OIL EXTRACTION Case Study: the Arctic

SEMINARY PAPER Global Environmentalism in English OIL EXTRACTION Case Study: the Arctic Bc. Aneta Kompérová Bc. Barbora Podešvová Bc. Vozáryová Wanda Internationl Development Studies 2017 Table of Content Introduction .................................................................................................................................................. 3 1. The history of the oil extraction in Arctic ........................................................................................ 4 Early beginnings of the oil extraction ................................................................................................... 4 The development of the oil extraction before 1950 ........................................................................... 4 The development of oil extraction after 1950 ..................................................................................... 5 2. Current oil production in the Arctic ................................................................................................. 6 3. Shell Oil Company: Oil drilling in Arctic region ............................................................................. 7 Termination of oil exploration in the Arctic region ........................................................................... 8 Greenpeace campaign: Save the Arctic! ............................................................................................... 8 4. Conclusion ............................................................................................................................................ 9 5. References ........................................................................................................................................... 10 2 Introduction Oil is a valuable raw material to which humanity is dependent almost for a hundred years now, it directly or indirectly enters the production of all economic goods and it is an effective source of energy. Oil has been known for more than 5,000 years, but the humankind did not paid attention to it. In the last 150 years, however, its importance has risen rapidly and oil has become one of the most important socio-economic aspects - it affects almost all directions of human activity and is also an important driver of technological progress. The Arctic is one of the most unique places on Earth. It is home to more than 13 million people, and provides a habitat for truly incredible wildlife. And now, it’s the battleground for one of the most important fights in environmental history. Although, in this seemingly inhospitable area, there are a lot of animal species - polar bears, seals, walruses, birds, and humans. Arctic ice, which affects the climate across the globe, has declined sharply in recent years as a result of global climate change. In the last 30 years, three quarters of the floating ice cover has disappeared in this area. Ice has been consistently covering the Arctic Ocean for more than 800,000 years. However, due to the use of dirty energy from fossil fuels, the massive loss of ice occurs. For the first time in human history, the ice may completely disappear during short period of time in the summer period. This would have devastating consequences not only for humans, polar bears, narvals, walruses and other species living in the Arctic region - but also for all the rest of us. Ice in the area of the North Pole reflects part of the solar radiation back into the cosmos, keeping the whole planet colder and stabilizing the climatic systems on which we are dependent. Protecting the ice shelf means protecting all of us. The last part of the assignment is focused on the oil drilling by the multinational corporation Royal Dutch Shell (‘Shell’) and its brief history of oil exploration in the Arctic region. Next part describes the termination of some of its oil exploration operations in Chukchi and Beaufort seas. And at the end of this part, one of the best world-known Greenpeace campaign called Save the Arctic is mentioned. 3 1. The history of the oil extraction in Arctic First, let's start short with Antarctica. According to a treaty concluded in 1959, it is a territory exclusively for peaceful and scientific purposes. No country can make any demands on it or start mining here. Antarctica has undeniable advantages over the Arctic. It is not inhabited, it is quite far from the nearest human settlement and it is part of the frequented sea routes. In contrast, about 10 million people live in the Arctic (Rixey, 2016). During a single September day in 2016, an Arctic glacier of great size disappeared: the fate of the Arctic is tied to the fate of all coastal and many other cities and regions across the world. The Northern Arc Circle is an alpha and omega of climate change. Scientists believe that Arctic temperature growth steeper and higher than anywhere else in the world Increase by two degrees, which is set by the Paris Climate Agreement as a limit, would mean a growth of 5 to 6 degrees in the north polar regions (Gulas, Downton, D’Souza, Hayden, & Walker, 2017). Oil and gas extraction has a complex