Can Big Oil handle the Arctic?

National Post

Claudia Cattaneo

CALGARY • With the public increasingly worried about oil spills, some aboriginal groups calling for an Arctic drilling moratorium, and the oil industry as keen as ever to tap Northern deposits, oil spill response preparedness was a big topic of discussion at the Arctic Council meeting in Sweden this week.

As Canada, which has large untapped deposits under the Beaufort Sea, assumed its chairmanship on Wednesday, the group of the eight nations that surround the North Pole signed a pact on oil spill prevention in Kiruna, Sweden’s most northern city.

Coinciding with the meeting, the London-based International Association of Oil & Gas Producers (OGP), whose member companies produce more than half of the world’s oil, was eager to talk about industry efforts to improve handling of oil spills in Arctic environments, which it says have advanced significantly in recent years.

Non-governmental organizations such as the OGP and Greenpeace requested observer status at the council but their requests were denied.

The OGP, which had hoped to use the platform to engage and collaborate with those with an interest in Arctic oil-spill response, said much progress was made in the past year as a result of the establishment of a joint industry program (JIP) focusing on key areas of research.

The initiative is funded and supported by nine international oil companies — BP PLC, Chevron Corp., ConocoPhillips, Eni S.p.A, ExxonMobil Corp., North Caspian Operating Co. (NCOC), Royal Dutch Shell PLC, Statoil ASA, and Total S.A.

“A lot of time our stakeholders do not know that industry is extremely collaborative in particular areas, especially in oil-spill response. We do not see this as a competitive aspect of the business, so we are working together to strengthen our oil-spill response,” Becky Peavler, the program’s executive committee chair and a ConocoPhillips employee, said in an interview.

“When an incident occurs, it affects all of us. So we have a history of working together to be able to solve and advance the oil spill response capabilities.”

The initiative involves six major areas of research, said Joseph Mullin, who took over as manager of the program after a 40-year career with the U.S. government, with the last 25 dedicated to managing its oil-spill response research program.

With the help of company experts and scientific institutions, the program is probing into what happens to oil when it’s dispersed under ice, the environmental impacts of oil spills and the trajectory of oil spills in icy environments.

It’s also looking at the effectiveness of remote-sensing to detect oil spills, the mechanical recovery of oil in ice and at controlled burning of oil.

“Every oil spill is different, so you want to have all the tools in the tool box to be able to use,” Mr. Mullin said in an interview. “You want to be able to respond with mechanical recovery. If mechanical recovery is not effective, then you also have other response options, such as in-situ burn and the use of dispersants.”

The international effort has drawn Canadian expertise, including input from Ottawa-based SL Ross Environmental Research Ltd., a world authority on the in-situ burning of oil spills, a technique studied in Canada since the 1970s in support of drilling in the Beaufort Sea. One of its principals, Ian Buist, was chief research engineer for Dome Petroleum Ltd. on oil-spill prevention and control for the Beaufort Sea program.

Of course, there are plenty of doubters, and incidents such as BP PLC’s Deepwater Horizon oil spill in the Gulf of Mexico in 2010 don’t help. Royal Dutch Shell PLC had its own problems recently with two drill ships, the Noble Discoverer and the Kulluk, that suffered serious accidents in the U.S. Beaufort and Chukchi Seas.

Canada has had its share of oil disasters, such as the sinking of the Ocean Ranger in 1972 and the Cougar Helicopter crash in 2009, both in Newfoundland’s frigid offshore.

Greenpeace said cleaning up an oil spill in the Arctic is a risky endeavor.

“It’s experimental, the companies have not done this before, they don’t know how to deal with an accident, they don’t know how to prevent an accident and there is simply no response capacity in any of the Arctic states to deal with what could be the worst environmental disaster in history,” Christy Ferguson, the Arctic project leader for Greenpeace Canada, told CBC News this week.

Some Aboriginal groups from Arctic countries including Russia, Canada and Greenland signed a statement of “indigenous solidarity” this week calling for end to drilling in the Arctic shelf.

“There are no effective and tested methods to prevent or clean up oil spills in the freezing Arctic seas,” they said in the statement signed by representatives of 42 aboriginal organizations, including Canada’s Dene Nation and the Athabasca Chipewyan First Nation.

Others rejected the statement, which they say was orchestrated by Greenpeace as part of their anti-development campaign.

“We are the stewards of our own Arctic homeland, we are the negotiators of what takes place in our own back yards, and we will weigh and determine the cost-benefit of development for ourselves as a people,” said Duane Smith, President of Inuit Circumpolar Council, Canada. “We certainly have no need or appetite to invite environmentalist groups to come to the Arctic and do the work under their logos and on our behalf.”

Mr. Mullin said industry has conducted research in Arctic oil spill response for the past 40 years that has involved hundreds of studies, laboratory and basin experiments and field trials.

Industry recognizes that an oil spill in the North poses unique challenges, including being far away from infrastructure, long periods of darkness, extreme cold, ice and high operating costs.

Ms. Peavler said there are also some advantages relative to cleaning up oil spills elsewhere. For example, she said ice is a natural barrier that helps with mechanical recovery. It also reduces the height of waves, which helps with in-situ burning and dispersant techniques.

With so much oil being found in tight formations closer to energy markets, many Arctic deposits remain an asset for the long term. In Canada, the Arctic exploration was at its height in the 1970s and 1980s thanks to federal tax breaks. While substantial oil and gas deposits were found, they were not large enough to justify the cost of production. Some exploration has been done in recent years in the Beaufort, but progress has been slow.

Still, more than 500 wells have been drilled in Arctic environments since the 1920s. In addition to Canada, four other Arctic countries — Greenland, Norway, Russia, and the United States – have seen offshore oil exploration, development and transport.

Arctic operations – offshore and onshore combined – have produced some 40 billion barrels of oil and 1100 trillion cubic feet of gas, and onshore and offshore Arctic production accounts for 15% of world energy supply.

“As an industry, we are trying to understand where all of our operational areas can be, so it’s worthy to be prepared to be good stewards of the environment,” Ms. Peavler said. “That is why our efforts are going on expanding our capabilities for oil spill response in the Arctic.”

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