The Arctic Resource Rush is On

As the Arctic’s sea ice melts, energy and mining companies are moving into previously inaccessible regions to tap the abundant riches that lie beneath the permafrost and the ocean floor. The potential environmental impacts are troubling.

In spring, the shores of the Arctic Ocean in Canada’s Northwest Territories are buried deep in snow and ice, seemingly devoid of all life and resources. But not far under the surface, in the relatively shallow permafrost, lies what could be one of the largest sources of energy ever discovered, a slushy mix of water, ice, and natural gas known as methane hydrates. These days, Arctic geologists are scrambling to find methods to tap into this abundant store of energy.

Methane well
A geologist at a site near the Beaufort Sea, where exploratory drilling is taking place for methane hydrates, a potentially enormous source of natural gas. ED STRUZIK

Gas hydrates — lattice-like ice structures that trap large quantities of methane, the major component of natural gas — are just one of a trove of natural resources in and around the Arctic Ocean. Vast reserves of oil, natural gas, and minerals also lie beneath the frozen sea and land. For centuries, these riches lay out of reach. Indeed, as recently as five years ago, few companies dreamed of investing in the Canadian Arctic because there was no safe and economical way of extracting these resources and shipping them out. In an area nine times as large as California, there was — and is — only one highway, a third of it gravel, which goes to the Arctic Ocean. There is no seaport and no railway.

All that, however, is about to change, as a fast-moving confluence of events is turning the Canadian Arctic — and some northerly regions of Russia and other Arctic nations — into the next Klondike: Just as the Arctic’s summer sea ice is melting at an unprecedented rate, soon opening up the fabled Northwest Passage and other shipping lanes, the booming global economy has created a soaring demand for natural resources, sending prices sky-high. The wealth that has lain untapped beneath the Arctic is now rapidly being opened for exploration.

Soon, not only will ships be steaming across the top of the world, shaving 7,000 kilometers off a Europe-to-Asia voyage that now takes them through the Panama Canal — these vessels will also be able to penetrate previously inaccessible expanses of the Arctic to explore for, extract, and transport natural resources.

These developments will have profound environmental, economic, and global security impacts. Unlike Antarctica, where exploitation of minerals has been indefinitely banned under the Antarctic Treaty System, the Arctic is ripe for exploitation. And the environmental implications of this resource rush are sobering, with fleets of ships and oil tankers moving through a pristine marine environment and legions of workers on land drilling and digging for all manner of mineral wealth.

A Canadian Coast Guard icebreaker on the Arctic Ocean. Neighboring countries are making conflicting territorial claims as the resource scramble intensifies. ED STRUZIK

“It’s only a matter of time before a single tramp steamer takes a run through the Northwest Passage,” says Michael Byers, who holds the Canada Research Chair in International Law and Politics at the University of British Columbia. “Our ability to stop that ship or clean up if it runs aground and spills its load is severely lacking. We have the longest coastline in the world in a region that is covered by ice for most of the year, and we don’t even have an all-weather icebreaker.”

With so much money at stake, the Arctic has become a hotbed of territorial disputes as the surrounding countries spar for control of resources. In a report issued earlier this year, two of the European Union’s top foreign policy officials warned of the looming international struggle over this energy rich region. The Bush administration, however, is more sanguine, arguing that existing maritime treaties and regular meetings of the five major nations bordering the Arctic Ocean — Canada, Russia, the United States, Norway, and Denmark — will ensure the Arctic’s peaceful and responsible development.

This focus on the Far North comes as a result of the stunningly swift disappearance of ice in the Arctic Ocean. Scientists estimate that summer sea ice has declined by about 50 percent since the 1950s. Last year, summer sea ice extent reached a record low, and thick, multi-year sea ice now covers less than 30 percent of the ocean, down from more than 50 percent in the mid-1980s. Experts who once believed that the Arctic Ocean would not be largely free of summer ice until mid-to-late century now concede that the ice could be gone within a decade.

