Arctic seen as source for additional oil, gas

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A recently released report by the U.S. Energy Information Administration indicates nearly a quarter of the world’s undiscovered oil and natural gas resources are north of the Arctic Circle, but Oklahoma energy companies don’t seem to be in any hurry to get there.

Devon Energy Corp. was active in northern Canada for about five years earlier this decade, spending about $300 million on exploration.

Michel Scott, a vice president for the company’s Canada operations, said Devon drilled the first offshore rig in that area in more than a decade during that period, but eventually shut down its operations there in 2006 after efforts to build pipelines stalled.

"We couldn’t see the light at the end of the tunnel,” he said.

Scott said Devon officials had opportunities to invest the company’s money elsewhere.

"In retrospect, it was the right call,” he said.

Devon discovered more than 250 million barrels of oil that could be recovered in the Arctic before it abandoned its operations there, Scott said.

A 2008 U.S. Geological Survey assessment estimates there is more than 400 billion barrels of oil equivalent in the region, according to the government’s report on the Arctic’s oil and gas potential. More than a third of those resources are in the North American part of the region.

Transport expense The report includes several "bad news” points, noting the resource base is mostly natural gas and liquids that are more expensive to transport than oil. There also are unresolved sovereignty claims in the area, which includes portions of eight countries.

"The bottom line for Arctic oil and natural gas potential is high costs, high risks and lengthy lead times can all serve to deter their development in preference to the development of less challenging oil and natural gas resources elsewhere in the world,” author Philip Budzik wrote.