Even As Arctic Thaws, is Investment Freezing?

March 11, 2015

shellrig

I’m in Oslo this week for a one day “Arctic Summit” sponsored by the Economist magazine, on the future of the Arctic.
The theme of the conference is significant, as it takes note of geopolitical changes which may be jamming the slam-dunk euphoria of arctic exploitation.

As major players like Shell have found out,  (you may remember the stranding of an arctic oil rig two years ago, above) this is a tough, remote environment.  Just because the sea ice is getting spottier in coming decades, it remains difficult, unpredictable, and very, very, expensive to do business here. With the global price of oil falling, and many observers predicting continued low prices, its not going to get any easier to attract investment in this area in the near, or medium term.

The Economist:

The ice might be melting but megaprojects planned in the Arctic are coming to a grinding halt due to dropping oil prices, rising tensions with Russia and America’s new production capabilities. The icy ‘last frontier’ is expensive and hazardous for all industries and stakeholders are now weighing the return on their current and future investments. In addition indigenous groups and NGOs remain sceptical about the impact commercial activity will have on climate change, biodiversity and local communities.

There is a growing realization among key players that this Arctic gig might not be as much of a cakewalk as hoped.

The Scotsman:

Oil and gas explorer Cairn Energy today said it was focused on exploiting its “significant discoveries” off the coast of west Africa as it ruled out any further drilling in the Arctic unless it can bring in additional partners.

The Edinburgh-based company has a 40 per cent stake in three blocks off Senegal and is planning to submit further exploration and appraisal plans to the government in May, with a drilling programme due to start by the end of this year.

Cairn estimates there could be more than three billion barrels of oil waiting to be found off the coast of Greenland, where its activities have been criticised by environmental campaigners, but is seeking to reduce its interests in the Arctic.

The company holds an 87.5 per cent stake in the Pitu block in Baffin Bay and has taken a $22.7m impairment because it has “no firm plans for future exploration activity” in the region.

Thomson said: “What we’re going to do is focus on where we’ve encountered significant value – and that’s Senegal. We’ve been pretty clear that we’re not going to drill in Greenland at current equity levels as the capital exposure would be too large for a company of our size. We still have the acreage so let’s see what happens in the future, but in the meantime our job is to follow up on the significant Senegalese success.”

My Dark Snow colleague Jason Box was named as the only scientist speaking on the program, which is tomorrow, thursday.  He’s here to act as the conscience of the community, and add a cautionary note from the scientific, not just the economic, side.
I’ll be chatting with organizers this afternoon to see how many interviews I can snag. More later.

Traveler’s tip: When in Oslo,  Try the Hummus at The Kasbah – cozy decor with Bob Marley-inflected Norwegian take on Middle Eastern cuisine.

 

22 Responses to “Even As Arctic Thaws, is Investment Freezing?”


  1. Have a nice trip to Norway! 🙂

    • dumboldguy Says:

      Norwegian hummus? Whatever—-just don’t eat any lutefisk.


    • Gosh, only 5 comments so far in this thread. Maybe I can help pump it up a bit.

      On the topic of freezing (as opposed to being a hot thing), how’s that Merchants of Doubt movie working out for ya?

      “Merchants of Doubt Domestic Total as of Mar. 8, 2015: $20,300” http://boxofficemojo.com/movies/?id=merchantsofdoubt.htm

      • dumboldguy Says:

        Go away, Russel

      • peterangelo Says:

        Russell, the same entities described in the movie also prefer it not be shown in a nieghborhood near you. now please go back to reruns of the Simpsons.


        • Wrong on that score, friend, pure psychological projection on your part. Skeptics constantly show the other side in order to contrast it with their own. AGW believers knock themselves out to either erase the existence of the skeptic side or to destroy the credibility of their critics. What we find especially amusing is how some of your folks fail so miserably at that sometimes, oblivious to what the Streisand Effect is. Watching Oreskes sail over a cliff is a bit sadistic, I suppose, but she seems bent on it.

