World Marketplace
Frozen Plunder
Lionel Beehner
11/01/2007

The North Pole, or at least the mineral-rich seabed beneath it, is up for grabs. A popular topic of geopolitical discussion holds that global warming will slowly melt away the polar ice caps, and what was once an impenetrable frozen landmass may soon be opened up to exploration, commercial fishing and, most importantly, offshore drilling.

The region’s abundance of untapped oil and gas reserves has northern nations and the energy sector scrambling for a piece of the financial pie.

Analysts predict this gold rush could have profound effects on global energy markets, particularly as reliable supplies of oil grow scarcer. But they caution that tapping into the Arctic’s resources remains a risky venture, not least because of technological hurdles. Nor is drilling beneath the North Pole cost-effective at current global oil prices. This has done little to slow the race to lay claim to some—or all—of the region and its wealth. In August, Russia sent a pair of Mir submarines miles beneath the ice to gather geological data from an underwater ridge Moscow claims is a continuation of its continental shelf. Just to add a bit of theatricality, the Russians planted a titanium version of their tricolor flag along the Arctic seabed, a man-walks-on-moon gesture that sparked similar missions by other nations with a commercial stake in the region.

A Ridge Runs Through It
A 2000 U.S. Geological Survey study estimated that as much as one-quarter of the world’s undiscovered energy reserves lies beneath the Arctic ice cap. Although some experts say the figure may be inflated, they agree that billions of dollars could be at stake if the region’s energy resources are ever developed (not to mention the millions saved in shipping costs if the Northwest Passage—linking the Pacific and Atlantic oceans, via the Arctic—were ever realized).

The Arctic’s most sought-after prize is the Lomonosov Ridge, a triangular swath of seabed roughly the size of Western Europe that Russia insists is an extension of its Siberian continental shelf. (Denmark claims the ridge is part of Greenland.) Moscow’s claim is motivated by potential petrodollars. After all, Russia’s Institute of Oceanology estimates the ridge may contain as much as 10 billion tons of oil and gas reserves, not to mention minerals like tin, manganese and gold. But the Russians must first scientifically prove the ridge belongs to them.

TOP VIEW
With global warming melting the polar ice caps, numerous countries are scrambling to seize the Arctic’s abundant oil and gas deposits. Although the cost of extracting these reserves would be exorbitantly expensive, geopolitical strategists say that nations near the region can scarcely afford to let their neighbors claim exclusive rights to whatever may be extractable.

According to the 1982 Law of the Sea Convention, which Russia ratified in 1997, nations are allowed 12 miles of offshore territory, in addition to a 200-mile economic zone, which allows them exclusive rights to drill for hydrocarbons and other resources. The treaty—which the United States has not signed, calling it unfavorable to U.S. interests—leaves open the possibility of countries extending these zones, provided they can prove the seabed beneath them constitutes a natural extension of their territorial landmass.

But to win approval, nations must present their claims before the UN Commission on the Limits of the Continental Shelf, a legal process that can drag on for decades. In 2001, the commission shot down Russia’s previous attempt to prove its territorial rights to the Arctic seabed (not enough scientific evidence, it concluded). That decision provided the impetus for Russia’s expedition in August, which was the most ambitious attempt so far to explore the ocean floor beneath the North Pole. Armed with a nuclear-powered icebreaker, a phalanx of scientists, including Russia’s famed explorer Artur Chilingarov, plunged 14,000 feet below the ice to collect rock samples and other geological data from the underwater ridge. The Kremlin praised the mission as an achievement of moonwalk proportions—one small step for a Russian sub, one giant leap for Russian science.

The Claim Game
But the reaction from abroad was quite different. Some Western officials labeled the expedition a stunt with no legal significance. "This isn’t the 15th century," fumed Canadian foreign affairs minister Peter MacKay in an interview with Canadian television network CTV. "You can’t go around the world and just plant flags and say, ‘We’re claiming this territory.’" Some analysts also question Moscow’s claims to the underwater mountain range. "It’s awfully aggressive on Russia’s part," says Scott Borgerson, a fellow at the Washington, D.C.–based Council on Foreign Relations and an expert on Arctic geopolitics. "It’s also a long shot, because I think the growing scientific evidence does not support its assertion that the ridge is an extension of Russia."

Billions of dollars could be at stake if the Arctic’s energy resources are ever developed.

Still, Russia’s expedition spurred other polar nations to kick-start their own efforts to carve up the North Pole. Canada plans to spend $7 billion on a new fleet of reinforced Arctic patrol vessels, as well as build a deepwater port to service the vehicles. The United States has begun drawing up legal arguments to extend its own economic zone near Alaska, while the Senate looks like it might finally move to ratify the Law of the Sea Convention. The Nordic countries also have ramped up their mapping efforts around the North Pole. And a number of countries have flirted with deploying larger navies to the region to check potential Russian expansion.

How this mad dash to divvy up the Arctic’s resources may affect global energy markets remains unclear. For one, the region’s hydrocarbon reserves may prove too technologically cumbersome to develop anytime soon. After all, the cost of extracting oil and gas from shelves hundreds of feet thick and miles under the ice is exorbitant. Then there are the obvious transportation obstacles. Even if the ice cap were to completely thaw out, the oil and gas must still be carried out by ship, not pipeline. "It’s easier to stick a pipe in the ground in the Arabian Desert than it is to take an expensive oil tanker into a hostile environment like the Arctic," Borgerson says.

The Russian Polar Bear
Of course, much will depend on Russia, whose natural gas reserves are the world’s largest. Some speculate that Moscow may actually have no interest in developing the Arctic seabed but, rather, fears competition from the West. The flag plant, writes analyst Pavel Baev in the Jamestown Foundation’s Eurasia Daily Monitor, "becomes not a claim for the right to prospect and mine mineral resources but rather a ‘no-go’ sign that should stop others from doing it." Others argue that Russia would be foolish not to exploit the Arctic, which most Russians consider a natural part of their territory. "The Kremlin wants to secure long-term dominance over global energy markets," writes Russian analyst Vladimir Frolov in Global Research. "To ensure this, Russia needs to find new sources of fuel, and the Arctic seems like the only place left to go."

Indeed, as the ice cap melts away, the region around the North Pole has emerged as the planet’s last—and largest—untapped reservoir of hydrocarbons. And with energy reserves in Norway, Britain’s North Sea and the United States drying up in the face of increasing global demand, the push to develop the Arctic’s resources will only grow stronger. But energy sector investors should exercise caution, as it may be many decades before the first drop of oil is ever extracted from the Arctic. Things up there, after all, have a habit of moving at glacial speeds.

Lionel Beehner is a freelance writer in New York.