Is the future of Arctic energy oil, or natural gas?

Five countries, oil entrepreneurs big and small, and activists of various types have all weighed in on the biggest remaining motherlode of energy on the planet: the Arctic. Climate change is opening up this region, which holds an estimated 25 percent of the world’s remaining oil and gas, according to the U.S. Geological Survey. One ...

BP via Getty Images
BP via Getty Images
BP via Getty Images

Five countries, oil entrepreneurs big and small, and activists of various types have all weighed in on the biggest remaining motherlode of energy on the planet: the Arctic. Climate change is opening up this region, which holds an estimated 25 percent of the world's remaining oil and gas, according to the U.S. Geological Survey. One principal question mark in this ballyhooed rush north has been the doubts of environmentalists, who note that in the case of a spill, the Gulf of Mexico would be child's play compared with the Arctic, where spills dissipate far less easily and cleanup efforts are far more difficult than they are on the Louisiana coast.

But this is just one of the challenges facing Arctic development. As the biggest oil companies in the world are finding, energy trends themselves are at least for now working against the Arctic. Specifically, billions and billions of cubic feet of natural gas could end up stranded in Alaska, Canada, and Russia because there is so much competing supply around the world.

Five countries, oil entrepreneurs big and small, and activists of various types have all weighed in on the biggest remaining motherlode of energy on the planet: the Arctic. Climate change is opening up this region, which holds an estimated 25 percent of the world’s remaining oil and gas, according to the U.S. Geological Survey. One principal question mark in this ballyhooed rush north has been the doubts of environmentalists, who note that in the case of a spill, the Gulf of Mexico would be child’s play compared with the Arctic, where spills dissipate far less easily and cleanup efforts are far more difficult than they are on the Louisiana coast.

But this is just one of the challenges facing Arctic development. As the biggest oil companies in the world are finding, energy trends themselves are at least for now working against the Arctic. Specifically, billions and billions of cubic feet of natural gas could end up stranded in Alaska, Canada, and Russia because there is so much competing supply around the world.

In the Wall Street Journal, Phred Dvorak and Edward Welsch report on Canada’s backing of a 740-mile natural gas pipeline from its Northwest Territories — which border the Arctic — to southern markets, including the United States. Called the MacKenzie Gas Project, this $16 billion pipeline has partners including ExxonMobil, Shell, and ConocoPhillips. The three major fields there hold the gas equivalent of 1 billion barrels of oil. Now, with the Canadian government’s green light, the companies themselves must decide whether to proceed — a matter the government says it will take up in about three years, once it figures out the precise costs and engineering requirements.

These are among the same companies competing — with difficulty — to build long and expensive natural gas pipelines next door in Alaska. The gas equivalent of some 6 billion barrels of oil is bottled up on Alaska’s North Slope, but current estimates are that it will cost $26 billion to $42 billion for a 1,500-mile pipeline to market. And even with a $500 million subsidy from Alaska, Exxon and TransCanada will miss a self-imposed deadline at the end of this year to line up partners willing to take the risk, reports Becky Bohrer at the Associated Press. BP and ConocoPhillips are in a similar boat with their rival Denali Pipeline, which proposes shipping gas from the same fields south.

Given the challenges, Alaskans are wringing their hands over what to do, Michael Armstrong of the Homer News reports.

One alternative the various players are all-but certainly considering is redirecting their plans into a coastal-based liquefied natural gas play with an eye on Asia, as we’ve reported previously. Chinese energy demand — specifically from cleaner fuels enabling a shift away from coal and fuel oil — is spiraling upward, and it is only a matter of time before Beijing’s moves toward natural gas turn into a stampede. So the Arctic play could work on the natural gas side. But, given the shale gas glut in the United States, the Canadian and Alaskan gas would have to head west.

<p> Steve LeVine is a contributing editor at Foreign Policy, a Schwartz Fellow at the New America Foundation, and author of The Oil and the Glory. </p>

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