          Speaking of which, did you-all catch how I was a part of the ‘leaked email chain’ Evan Lehmann & InsideClimateNews is so proud of? http://insideclimatenews.org/news/12032015/leaked-email-reveals-whos-who-list-climate-denialists-merchants-of-doubt-oreskes-fred-singer-marc-morano-steve-milloy

          In case you haven’t spotted it yet, there’s a reason why I get included in that kind of stuff. But do you spot Katherine Bagley’s three errors about me? She’s not one of the traditional old ‘Woodstein’-style reporters who does fact-checking before putting pieces out, you see……

          • dumboldguy Says:

            Pure propaganda bullshit from Russell. For those who may be new to Crock and not familiar with Russell’s doublespeak and warped thinking, allow me to translate.

            Science DENIERS (who are not “skeptics”) constantly lie and distort the truth in their attempts to get the gullible and uninformed to suck up their garbage. Most of these DENIERS, like Russell and those named in the link he gives, are not scientists,

            AGW believers do not “knock themselves out to either erase the existence of the skeptic side or to destroy the credibility of their critics”. There IS NO “skeptic side” that hasn’t been rebutted many times over, and the “skeptics” have no credibility—-they are simply whores who are fighting a rear guard action for the fossil fuel industry that pays them to spread FUD—-they think that if they keep repeating lies they will magically become truth.

            What “we” AGW believers (who outnumber the non-believers 98 to 2) do NOT find “especially amusing” (but instead sad, pathetic, dishonest, and approaching criminal) is how Russell and his ilk have succeeded at their jobs. As part of the Merchants of Doubt, they have set back the effort to deal with GHG by misleading the gullible.

            It is proof of what a moron Russell is that he would BRAG about being included in the list of charlatans, whores, clowns, and fools in the InsideClimateNews article. He says “In case you haven’t spotted it yet, there’s a reason why I get included in that kind of stuff” Yes, Russell, the reason is that you are a “filler”, an “extra”, a “bit player” who is used to bulk out the bullshit stream from the “big names” among the deniers, so ICS does a complete job of reporting and mentions you even though you are a nonentity. Since Heartland is paying you, they figure they need to get their money’s worth by having you throw in your two cents (which shows how stupid they and the audiences at their conferences are).

            For the umpteenth time, in Russell’s own words—-the first few sentences of his BS talk at Heartland in July 2014 Russell says:

            “I can’t believe I’m here….Heartland must be really scraping the bottom if they’re getting speakers literally off the street….and that’s essentially me…I have nothing to do with science….”

            Lord love a duck, but Russell is clueless.

      • andrewfez Says:

        That’s $20k from only ten theaters though. It’s playing down in W Hollywood, but I don’t like W Hollywood, so I ain’t gonna go see it.


  2. OFF TOPIC: would like to rebut arguments about “long term persistence” (LTP)…

    I’m in Athens, where I’ve been surprised to learn that climate change is not considered to be much of a threat. Reasons have ranged from “we’re too worried about the collapse of the economy” to “we don’t have to worry about it here as they do further north because the changes won’t be severe” to “scientists don’t agree”.

    WRT the latter, I was pointed to scholarly work by Demetris Koutsoyiannis, a professor of hydrology and analysis of hydrology systems. His claim is that “long term persistence” of temperature means that ” the rise in global average land surface temperature during the past 150 years [is not] statistically significant” (http://www.climatedialogue.org/long-term-persistence-and-trend-significance/).

    Given the predictive success of current models and the clear correlation with anthropogenic GHG, I’m not inclined to spend a huge amount of time trying to understand exactly what LTP means. The fact that he is a professor of hydrology, and most of the references I can find talk about the impact of climate change on hydrology rather than the other way around, I assume that he is – like some famous physicists – using his deep knowledge in one area of science stand in for having deep knowledge about climate science.

    But I don’t know, and it makes me uncomfortable to assume… so if anyone has some insights or can point me to a reference to help me understand without having to remember everything I ever learned about statistics 30 years ago, I’d sure appreciate it!

    Thanks.

    • andrewfez Says:

      I think Koutsoyiannis is saying there is more ‘momentum’ built into the system than what the consensus currently says, where if all forcings were to presently fall to zero (or net to zero in some manner), the upward trend would decelerate slower than predicted.

      Now look at Colorado’s TSI series: http://lasp.colorado.edu/lisird/tsi/historical_tsi.html

      Look at 1700 to 1820, then compare that to the hockey stick curve for the selfsame interval. There is some increased energy happening up to a point, and then TSI falls and Mount Tambora hits in 1816. It would be interesting to see what Koutsoyiannis’ model does right there. I would imagine it would fail to account for the credible temperature drop. Examining acute temp drops from volcanoes seems like a credible path in contesting the guy’s model. Same deal for the temporary cooling in the 1940-79 range. But after ’79 if there is any temp acceleration happening overall, then that could confound his model.