As a result, in nearly every corner of this icy world, resource companies are investing heavily. Energy and mining firms have announced a $17 billion Arctic exploration agreement with Russia. Exxon’s Canadian subsidiary, Imperial, has formed a consortium to construct a $16 billion pipeline to send Arctic natural gas to southern Canada and the United States. Last summer, Exxon spent nearly $600 million for the rights to explore a tiny lease in the Beaufort Sea, and this year BP paid $1.2 billion to explore in the same region. French mega-uranium miner Areva, which is one of 40 companies looking for uranium in Nunavut, Canada’s new Inuit territory, is considering developing a huge mine. Theirs is just one of 200 development and exploration proposals the once-neglected territory is grappling with these days.

Sunset Icebreaker
An increasingly common sight in the Arctic Ocean: open water. Soon, the ocean will be ice-free in summer, opening the way for development. ED STRUZIK

On Canada’s Baffin Island — a huge mountain of snow and ice that is home to less than 10,000 people, mainly Inuit — plans are underway to develop a $4.6 billion iron mine and railroad. At Bathurst Inlet in the central Arctic, the Inuit themselves are contemplating construction of a seaport and a new 160 mile-long highway that would open up the Slave Geological Province, widely regarded as the richest untapped mineral deposit in the world. The road also would service three existing diamond mines, with more to come.

Recently, along the shores of the Beaufort Sea in Canada’s western Arctic, I got a sense of both the magnitude of these resources and the forbidding terrain that has so far kept them locked up. With the springtime temperature at -35 F (-37 C), I watched as scientists from the Geological Survey of Canada tapped into methane hydrates buried under the permafrost not far from the frozen shoreline. The gas rose quickly in the well before being capped by technicians.

Although methane hydrates are found deep in marine shelves worldwide, the biggest and most accessible reserves lie in the Arctic’s relatively shallow permafrost zones and on the Arctic Ocean’s continental shelf. The U.S. Geological Survey estimates that there may be more untapped energy stored in gas hydrates than in all of the conventional oil, gas, and coal reserves in the world.

Cognizant of the wealth at stake, many countries, including the U.S. and those in the European Union, are continuing to deny Canada’s long-standing claim of sovereignty over the Northwest Passage, through which most of these resources would be transported. They insist that the passage is, like the Suez Canal, an international strait.

Competing claims over Arctic territory are escalating. In 2002, Denmark planted a territorial flag on Hans Island, a tiny, treeless chunk of rock off the coast of Ellesmere Island, only to have Canada later send its own mission to reclaim the island. In the Beaufort Sea, the U.S. is in a dispute with Canada over the maritime boundary off the coast of Alaska and the Yukon, where billions of barrels of oil could potentially be found. Last summer, the Russians used a submersible to plant a flag on the ocean floor at the North Pole, claiming 460,000 square miles — an area nearly the size of Germany, France, and Italy combined. Much of that seabed already has been claimed by other Arctic countries.

Sovereignty, however, is not the only challenge that Canada faces in the Arctic. The environmental threats, on land and sea, are huge. Both the road that the Inuit want to build and the uranium mine that Areva is contemplating will be situated in the calving grounds of two huge caribou herds. Ships sailing through the Northwest Passage may also disrupt bowhead, beluga, and narwhal migrations. And today only a small portion of the biologically important areas bordering the Arctic Ocean are protected in parks or reserves.

But the biggest threat may well come from the captain of a single-hulled, crude oil tanker who tries to save time and fuel by taking a shortcut through the Northwest Passage. If that ship runs aground or is crushed by melting ice spilling out of the High Arctic, it could make the two-year, $2 billion clean-up of the Exxon Valdez look like a kitchen spill.

Experts all agree that Canada is not prepared to handle such a disaster. With no Arctic seaport, no roads, virtually no Arctic naval capability, and very few airports from which to stage a recovery and cleanup, the government would be hard-pressed to mount an effective response. Gary Sergy — an Environment Canada expert who helped pioneer oil spill cleanup technology in the Arctic — questions the ability of anyone to effectively deal with an Exxon Valdez-like disaster in the Canadian Arctic, where the huge Beaufort Gyre is constantly spiraling, pushing enormous volumes of ice and water through dozens of channels in the archipelago.

“How would you get a cleanup crew on site with no port or airstrip?” asked Sergy. ” We just don’t have the infrastructure. It all boils down to a logistical nightmare.”