effect on almost all components of life environment. It affects the air, the soil, the landscape, the area below sea level and the surface, flora and fauna. Oil and natural gas extraction in the Russian Arctic region has been a serious threat to the environment since 1980, state policy and policy however, remains unchanged after 37 years. However, the increase in mining production is an ecological risk Russia will have to face in the future and with it the whole world. Extraction may cause further Arctic ice loss or eradication of some marine animals. Of course, there is also the risk of an oil accident, whose consequences are unprecedented (Blanken, Tremblay, Gaskin, & Slavin, 2017). For example, recently, speculation is being made of new Arctic landings, which, according to experts, could be up to 90 billion barrels of oil (Cvrček, 2008). Early beginnings of the oil extraction For the ancient inhabitants, oil was readily available as raw material, as it poured out in many places. Records of discovery and use of oil date back thousands of years, on the territory of ancient Sumer, archaeologists have found a 6000-year-old mosaic set in asphalt, one of the distillates of oil. In ancient Egypt, oil was used for funeral ceremonies. The oldest historically preserved records of the excavation of oil wells originate in China around 350 AD. Modern history of oil begins to be written in the United States in 1846 with the discovery of the process of distillation and refining. Crude oil was refined by kerosene. This method has improved over time and spread throughout the Western world. Russia followed and in 1861 it built its refinery near the mining areas in Baku (Richard Heinberg, 2005). The development of the oil extraction before 1950 The modern history of the oil industry began to develop in the 1950s. The discovery of the distillation and refining process was a major concern for oil which was distilled from the oil in 1852 to obtain kerosene and the first petroleum lamp was constructed. This made the oil a very demanded source and began its bulk mining. It was also not used to acquire lighting but was primarily used in construction or in medicine and cosmetics (Hevler, 2003). The first truly commercial drilling was carried out in 1859 by Colonel Edwin Drak in Titusville, Pennsylvania. There have been companies that have become the world's largest monopolies in the 20th century, and some have maintained their position today. One of these companies was Standart 4 Oil, founded by John D. Rockeffler. In the 1980s, Standart Oil had almost 90% market share in the US market. Other companies were, for example, British Petroleum or Shell (Gulas et al., 2017). The development of oil extraction after 1950 By the 1950s, the United States had a dominant position in oil production. From this period, however, mining is gradually moving eastwards, and today the major oil industry is located in the Middle East. Here, thanks to huge oil reserves, cheap labor, easy obtaining of mining permits and low prices, new economic centers have emerged that have established their economies on profits from the extraction and sale of oil. These countries have become one of the richest countries in the world, and their oil production far exceeds that of other areas (Shumenko, 2011). No wonder oil is the source of instability. The situation is all the more worrying, the less the oil remains in the democratic and liberal states of Western civilization. The conflict over oil in Acrtic as a specific raw material is conditioned by the relative weight and the three main circumstances the political and strategic environment in which decisions are taken on resource issues, the future development of the relationship between supply and demand and the geography of oil production and distribution (ČTK, 2013). . 5 2. Current oil production in the Arctic Recently, the Arctic is not under threat only because of climate change, but also hunt for underwater oil reserves. Beginning with the 2007 and ending with 2008, there were important events that provided scientists with predictions about intensification of race for Arctic resources. Firstly, they thought because of tens of years of substantial ice melting, a new transportation passage could be through Northwest east passage. Secondly, in 2007 a deep-sea flag was planted at the North Pole by Russians. It was supposed to show how important the Arctic region is for the Russian leadership. Third, once the price of oil increased to 147 US$ per barrel in the summer of 2008, various people were afraid that the production of oil and gas nowadays wouldn’t be able to meet future oil demands from rising powers such as India, China, and Brazil, and if these demands could not be compensated there would be risk of continuous rising of prices (Koivurova and Hossain, 2008). Finally, in 2008 there was an estimation by the US geological survey (USGS, 2008) that Arctic has nearly 1/4 of the world's undiscovered oil and natural gas deposits. Therefore, the race for resources from Arctic has increased, when the knowledge spread about the vast resources, that they are highly probable to be found