Arctic May Hold 90 Billion Barrels of Oil, U.S. Says (Update2)
By Joe Carroll
July 23 (Bloomberg) -- The Arctic may hold 90 billion barrels of oil, more
than all the known reserves of Nigeria, Kazakhstan and Mexico combined,
and
enough to supply U.S. demand for 12 years, the U.S. Geological Survey
said.
One-third of the undiscovered oil is in Alaskan territory, the agency
found
in a study released today. By contrast, a geologic formation beneath the
North Pole claimed by Russian scientists last year probably holds just 1.2
percent of the Arctic's crude, the U.S. re****t showed.
Energy producers such as Royal Dutch Shell Plc and Chevron Corp. have
accelerated exploration of the northernmost regions for untapped reserves
amid record prices and receding access to deposits in more hospitable
climates. Russia's move to scrap a United Nations convention and carve out
an exclusive Arctic zone sparked protests from Canada, the U.S., Norway
and
Denmark.
``Most of the Arctic, especially offshore, is essentially unexplored with
respect to petroleum,'' Donald Gautier, the project chief for the
*****sment, said in the re****t. ``The extensive Arctic continental shelves
may constitute the geographically largest unexplored prospective area for
petroleum remaining on Earth.''
Russia dispatched a nuclear-powered icebreaker to the Arctic Ocean last
year
to map a subsea link between Siberia and the North Pole as part of a bid
to
refute a UN convention limiting resource claims beyond 200 miles (321
kilometers) offshore. Canada said earlier this month that it plans to
counter the Russian overture with ``a very strong claim'' to Arctic
exploration rights.
No Time Estimate
The U.S. re****t didn't include an estimate for how long it will take to
bring the reserves to markets. Offshore fields in the Gulf of Mexico and
West Africa can take a decade or longer to begin pumping oil.
The geologists studied maps of subterranean rock formations across the 8.2
million square miles above the Arctic Circle to find areas with
characteristics similar to oil and gas finds in other parts of the world.
The study also took into account the age, depth and shape of rock
formations
in judging whether they are likely to contain oil, Gautier said today
during
a conference call with re****ters. Seismic data doesn't yet exist for most
of
the Arctic, he said.
``Petroleum doesn't just occur anywhere,'' Gautier said. ``It requires a
very narrow set of burial conditions.''
U.S. oil executives such as Exxon Mobil Corp.'s Rex Tillerson and Chevron
Corp.'s David O'Reilly have urged lawmakers to relax prohibitions against
offshore drilling, including much of Alaska. Democratic leaders in both
houses of Congress rejected President George W. Bush's July 14 effort to
end
a 25-year moratorium on drilling in most coastal waters.
West Siberia Basin
The region above the Arctic Circle also holds an estimated 1,669 trillion
cubic feet of natural gas, equal to 27 percent of the world's known gas
reserves, the study showed. Almost 40 percent of the gas reserves are in
Russia's West Siberia Basin.
About 84 percent of the oil and gas reserves probably lie offshore, the
re****t showed. The region also has an estimated 44 billion barrels of
natural-gas-liquids such as propane and butane, which are used by chemical
producers, oil refiners and for home heating.
The study encompassed all areas north of 66.56 degrees north latitude and
only included reserves that could be tapped using existing techniques.
Experimental or unconventional prospects such as oil shale, gas hydrates
and
coal-bed methane weren't included in the *****sment.
Data Contributors
Contributors of data to the study included the Geological Survey of
Canada,
the U.S. Interior Department's Minerals Management Service, the Norwegian
Petroleum Directorate, the Cambridge Arctic Shelf Program and researchers
in
Denmark and Greenland. No Russian institutions took part in the study.
The survey only applied to undiscovered reserves. Exxon Mobil, Shell,
Gazprom OAO and other energy producers have already found 400 oil and gas
fields that hold the equivalent of 240 billion barrels. On a combined
basis,
the undiscovered reserves of oil and gas in today's re****t amount to 412
billion barrels.
Most of those discoveries remain capped because of a lack of pipeline or
****pping facilities to haul the petroleum to markets.
Crude for September delivery fell $3.98, or 3.1 percent, to $124.44 a
barrel
at 2:59 p.m. on the New York Mercantile Exchange. Oil climbed 66 percent
in
the past year on its way to a record $147.27 a barrel on July 11.
Global Demand
Global crude demand is expected to rise by 1 percent this year to 86.85
million barrels a day, after a 1.3 percent increase in 2007, the
International Energy Agency said in a July 10 re****t.
Kazakhstan, site of the world's two biggest oil discoveries of the past
three decades, has 39.8 billion barrels of crude reserves, according to
London-based BP Plc. Nigeria's reserves amount to 36.2 billion barrels and
Mexico holds 12.2 billion. Russia, the world's largest producer last year,
has 79.4 billion barrels of oil reserves and 1,577 trillion cubic feet of
gas.
The U.S. is expected to use about 7.39 billion barrels of crude this year,
according to the Paris-based IEA.
To contact the re****ter on this story: Joe Carroll in Chicago at
jcarroll8@[EMAIL PROTECTED]
Updated: July 23, 2008 16:30 EDT
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