

The solutions and policies that the international community comes up with now will have effects on humankind centuries into the future.

The Arctic is a test case for our ability to solve emerging problems.

What place is there for interested non-Arctic parties to discuss issues of rule-making in the Arctic? Is oil and gas exploration in the high North really a closed shop that only concerns Arctic states?

The EU is in a much better position now to become an observer at the Arctic Council. The next vote will occur in 2013, and Norway has officially stated its support for that candidacy.

The interests of indigenous communities can differ meaningfully from those of bureaucrats in capitals far away.

On the Arctic Council's recent treaty on shared response to oil
spills: Is it a real, concrete and positive step? Or is it just a sophisticated PR campaign to show that the Arctic Council can actually set rules on something?

What we are really talking about is how to reduce risk. That is:
Efforts to reduce the consequences of accidents and oil spills. But risk is a combination of probability and consequence. These efforts tend to focus on the latter, but the former is also important, and it is more difficult to assess and discuss.

The starting point in managing the behaviour of oil and gas companies has been to impose standards on the industry. This is inflexible and puts a lot of responsibility on the regulator. An alternative approach would be to use the dynamics of the companies themselves to find the best solutions. The authorities could set standards, but leave it to the company to decide how to achieve those standards. We should be careful before we cry out for regulations and rules. They can be good, but they are a means and not a goal in and of themselves. The goal is to reduce risk.

If you're saying you're going to reward or penalise based on whether oil spills happen or not, then we're talking about ex post facto regulation. Such regulation would be irrelevant after a spill, as any spill would be a political and legal game-changer in the first place.

In addition to standard-setting, we have to talk about payment and insurance schemes to deal with the consequences if an oil spill happens. This could really increase the cost of projects.

It's not feasible that a moratorium on Arctic drilling will be accepted by all states. If there is drilling in the Arctic, there will be a mistake. We have learned this from every region on earth. We permit drilling, and we make contingency plans. When our contingency plans don't work, governments raise the bar until the next disaster happens. Then they raise the bar again. It keeps going this way. In the Arctic, if there is a spill, there is no capacity to respond.

Oil-eating bacteria aren't active at these low temperatures, floating ice means booms don't work, and you can't burn the oil. All of the contingency plans we use elsewhere are inappropriate for the Arctic.

It is a brand new region in terms of accessibility, and the Arctic states are like kids in a candy store.

There will be mineral activity in the arctic, there will be mistakes, and there will be consequences.

Massive amounts of methane are devolving into the atmosphere each year from the thawing permafrost, but we have no technology to capture it, although that would have a double benefit for us.

It can be misleading to talk about the Arctic as one region. Some parts are not much more difficult to work in than the rest of the world, while others are particularly complicated. Drilling and spilling in ice would be a major problem. Fortunately for Norway, there is no ice in the areas where drilling takes place. Prirazlomnoye in the ice-infested Pechora Sea could be a major problem, however.

The Arctic is not going to be a bonanza in the future years.

The oil companies should be required to fund the creation of additional infrastructure that would be useful not just for their own projects but for many other purposes as well.

There is a fiction in the industry that the preparations being made are adequate to the challenges. How can we ensure that the companies are bearing the actual costs of cleaning up anything? We need to get much greater clarity about the assumptions being made regarding cost and risk.

We need energy, so we have to be prepared to drill in the Arctic.

We don't need that specific oil and gas from the Arctic. Look at the driving forces for resource owners here, which are export earnings (Russia, Norway, Canada) and energy security (US). But energy supplies can come from many different places, it is a question of price.

Successful improvements in energy efficiency in Russia and the US would dwarf the advantage of adding energy resources from the Arctic.

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