there, and also the fact that the accessibility of Arctic has increased because of the decline in ice coverage since 1987(Arctic Council, 2009). The fever in Arctic waters begins. Shell, BP, Exxon, Gazprom and other companies want to risk an oil accident in the Arctic and the devastation of the whole area. Dirty energy giants, who are themselves co-responsible for the melting of the Arctic, are now about to make money on the disappearing ice. They want to start mining in a new area where potentially up to 90 billion barrels of oil can be found. This is not insignificant from an economic point of view, but this quantity corresponds to only three-year worldwide consumption. Government documents show that the liquidation of the oil crash in the Arctic waters is "almost impossible" and that a possible leak, that we cannot avoid, would devastate fragile arctic environment. In order for Arctic mining to be possible at all, oil companies must pull floating glaciers out of their extraction platforms and dissolve the floating ice with warm water. In the case of the mining initiation, the oil accident would essentially be inevitable. It is not a question of whether it would happen, but only when. We have seen the catastrophic effects of the Deepwater Horizon oilfield crash in the Gulf of Mexico. Let's avoid causing the same mistake in the Arctic. Shell is the first to begin preparations for oil production in the Arctic this year. Oil extraction is a very dangerous trade. In recent years, all Western oil companies have had to admit, even though grudgingly, oil pollution in Europe, Asia and North America. To make things worse, they have now turned their attention to the Arctic, where they want to continue in devastation. Mining drillings in this area can be carried out only during the Arctic summer. This is the time when the ice will retreat for several months and places that are inaccessible for the rest of the year can be reached. However, the Arctic is a very remote area with insufficient infrastructure, which is only available for 4 months a year, and it would be practically impossible to cope with a possible oil accident in the extreme climatic conditions there. Arctic mining would certainly mean disaster (Greenpeace.cz, 2012). 6 3. Shell Oil Company: Oil drilling in Arctic region For more than 80 years, oil and gas companies have been operating in Arctic environments. In Alaska’s North Slope alone, over 17 billion barrels of oil have been developed and shipped to domestic ports in California and Washington. There is a long history of offshore Arctic exploration as well. In fact, exploration and production wells have been drilled in the U.S. Arctic dating back over 30 years. (Arctic Energy Center, 2015) Shell Oil Company is one of the largest integrated energy companies in the world and subsidiary of Royal Dutch Shell, a multinational oil corporation, that aims to meet the growing energy demand of society for oil and gas mainly by ensuring the oil and gas resources to be extracted and delivered profitable and in socially and environmentally responsible ways. (Shell, 2015) Shell is engaged in a multi-year drilling program to explore for new oil & gas resources in highpotential blocks in offshore Alaska. The main reasons for oil exploration in the Arctic region were a large proportion of undiscovered, technically recoverable resources and majority of offshores located there. The Shell’s interests about oil extraction in the Arctic region has raised in 1960s when Shell drilled first offshore well in Alaska (1963). In 2005, Shell acquired licenses to build drills in Beaufort Sea and in 2008 purchased leases in Chukchi Sea when Polar Pioneer has started its oil extraction. In 2012, Shell obtained the necessary permits and successfully mobilized the Discoverer and Kulluk, drilling units and reactivated to support the Beaufort Sea-Chukchi Sea exploration program. Within a few months, however, Shell’s offshore operation ran into trouble when Kulluk, ran aground on Kodiak Island, Alaska. Although, no oil spilled, the accident was a reminder of the difficulties and hazards of drilling in Artic seas. These events led to announcement of Shell to pause in drilling operations for 2013-2014. However, the company was planning to restore its drilling programs in 2015 and since that year only the oil extraction program in Chukchi Sea has run. The major drilling rigs of Shell Oil Company in the Arctic region are called Polar Pioneer and Noble Discoverer. (Fairfax, Russell, 2014; Royal Dutch Shell Report, 2015) Alaska Production History 7 Termination of oil exploration in the Arctic region Shell has abandoned its controversial drilling operations in the Alaskan Arctic – its contract for use of Transocean’s Polar Pioneer drilling rig – in the face of mounting opposition in what jubilant environmentalists described as “an unmitigated defeat” for big oil. The Polar Pioneer along with Noble Discoverer were the harshest environment drilling rigs Shell contracted to carry out drilling operations in the Chukchi and Beaufort Seas. The company has spent over $7billion on its failed hunt for oil which critics