With the constantly rising demand for oil around the world, oil and gas companies are looking to extract every drop of oil they can from around the world.
The Arctic is estimated to contain 13 percent of the world’s undiscovered oil reserves and 30 percent of gas reserves. Exploration and production licenses have recently been granted to certain companies to work in the area, yet a Norwegian study claims that oil fields there may actually only contribute a marginal amount of oil compared to volumes initially forecast.
The study was carried out by the Centre for International Climate and Environmental Research in Oslo and Statistics Norway, and found that the amount of oil and gas produced in the Arctic will decline by 2050 due to the high production costs.
The fact that oil fields in the Arctic are generally out at sea, far from land and any existing infrastructure, and constantly bombarded with extreme climate conditions, means that the cost of extracting oil there is far higher than other sources.
The decrease will come due to an expected increase in unconventional oil and gas sources, such as shale gas in North America, and growing production volumes of conventional oil and gas in the Middle East, which will hold preference due to the higher profit margin that they command.
By. Charles Kennedy of Oilprice.com
Charles is a writer for Oilprice.com