Arctic Oil & Gas Exploration: Do the Challenges Outweigh the Potential?

The first step in oil and gas exploration and production (E&P) is finding the most productive deposits. One area known to offer vast reserves—but immense challenges—is the Arctic.

The U.S. Geological Survey estimates there may be 90 billion barrels of oil, 1,669 trillion cubic feet of natural gas, and 44 billion barrels of natural gas liquids in the Arctic. But the harsh Arctic region is little explored or understood, and accessing these reserves presents challenges and pitfalls not encountered in traditional E&P operations. For example:

Specialized equipment must be developed for offshore drilling in extremely deep water, and that is able to withstand freezing temperatures and high winds.
Warming conditions in the Arctic actually make exploration projects more dangerous because warmer permafrost creates unstable land for oil structures which can break and spill.
Sea ice, present for more than half the year, can prevent transport of equipment, supplies, and personnel to and from the site, and damage ships and offshore facilities.
It can be difficult and expensive to attract and maintain a workforce in these remote areas.
There are some environmental concerns, as recovery of spilled oil in the extreme arctic environment would be very challenging.

Given the tremendous financial and technological investments and extremely long production cycles required to make Arctic oil and gas reserves commercially viable, many companies have suspended operations there. According to Offsite Engineer, not everyone has been scared away. The article explains that Russia, Norway and Canada are among the countries continuing activity in the area:

Russia: Much of Russia’s investment has been in the sub-Arctic region, in fields surrounding Sakhalin Island. Russian focus has also been on the Russian Arctic continental shelf. In 2013, the Prirazlomnoye facility came onstream. It is expected to yield 5 million-ton of Arco (Arctic Oil), a high density, high sulphur oil, between 2016-2017.

Canada: Ongoing development of satellite fields, including the Hibernia South Extension, have significantly increased oil reserves, and production is now expected to continue for a further two decades years. The ongoing success of Hibernia is expected to encourage further exploration drilling and the company now has successfully bid for more than 1.5 million hectares of offshore licenses.

Barents Sea: The Norwegian Petroleum Directorate estimates that the Barents Sea holds almost half of Norway’s undiscovered 18 billion bbl of hydrocarbons. Norway is getting closer to the development of other regional fields, among them Lundin Petroleum’s Gotha, with an expected 100 MMboe in reserves, and Johan Castberg, which is believed to hold 550 MMbbl.

Technology has a way to go before Arctic oil exploration can begin in earnest, but for more conventional E&P projects, portable x-ray fluorescence (XRF) analyzers are improving efficiency in oil and gas exploration and production (E&P) operations. Portable XRF analyzers provide a valuable way to obtain rapid, real-time, on-site chemical analysis of rocks, cuttings, and cores that can be used for identifying characteristics can be used to infer formation properties favorable to oil and gas production.

Learn more about Portable Oil and Gas Exploration Analysis using XRF.