said could only endanger one of the world’s last pristine environments and produce expensive hydrocarbons that were no longer needed. The unsuccessful campaign is Shell's second major setback in the Arctic after it interrupted exploration for three years in 2012 when an enormous drilling rig broke free and grounded. (Schuler, 2015) Environmental campaigners and shareholders have also pressured Shell to drop Arctic drilling. Some are worried an oil spill would harm protected species while others are concerned about the cost after oil prices more than halved in a year. Environmentalists hope Shell’s failure will slow that race for riches in the far north. They will also hope it will prevent a buildup in military might amid fears of a new cold war. Yet the decision appears a reluctant pause as Shell suggests it would have continued to drill if it had found more oil and gas and it has only halted exploration ‘for the foreseeable future’. (Macalister, 2015) Greenpeace campaign: Save the Arctic! The UN was challenged at the summit in Rio de Janeiro in order to create a world reserve around the North Pole to protect the Arctic from the mining. The Greenpeace organization took part in this challenge. Symbolically, they chose the day of the summer solstice when the Sun does not set over the Arctic. Save the Arctic is a Greenpeace campaign to protect the Arctic by preventing oil and natural gas drilling and unsustainable industrial fishing in the area. The campaign, begun in 2012, aimed to prompting a UN resolution on protection for the Arctic, and it emphasized on the four main oil companies exploring the Arctic – Royal Dutch Shell, ExxonMobil, Gazprom and Rosneft. The main focused was given on Shell Oil Company. Shell faced flood of e-mail and Facebook messages, that have begun the appeal to end the Arctic mining plans. Blockade of ships in the harbours and massive resistance from around the world made it clear to miners that they are under the control of millions of people. During the global week of events, Shell was strongly urged to end the Arctic mining project. Gas stations were blocked, Shell's Dutch headquarters were occupied, the access to the Shell building in France, and mining boats in ports were also blocked (Greenpeace.cz, 2012). In 2014, Greenpeace launched a global boycott campaign to persuade Lego Company to stop producing toys carrying Shell’s logo in response to the oil company’s plans to drill for oil in the Arctic. Lego’s partnership with Shell ended in 2014. Shell finally canceled its 2012 Arctic drilling after a test caused an oil containment dome on one of its ships to be crushed like a beer can. Shell failed to provide any adequate plan for spill prevention or recovery and has a history of ineptitude. In 2014, the company was forced to scrap its Arctic drilling plans when a U.S. court ruled more detailed environmental information was required and in 2015 Shell abandons Arctic drilling. (Glaser, 2015) 8 4. Conclusion Since the states are currently worried about oil and energy crises, it is understandable that they are trying to secure additional resources for their existence. The distribution of world oil reserves is very uneven and the main production centers are located at great distances from the main consumption centers. Great risk is therefore placed to Arctic, where the further extraction can cause loss or eradication to some animals, the risk of oil accidents and is interconnected to the danger of global warming. The international organizations such as Greenpeace must be ready to go into the struggle to save the Arctic again. There has to be promotion of creating a world reservation in the Arctic and to put an end to the efforts to devastate Arctic once and for all. Millions of people all over the world stand on Arctic's side, and that's why there is a chance of success 9 5. References Arctic Energy Center: History. [online]. http://arcticenergycenter.com/history/ 2015 [cit. 2017-11-22]. Retrieved from: Balancing Growth and Returns: Alaska Shareholder Field Trip. In: Royal Dutch Shell [online]. 2015 [cit. 2017-11-22]. 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Retrieved from: https://www.theguardian.com/business/2015/sep/28/shell-ceases-alaska-arctic-drillingexploratory-well-oil-gas-disappoints SAUVEN, John. The Guardian: Saving the Arctic is environmentalism’s the biggest challenge yet. [online]. Guardian News and Media Limited, 2012 [cit. 2017-11-22]. ISSN 0261-3077. Retrieved from: https://www.theguardian.com/environment/blog/2012/aug/24/savingarctic-environmentalism-challenge SCHULER, Mike. Shell Terminates Contract for Polar Pioneer Drilling Rig. In: GCaptain [online]. 2008 [cit. 2017-11-22]. Retrieved from: http://gcaptain.com/shell-terminates-contract-forpolar-pioneer-drilling-rig/ Shell Global: Who We Are. [online]. Netherlands, 2015 [cit. 2017-11-22]. Retrieved from: http://www.shell.com/about-us/who-we-are.html Blanken, H., Tremblay, L. B., Gaskin, S., & Slavin, A. (2017). Modelling the long-term evolution of worst-case Arctic oil spills. Marine Pollution Bulletin, 116, 315–331. 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