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Arctic has 90bn barrels of crude

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Arctic has 90bn barrels of crude

By Carola Hoyos in London

Published: July 23 2008 19:43 | Last updated: July 23 2008 19:43

The Arctic holds as much as 90bn barrels of undiscovered oil and has as much undiscovered gas as all the reserves known to exist in Russia, US government scientists have said in the first governmental assessment of the region’s resources.

The report is likely to add impetus to the race among polar nations, such as Russia, the US, Denmark, Norway and Canada, for control of the region.

The US Geological Survey believes the Arctic holds 13 per cent of the world’s undiscovered oil, while 1,669,000bn cubic feet of natural gas is equivalent to 30 per cent of the world’s undiscovered gas reserves.

“The extensive Arctic continental shelves may constitute the geographically largest unexplored prospective area for petroleum remaining on earth,” the USGS said.

Last August Russia planted its flag on the seabed 4km under the North Pole raising fears of a rush to grab the Arctic’s mineral resources, particularly its oil and gas deposits. Denmark in May called a summit of the five Arctic powers in Ilulissat, Greenland, to try to restrain competition and reiterate the countries’ joint commitment to the United Nation’s Law of the Sea Convention that governs territorial waters.

Commercial interest in exploiting the Arctic has also increased, with Royal Dutch Shell, the Anglo-Dutch energy group, pushing to help Russia develop gas from the Yamal region, and Total winning the right to do so at Russia’s giant Shtokman gas field.

In the US, companies are pushing ever further into the Arctic regions of Alaska, while Denmark has attracted a number of large companies interested in exploring for oil and gas off the coast of Greenland.

Consultants Wood Mackenzie in 2006 estimated the Arctic basins, including those already being developed, held 233bn barrels of discovered oil and gas with another 166bn yet to be found, the majority of it gas.

Alan Murray, who heads its exploration research and co-authored the report, noted that the USGS was often more optimistic about potential resources than other research organisations. “These are huge potential volumes, but they are not going to impact supplies or price any time soon. There are still a lot of undeveloped resources that are easier and closer.”

The USGS report used a probabilistic methodology and included only undiscovered resources that could be exploited using today’s technology.

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Copyright The Financial Times Limited 2008

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