      Foster and Rahmstorf subtracted all the big natural variables out of the temps in one of their papers to find a signal. That may or may not help you as it doesn’t show much if any acceleration.

      Click to access 1748-9326_6_4_044022.pdf

      But it again would be interesting to apply F&R’s method to the 1700 to 1820 spot (just for TSI and Mt. Tambora), and compare that against the Koutsoyiannis model.

      Alas, I’m past my bedtime…


      • Thank you so much for your help! The links are great and I will follow up on your thoughts next week, when I am on vacation.

        Very kind of you to take the time.
        Linda

        • andrewfez Says:

          No problem. The guy is in a way saying that there is some unknown phenomenon that is happening that only a statistical test can reveal, but which thousands of geophysicists have consistently missed for decades whilst he simultaneously refutes the very robust theory of greenhouse gas forcing. There was a study published the other day that directly links warming to increases in [CO2].

          http://www.forbes.com/sites/jamesconca/2015/02/27/surprise-co2-directly-linked-to-global-warming/

          What the guy is asking is to ignore the elephant in the room, whilst asking you to believe in an invisible elephant experts can’t see that just happens to be the same weight.

  3. peterangelo Says:

    so if true, ie: investment in arctid drilling decreasing;

    why is the port of seattle leasing staging ground for an arctice drilling fleet?

    http://www.bizjournals.com/seattle/morning_call/2015/03/port-of-seattle-rebukes-environmental-protesters.html

    any answeres forthcoming on this one from this summit?

    Peter

  4. redskylite Says:

    The low price of oil is giving the Arctic a reprieve, but I fear it is only temporary, despite Shell’s vice president’s fine speech on the progressive nature of his company, they are itching to make a buck in the untapped oil fields under the Arctic, (see the ThinkProgress article – Shell using Seattle for Arctic rigs – attached).

    What worries me more is the Russian military build up and recent aggressions, the once calm and pristine environment is now becoming a pawn in mankind’s hands.

    My only hope is that the same does not occur way down South in the Antarctic when that starts becoming more accessible.

    http://thinkprogress.org/climate/2015/03/11/3632389/seattle-says-no-drilling-rigs-baby/

    Hope the Summit goes well and I’m sure there will be some interesting news coming out.


  5. […] I’m in Oslo this week for a one day “Arctic Summit” sponsored by the Economist magazine, on the future of the Arctic.The theme of the conference is significant, as it takes note of geopolitical changes which may be jamming the slam-dunk euphoria of arctic exploitation.As major players like Shell have found out, (you may remember the stranding of an arctic oil rig two years ago, above) this is a tough, remote environment. Just because the sea ice is getting spottier in coming decades, it remains difficult, unpredictable, and very, very, expensive to do business here. With the global price of oil falling, and many observers predicting continued low prices, its not going to get any easier to attract investment in this area in the near, or medium term.The Economist: The ice might be melting but megaprojects planned in the Arctic are coming to a grinding halt due to dropping oil prices, rising tensions with Russia and America’s new production capabilities. The icy ‘last frontier’ is expensive and hazardous for all industries and stakeholders are now weighing the return on their current and future investments. In addition indigenous groups and NGOs remain sceptical about the impact commercial activity will have on climate change, biodiversity and local communities.There is a growing realization among key players that this Arctic gig might not be as much of a cakewalk as hoped.Click headline to read more–  […]

  6. redskylite Says:

    This press release was issued by the Norwegian Government on today’s summit:

    (Climate change is the main driver of change in the Arctic.)

    http://foreignaffairs.co.nz/2015/03/13/economist-arctic-summit-oslo-2015/

    Looking forward to reading about some of the meeting’s insights on the area.


  7. […] I'm in Oslo this week for a one day "Arctic Summit" sponsored by the Economist magazine, on the future of the Arctic. The theme of the conference is significant, as it takes note of geopolitical ch…  […]


  8. […] last week’s Arctic Summit in Oslo, put on by The Economist magazine, the atmosphere was […]


  9. […] of the takeaways from the Economist’s Arctic Conference in March, was that this Arctic stuff, ice, or no ice, is a harder slog than the rah-rah enthusiasm […]


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