The Arctic Sea region is one of the last great frontiers for oil and gas exploration. But developing its resources and, crucially, transporting them to consumer markets would be difficult and costly.

Geologists know little about the area compared with other oil and gas provinces. Some of the surveys, dating from the cold war when US and Soviet submarines played cat-and-mouse in the area, remain secret even now.

Wood Mackenzie, in one of the most detailed studies of the area, estimates that the Arctic basins, including areas already in production such as the Prudhoe Bay oilfield in Alaska, contain about 233bn barrels of oil equivalent – a measure that covers both oil and gas. It believes there are another 166bn boe yet to be found.

Adam Sieminski, chief energy economist at Deutsche Bank in New York, said: “There is a good chance of finding more oil and gas there. We know already of oil deposits in northern Canada, the Barents Sea near Russia and Alaska.”

The US geological survey plans as soon as next year to assess whether the Arctic region, as some early studies have indicated, contains up to 25 per cent of the world’s yet-to-be-found oil and gas reserves.

Russia’s attempt to extend its sovereignty up to the North Pole, however, is seen in the oil industry as a political stunt. Moscow’s exclusive economic zone in the Arctic Sea already contains giant basins, such as the East Barents Sea, home of the huge Shtokman gas field.

The East Barents Sea alone is expected to contain more than 10bn boe and is the cheapest to exploit in the region, with production costs of about $20 a barrel, according to calculations by Wood Mackenzie. In other areas, such as Canada’s Southern Arctic Island, production costs can be twice as high.

The remoteness and extreme climate conditions of some corners of the Arctic present the energy industry with a technological challenge that would long delay their development, industry executives said.

Liv Monica Stubholt, Norway’s deputy foreign min-ister, said this week: “We have decades ahead of us before the technology to do this in a safe and sustainable way is there.”

The recently published US National Petroleum Council report on the future of oil and gas supplies said some of the technology needed to exploit the Arctic’s hydrocarbons would not be ready until 2050.

But Mr Sieminski said while the Arctic region was too remote and hostile to make investment sense when oil prices were about $20 a barrel, “with oil prices well above $50 a barrel the outlook has changed”.

To complicate the scene, geologists say the region is rich in natural gas but not in the more sought-after crude oil.

Andrew Latham, of Wood Mackenzie, said remote natural gas was harder to transport.

Natural gas needs to be super-cooled before being shipped to consumer countries in complex and costly liquefaction plants.

Pipelines are not an option for most of the Arctic because of the huge distances that need to be
covered.

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