|Arctic May Hold 90 Billion Barrels of Oil, U.S. Says (Update1)|
|July 23, 2008|
July 23, 2008
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. report 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 assessment, said in the report. ``The extensive Arctic continental shelves may constitute the geographically largest unexplored prospective area for petroleum remaining on Earth.''
Russia dispatched a nuclear-powered ice-breaker 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.
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 report 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 assessment, the report showed.
Exxon Mobil Corp., Shell, Gazprom OAO and other energy producers have already discovered the equivalent of 240 billion barrels of crude after decades of drilling the U.S., Canadian and Russian Arctic, the study showed. Most of the discoveries remain capped because of a lack of pipeline or shipping facilities to haul the petroleum to markets.
Crude for September delivery fell $2.09, or 1.6 percent, to $126.33 a barrel at 1:49 p.m. on the New York Mercantile Exchange. Oil climbed 68 percent in the past year on its way to a record $147.27 a barrel on July 11.
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 report.
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.
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