“It is an open secret that as a result of the human activities in the north we often see irreparable damage inflicted on nature and the environment,” said Oleynik. “We have to admit that in the beginning we really did not give any attention to the issue of environmental protection, we felt nature was powerful enough to endure any impact and the livelihoods of the indigenous people would not be under threat from the oil industry.” That has changed, he said. “There is a Russian saying ‘do not dig a hole for others to fall into.’ Resource management in the north should not become like digging a hole into which mankind shall fall.”
Some of that past damage was catastrophic. In the neighboring Komi Republic, a thirty-two-mile section of pipeline fell apart in 1994, gushing more than 100,000 tonnes of oil. After a dam failed to contain the spill, over a square mile of land was contaminated and oil rushed into the Kolva and Usa rivers. The fish have yet to fully recover. North of Komi, in the Nenets district that borders the Arctic seas, a gas well blew out in 1980 and continued to burn 2 million cubic meters of gas a day for six and a half years. In a spectacular piece of Soviet hubris, a tunnel was dug close to the blowout and an atomic bomb exploded underground to extinguish the burning gas. It failed, but added a crater and more polluted land.
How do you know that spills are not happening now, a Westerner in the audience asked the deputy governor? “Satellite monitoring systems allow us to discover any spill instantaneously,” he replied. “Recently there have been no spills on the territory of the Russian Federation that can be compared with the spills in Alaska, the huge spill from BP’s corroded pipeline.” (BP spilled 260,000 gallons of oil onto the tundra in 2006.)
Russians don’t much like to be lectured by Westerners. Russia now pumps about as much oil as Saudi Arabia, otherwise the world oil leader, and more gas than any other nation. In 2007, the energy sector accounted for one-third of Russia’s GDP, 60 percent of its exports, and half of all government revenue. Russia’s wealth and power come from energy. With existing oil and gas developments passing their peak, Russia must develop more. The Arctic seas are where Russia is going, lawsuits do not stand in its way, and warnings of risks from environmental groups are not slowing it up.5
My introduction to Russia’s offshore plans came in neighboring Finland, which is totally dependent on Russia for gas supplies. Aker Arctic, a Finnish company that has designed more than half the world’s icebreakers, invited me to Helsinki to their annual “Arctic Passion” seminar. Aker management joked that Russia was responsible for their success. After the Second World War, Finland lost territory to the Soviet Union and access to its only ice-free port. So the Finns had no choice but to become expert at designing icebreakers to get through the frozen winter Baltic Sea.
Aker Arctic has the world’s most advanced ice-model testing tank: essentially a giant swimming pool, half as long again as an Olympic pool, with glass panels in its sides and bottom; all sitting in a huge refrigerated building. In the pool you can grow a layer of floating ice of any thickness, complete with pressure ridges if you like, and then drive a model ship through it to see how it copes. It was a wonder to be able to sit below the tank and watch a ship plow through the ice above me. I quickly began to appreciate the subtleties of icebreaker design. It’s not enough just to build a strong bow to break through the ice; the hull shape, propeller position, and the ship’s wake are all tuned to make the broken ice flow away from the ship so that it can keep moving smoothly.
Ice men from all over the world had gathered at Aker Arctic. And I mean men. When Finland’s minister of foreign trade, Paavo Vayrynen, opened the seminar, he began “Ladies and Gentleman” and then looked around the seventy or so people in the room and corrected himself to “Gentlemen.” The world of Arctic icebreaking is a world of men and quite a few of the icebreaker captains looked as if they could easily wrestle a polar bear to the ground.
At that seminar I learned that just as in Alaska, a key issue in the Russian Arctic is how to get the oil and gas down south to where they are needed. The choice is ships or pipes. Alaska tried out a giant icebreaking oil tanker back in 1969. The Manhattan sailed to Alaska and back through the Northwest Passage, sparking that famous spat with Canada that has never been resolved, but tankers were abandoned as too costly and the trans-Alaska pipeline was built instead.
Thanks to those oil riches in the Khanty-Mansiysk District, Russia already has an enormous pipeline system farther south. Oil can leave Khanty-Mansiysk through a trunk pipeline and travel west to the port of Primorsk, just outside St. Petersburg on the Baltic Sea. From here it’s a short tanker ride to the refineries of Europe. That pipeline also goes east and will one day join the East Siberian-Pacific Ocean (ESPO) pipeline, which is being built west from Russia’s Pacific port of Vladivostok. Russia will then have the power to decide whether to export its oil to western or eastern nations. That pipeline system is now pushing branches north to the two regions bordering the Arctic Seas—the Nenets District and its eastern neighbor, the Yamal Nenets District—where oil and gas fields are already busy on land.
But pipelines alone are not enough. I learned in Helsinki that oil from onshore fields close to the sea was being shipped out of the Arctic aboard new designs of icebreaking oil tankers, supported by new icebreakers. More ships are being built and will carry oil from new offshore oil fields in the near future. A little later, gas will be piped ashore from far out in the Arctic seas and travel onward by pipeline to Europe and anywhere in the world aboard liquefied natural gas (LNG) carriers. A new Arctic oil industry is being born, with Russia driving it forward and many foreign partners adding expertise and investment.
