Shell takes lead in race for Arctic oil


The Bering Strait is open for the first time in recent memory, and will rival the world's great shipping lanes. Meanwhile, permission to drill has been granted and billions of dollars are at stake. Business in the Arctic is about to boom.


NASA Goddard Photo and Video, Flickr

THE BERING STRAIT — Our twin-engine plane cut through a thick fog as the choppy, gray waters of the Bering Sea came into view. A lone freighter left a frothy wake on its way through the Bering Strait just off the furthest point of Alaska's western coast.

The historic passage in the Arctic is one of the last great, wild places on earth where West meets East, the Atlantic meets the Pacific, the US meets Russia and where a global rush for oil, natural gas and minerals is underway.

The melt of Arctic sea ice in the spring and summer has increased dramatically, setting a new record this month, due largely to the effects of climate change. This has opened access to shipping lanes of the strait for the first time in memory and comes amid the discovery of vast off-shore oil and natural gas fields along the North Slope of Alaska. A competition for power and influence among the eight nations of the High North is well underway. This is history in the making, and fortunes in the making as well.

On Thursday the US Department of the Interior granted Shell permission to go ahead with the preparatory work for drilling its first well in the Arctic Ocean, setting the stage for an explosion of economic activity here for which the state of Alaska and the federal government seem ill-prepared.

Despite concerns among environmentalists, Shell confirmed Thursday that its vessel, the Noble Discoverer is now set to arrive here in the next 24 hours. After setting anchor, Shell says the ship could begin preliminary drilling within a few days.

There are hundreds of billions of dollars at stake for big oil and shipping magnates amid the specter of a global shift in the movement of petroleum and other goods around the world. The Bering Strait is now set to rival the Panama and Suez canals as a central lane for global trade. 

Hanging in the balance is the Arctic’s delicate ecosystem and the way of life for indigenous people who rely on its harvest. 

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As a reporter who has covered the Middle East for more than 20 years, I have witnessed first hand the vast wealth that oil creates, the way it transforms societies for good and ill and the conflict and corruption that too often has come with an oil economy.

And here in Alaska, geologists and energy experts say the gold rush for oil and natural gas is every bit as momentous as the tapping of the huge oil fields in the sands of Saudi Arabia that came just before World War II and surged in the 1950s, transforming the modern Middle East and feeding America’s seemingly endless thirst for oil. 

On this, my first trip to the Arctic, it strikes me that the Arctic is shaping up as a kind of photographic negative of the Middle East. Here a vast wealth of oil lies under a sea that remains frozen most of the year rather than the hot sands of the House of Saud. It is where the eight nations of the Arctic Council seemed to be working cooperatively, at least for now, as opposed to the decades of fighting over oil that have unfolded in the Middle East.

Comparing the Inuit to the Bedouin tribes is far-fetched, but still the shape of things here are similar, forged by great need and raw greed and balancing a threat to a traditional way of life against a secure financial future for many generations to come.

On this leg of the journey, we have just left the tiny island village of Gambell on the island of St. Lawrence at the mouth of the Bering Strait. The community of about 600 Inupiak Eskimos live on subsistence hunting and fishing. In many ways, these residents of Gambell are watching this historic moment glide past them as more and more cargo and cruise ships appear on the horizon off their coast line, forging the Bering Strait.

Residents here told me they fear that the steady increase in shipping of oils and the number of cruise ships, which is expected to reach a boom in the coming years, will impact the migration of sea mammals and fish upon which they rely for sustenance and a determined preservation of their traditional way of life.

The residents said they also fear that the US Coast Guard is ill-equipped to deal with the coming onslaught of shipping through the Strait and that the rush for oil is an accident waiting to happen. They echo concerns of environmentalists in Washington who fear that a big oil spill in the Bering Sea would be virtually impossible to contain given the peril of its waters and the way it becomes locked in ice in the fall and winter. 

More from GlobalPost: Arctic sea ice melting at an alarming rate, hits record lows

With the Bering Sea open for shipping in just the last five years and with huge oil fields open for exploration for the first time, Shell and other big oil companies are securing lease holds and starting exploration.

Shell is eager to begin drilling in the fields off the coast of Wainwright, a tiny and desperately poor village on Alaska’s North Slope. The final approval Thursday by the Interior Department will allow the company to begin preliminary drilling in the Chukchi Sea, submerging some 1400-feet of well casings as part of a required blowout preventer, which is designed to cap a runaway spill.

The company will not be permitted to drill directly into the oil fields, Interior Secretary Ken Salazar told reporters in Washington, until an array of safety and containment systems are in place. Those systems are aboard a vessel called the Arctic Challenger which is on its way from Bellingham, Washington and expected to arrive next week. 

More from GlobalPost: The Arctic is melting, and we're going to cover it

Shell has already invested more than $4 billion and six years of lobbying and preparation for this exploration. And now oil industry officials say Shell is in a race to get their drill bits to hit oil and take samples before the ice begins to form again in October. It is unlikely they will get much real drilling done this year, but will seek to identify the exact size and pressure of the fields.

They are expecting to tap into some of the largest oil reserves on the planet.

Some oil industry experts here have said that the fields where lease holds have been signed will “dwarf,” as one oil executive put it, the on-shore findings in Alaska’s Prudhoe Bay in the 1960s. Those oil fields, stretching over 215,000 acres and containing some 25 billion barrels, forever changed the history of the state and broke the stranglehold that the Persian Gulf oil cartel had over the US in the 1970s.