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Environmentalists that are worried by Arctic oil exploration and the apparent eagerness that most countries and oil companies show in tapping into the regions 90 billion barrels of oil reserves, according to the US Geological Survey, may breathe a little easier in the knowledge that such activity in the Arctic is not likely to be realised for decades to come.
Statoil, the state-owned oil company of Norway, has declared that large-scale drilling and exploration will not occur in the Arctic for a few decades due to the massive challenges of working in one of the most inhospitable environments in the world.
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Tim Dodson, the Exploration Chief at Statoil speaking at a conference in London on the Arctic and climate change, admitted that the astronomical pries involved with exploration in the region, combined with the strict regulations that must be followed, and the harsh weather conditions, mean that expansion in the Arctic is likely to progress at a much slower pace than previously thought.
“We don't envisage production from several of these areas before 2030 at the earliest; more likely 2040, probably not until 2050.
I think what we have to realise is that the challenges our industry face in the Arctic are at least as significant as we thought they were just a couple of years back, but they're not insurmountable.”
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One of the biggest immediate challenges that companies will face is the cost of exploration, which is many times higher than for the rest of the world. “There’s almost no prospectivity on this planet that can support drilling exploration levels for half a billion dollars each. And that's what we're talking about, half a billion dollars for some of these wells.”
This massive cost means that oil companies cannot afford to fail with their exploration wells; each borehole must be a success. To increase their chances Statoil states that the oil industry must work together in tackling the Arctic, and is working hard to share all information it gathers with other companies working in the area.
Dodson explained that “what we're facing is, from my perspective, an industrial challenge, it's not a company challenge. If one of us fails, we all fail.”
By. Charles Kennedy of Oilprice.com
Charles is a writer for Oilprice.com