I learned that three big Russian projects are changing the Arctic: Varandey, Prirazlomnoye, and the truly ambitious one, Shtokman.
Varandey is just an oil-loading terminal, you might say, so why get excited about it? In a joint $4 billion project with Conoco-Philips, oil from the fields in Nenets Province flows out through an undersea pipe to a terminal fourteen miles offshore at Varandey. The terminal is a giant conical platform, piled to the seafloor, with a turntable and hose on top. Tankers can pull up here, fill up with oil and head off. In winter a couple of new icebreakers, built in Singapore, keep ice away from the terminal so tankers can maneuver easily. What’s new is that the tankers have been built to travel through ice on their own, without icebreakers to help them, and can run a continuous shuttle service, summer or winter, to the ice-free port of Murmansk from which the oil can travel onward. Varandey plus its tankers is a model for the export of Arctic oil in frozen seas.
The icebreaking oil tankers aren’t like normal ships. They have two bows of different shape, rather than a bow and a stern. The ship can go forward through thin ice using a more conventional bow at the front of the ship, and backward through really thick ice, using an icebreaker bow at the back of the ship.6
Reko-Antti Suojanen, one of Aker Arctic’s naval architects, explained to me that the idea may sound strange but it has a history. He pointed to a few of the ship models that sit in glass cases all around their building. Three of them (the Tarmo, Karhu, and Tor) were chunky little red-and-black icebreakers; all had that overhanging bow, rising from beneath the water in an arching curve. The strengthened bow of the ship rides over the ice and helps break down through it. All three ships also had something strange: a pair of propellers at the front of the vessel, set back where the line of the bow vanished underwater, as well as at the stern of the ship where you’d expect to find them.
Back in the late 1950s when these ships were conceived, designers had recognized that propellers at the front of a ship helped move through ice by pulling the breaking ice down and on past the ship. Two sets of propellers proved an expensive solution, explained Suojanen. A neater design would be a ship that could just as easily go backward or forward with only one set of propellers at the stern. That would make it possible to put an icebreaking “bow” at the stern over the propellers to drive the ship backward in thick ice. That d
esign became a reality with propellers that are driven by giant electric motors and sit in pods under the stern of the ship. The pods can be swiveled to drive the ship in any direction. When they are moving backward through ice, the flow coming off the propeller accelerates the broken ice pieces around the stern and lubricates the hull, making travel easier. If you hit stronger, ridged ice, the propellers are strong enough to even mill through it.
The new ships can keep going through ice five and a half feet thick. Amazingly, each of the three $150 million tankers went from keel-laying to launch in just nine weeks at a Korean shipyard. In June 2008, Varandey opened and the tankers began shuttling Arctic oil over to Murmansk.
Forty miles offshore, much farther than anyone has gone in Alaska, is the second of Russia’s giant Arctic developments. Here in the Pechora Sea at Prirazlomnoye is a huge oil field. The sea freezes over in winter, but even this far offshore the water is only sixty-five feet deep. So a gigantic platform, over 330 feet wide and weighing 100,000 tons, is being built at an estimated cost of over $2 billion at the Sevmash shipyard in Archangel. Construction of the platform is running very late, so the field is unlikely to produce oil before 2013. Once it has been floated into place, it will be set on the bottom and another 400,000 tonnes of ballast dredged from the seabed to hold it down. The platform will supply more of those double-bowed icebreaking oil tankers, this time built in Russia’s own yards.
Much farther out, almost 400 miles from shore is Russia’s grand prize, the Shtokman field, the second-largest gas field in the world. The Russian energy giant Gazprom, Norway’s StatoilHydro, and France’s Total are working to bring it into production by the very ambitious target of 2013. Here the water is much deeper (1,000 feet), so the drilling platforms must float rather than sit on the sea bottom; temperatures are brutal; there can be heavy fast-moving ice; huge icebergs sometimes wander by; there are savage hurricane-like storms caused by passage of the much-feared polar lows; it is dark half the year; spray can quickly ice up ships and structures and topple them; the distance to land is at the very limit of a helicopter flight so supply and rescue are serious worries; the pipeline carrying the gas to shore is longer than any built in this environment…the list of difficulties is great. We’ll look more at the technology in the next chapter, but one thing is not in doubt: this is the hottest groundbreaking project in the entire Arctic, and Russia is driving it forward.
I had wanted to find out where the oil industry would make its first move into the Arctic, and I had a big part of the answer, but there are still two other players to consider. In Canada, the Beaufort Sea and the Mackenzie Delta are back at the frontier after a thirty-year lull. There was lots of exploration offshore here in the 1970s when energy prices were high, and even farther north among the more remote Arctic Islands. On land, enormous quantities of natural gas were found in the Mackenzie Delta and along the Mackenzie Valley. Now the big oil companies have returned. In June 2008, BP paid $1.2 billion for a single five-year exploration license in the Beaufort Sea, next to another parcel bought by Imperial Oil and ExxonMobil for $585 million the previous year.7
To reach the natural gas, a 750-mile pipeline running the length of the Mackenzie Valley has been planned for almost forty years without an inch of it being built.
