OIL & GAS
Oil and Arctic Nations Eight approaches to energy in the far north By Tasha Anderson
T
he development of oil and gas in the Arctic has been a hot topic for some time, but the reality is that oil produced in Alaska has always primarily come from the North Slope, solidly within the Arctic Circle. However, the majority of oil and gas production in the United States is not within the Arctic, as Alaska is currently the fifth largest oil producing state, following Texas, North Dakota, New Mexico, and Colorado. Even though the state doesn’t lead US production (which is the current largest producer of oil in the world), Alaska’s location is what includes the United States as one of eight countries with territory in the far north. The others are Canada, Denmark (via Greenland), Finland, Iceland, Norway, Sweden, and Russia. Oil and gas operations in the eight Arctic countries are incredibly varied, ranging from national policies that discourage oil and gas to countrywide efforts to ramp up production. Below are broad overviews of the eight Arctic nation’s relationship with the oil industry.
Finland Finland does not produce any oil or gas, instead importing crude oil and methane primarily from Russia— for now. According to Bank of Finland and Statistics Finland data, oil imports accounted for 22 percent and gas imports accounted for 5 percent of Finland’s total energy consumption in 2019, but in late April officials announced a $924 million investment with the intended purpose of cutting petroleum ties with Russia. Finland’s Minister of Economic Affairs Mika Lintilä explained that Finland will partner with Estonia to rent a floating LNG terminal, which he said will provide enough capacity for Finland to operate independent of Russian oil and gas. As of early April, Finland had replaced 85 percent of its oil supply with crude from other countries and 76 | May 2022
indicated it will not sign any new contracts with Russia, though some are still in place that will expire by the end of this year. According to the Finnish Energy Industry Association, Russian gas imports can be replaced by the fall of 2023. Crude oil that is imported to Finland is refined by Neste Oyj, the country’s sole oil refiner. Once imported, oil is transported by truck, train, or ship, as the country has no oil pipelines. LNG is also generally transported by truck or ship, though natural gas is generally delivered to end consumers by pipelines, the majority of which are buried underground. Finland’s cold climate, long distances between communities, and industries with high energy consumption have led to the country having one of the highest per capita energy consumption rates in the European Union.
concerns influenced the decision to move away from oil exploration, stating “the environmental consequences of oil exploration and extraction are too great.” Another factor in the decision was an economic analysis that showed development would likely deliver low profits or operate at a loss. “It is a decision where climate considerations, environmental considerations, and economic common sense go hand in hand,” Nathanielsen said. Eighty percent of Greenland’s oil imports come from Sweden, though it also sources oil from Iceland, Netherlands, Denmark, and Belgium to meet its petroleum needs; in 2020 it imported nearly $80 million in refined petroleum. Its gas imports are negligible, as most of Greenland’s energy needs are met by renewable resources, primarily hydropower.
Greenland
Iceland
Greenland also does not produce any oil within its borders, though until last year it had intentions to do so. The US Geological Survey estimated in a 2007 report that there is up to 31.4 billion barrels of oil equivalent in northeast Greenland, and a more recent study estimated there are 18 billion barrels of oil on Greenland’s west coast. Since the ‘70s Shell, Chevron, ExxonMobil, and Eni have all participated in oil exploration activities there. Exploration for oil and gas peaked in Greenland between 2002 and 2014, with upwards of twenty offshore licenses being granted. In July 2021, Greenland announced it would end its strategy to find oil and would stop granting exploration leases. At the time of the announcement, four active exploration leases remained, which will expire in 2027 and 2028. In mid-2021 Greenland’s Minister of Natural Resources Naaja Nathanielsen explained that, in part, environmental
Iceland is another Arctic nation without any domestic oil production, though there are areas with potential and systems in place to allow exploration activities. Oil and gas exploration in Iceland is regulated by Orkustofnun, its National Energy Authority, which grants licenses for prospecting, exploration, and production. Experts believe that the Icelandic Continental Shelf has two areas with the potential for commercial accumulations of oil and gas: Dreki and Gammur. According to the Orkustofnun, Dreki has potential for hydrocarbon accumulations “because of its geological similarity to hydrocarbon basins which were its next door neighbours [sic] prior to the opening of the northeast Atlantic ocean basin.” At Gammur, according to Orkustofnun, “indications have been found of gas escaping the sediments; however, the type of gas has not been demonstrated.”
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