I asked Benoît Beauchamp, a geologist and the executive director of the Arctic Institute of North America in Calgary, what the prospects were. “The oil is not Saudi Arabia and I don’t think it’s on a par with Alaska’s North Slope or with the Siberian shelf onshore and offshore, but it’s enough to entice industry to go back up there,” he explained. “If the gas pipe is built, a lot of the smaller gas discoveries will all of a sudden become within the realm of possibilities. That pipeline will very much become the economic bridge between the north and south. If you get more exploration, then you develop infrastructure, roads, and attract small businesses to support that industry.”
But the pipe may never be built. When plans were considered, in 1977, they failed at a famous public inquiry that generated 100,000 pages of evidence. Justice Thomas Berger, who led the inquiry, concluded that the social consequences of the pipeline would be devastating for the native population whose traditional lands it would cross; it would damage wildlife and create a corridor of development that would create few jobs for the people who lived there. He recommended a moratorium while the land claims, and forms of self-government, were settled for the First Nations of the valley. This time around, with their land claims settled, most of the First Nations have decided to do business. All except one have joined together in the Aboriginal Pipeline Group, which intends to buy a share of the pipeline and then profit from the gas passing through it.
That change may not be enough. Costs have soared, an ongoing inquiry into the revived project is already running two years late, environmental groups oppose it, and if the Alaskan gas pipeline goes ahead, it may kill the Mackenzie project. Two big Arctic gas pipelines may push the price of gas too low for them both to be profitable.
The last ice-bound Arctic frontiers lie in the seas to the west and east of Greenland and off the coast of Labrador. Greenland might turn out to be the big surprise. It has no oil or gas development, no industry, and there has been hardly any exploration. But the USGS picked out its seas as full of potentially good prospects. ExxonMobil and Chevron have bought leases there as have lots of smaller oil companies, including Canada’s Husky Energy which has built a reputation with successful developments in Newfoundland’s seas where there are plenty of icebergs. And Greenland wants to see oil development and the cash it can bring to its budget.
The list may sound long, but it’s still only a start. Farther in the future, in areas of challenging remoteness, are the giant gas fields of Canada’s Sverdrup Basin and three large areas off the untouched Siberian coast in the Kara Sea, the Laptev Sea, and the East Siberian Sea. Even in these areas, Russia’s Ministry of Energy has ambitious plans and has already commissioned concept designs from western companies.
When I left Alaska, I was wondering whether any oil company would successfully move into the Arctic seas. After looking at a wider world the answer is that it is already happening. The big question that underlies the conflict in Alaska is whether it is possible to have both an offshore oil industry and a healthy Arctic environment. If I had to bet on where the answer to that question might come from, it would be Norway, a nation that has not been mentioned so far. Its dependence on oil and gas (half of exports and almost a third of government revenue) approaches that of its neighbor, Russia, but it is accompanied by a public passion for protection of the environment and enormously rich fisheries in clean waters. Norway has to find solutions, and its sophisticated oil industry is determined to move into those Arctic waters. The Snøhvit gas project, well inside the Arctic Circle in the very north of Norway, has already been completed, and all its wells have been hidden away at the bottom of the sea in a technological tour de force. Next up is the Goliat oil field, being developed in the far north by Eni of Italy, and very closely watched by environmental groups.
There’s potential for endless conflict and there are plenty of savage attacks on the performance of StatoilHydro, Norway’s big oil company, inflamed by spills in the Barents Sea in 2008. But Norway is a small place and consensus is easier to reach without protracted legal action. In 2006 its government decided to try to square the circle of oil development and environmental protection with a holistic, ecosystem-based management plan for the Barents Sea and the adjoining areas off the Lofoten Islands.
The goal for the oil industry is “zero discharge,” that is, nothing whatsoever can be spilled into the sea from drilling rigs—no waste, no drill fluids, nothing. The fishing industry is being more closely regulated. Vulnerable areas, and anywhere with ice, are specially protected with oil developments kept out altogether for now. Scores of indicators of environmental health, ever evolving in their sophistication, are monitored and brought together to provide regular overall pictures of the st
ate of the ecosystem. “What is unique about the Norwegian example is that it is an attempt not just to do ecosystem-based fisheries management, but it is trying to integrate all activities. It is a matter of necessity in Norway because our waters have multiple uses,” explains Erik Olsen, a senior scientist at the Institute of Marine Research in Bergen, which provides advice to the government. A similar plan for the much larger Norwegian Sea was added in May 2009.
The plan will be revised every four years. In the 2010 revision, the oil industry is pressing for the opening of waters around the Lofoten Islands, a particularly rich area for oil and the spawning ground for many commercial fish. That is very controversial. “Very few systems are totally failsafe. When the oil industry wants to operate in the most valuable areas we have, where the wealth of the ecosystem is produced, it raises great concerns with me as an advisor to the government, because a large spill could have dramatic long-term consequences. The worst case scenario could set back populations of cod or herring tens of years and close the fishery for a long time,” says Olsen.
After the Ice Page 21