Russian minister draws parallels between Space Race and Arctic offshore development

Russia's Gazeta

Russia’s Gazeta announces America’s “rush to the Arctic.” May 12, 2015.

The reaction to the U.S. government’s decision to conditionally allow Shell to drill in the Chukchi Sea this summer has been harsh in many media outlets. The non-profit organization Greenpeace is carrying out an aggressive campaign against Shell, which The Guardian – the newspaper behind the “Keep it in the Ground” campaign – is covering non-stop. The New York Times ran an op-ed by environmentalist Bill McKibben lambasting President Barack Obama’s “catastrophic climate change denial.” The media in Russia, however – a country where the petroleum industry accounts for 26.5% of GDP – has a different take on Arctic oil exploration. Gazeta, a privately-owned online Russian newspaper, published a story by journalist Alex Topalov on May 12 entitled “Americans rush to the Arctic” (“Американцы рвутся в Арктику”). The article depicts Shell’s plans as logical and future-oriented, while the subtext seems to be that Russia could have a new competitor in the Arctic offshore industry hot on its heels.

A map of Shell's plans for Summer 2015. From a BOEM document.

A map of Shell’s plans for Summer 2015. From a BOEM document describing Shell’s exploration plans.

The Bureau of Ocean and Energy Management’s conditional approval of Shell’s exploration plans is relevant to Russians for both environmental and industrial reasons. On the one hand, the Chukchi Sea is right in between Alaska and Chukotka, Russia’s most northeastern region. While Shell will be drilling much closer to Alaska than Chukotka (see above map), any oil spills or accidents could still affect Russia’s coastline, where some indigenous Chukchi people still live. Most Chukchi were forcibly assimilated into sedentary lifestyles under the Soviet Union, but some still hunt whales and fish for subsistence purposes. The Chukchi Sea is also teeming with wildlife on the Russian side, from the walruses that haul out every year onto places like Herald Island to the polar bears that sometimes eat the tusked marine mammals.

More importantly for the Russian government and industry, however, is the sense of industrial competition brewing across the Bering Strait. Russia already has one active Arctic offshore field, Prirazlomnoye, in the Pechora Sea. As Topalov pointed out in his article for Gazeta, the U.S. has none. He wrote (translated from the Russian),

“At the moment, offshore work in the U.S. Arctic is almost not conducted except for in Prudhoe Bay in Alaska. But it cannot be considered offshore, for it goes onto the shelf only partially.”

Yet if Shell manages to be successful this summer, then the company might leap ahead of Russia in developing Arctic-ready offshore technology. Already, access to American technology and finance has proven crucial for Russian firms operating in the region. Due to the sanctions, however, Shell might not be able to export any technological advances it makes in the Chukchi Sea to Russia. Rosneft, for instance, has postponed any drilling plans in the Russian Arctic this summer since the sanctions forced ExxonMobil to pull out of its joint venture with the Russian oil major in the Kara Sea despite striking oil last September.

The Gazeta article quoted an expert from Russia’s Institute for Energy and Finance, located in Moscow. Nikolai Ivanov, chief of the energy markets sector, remarked that although weak oil prices would likely dissuade Shell from investing in large-scale production on the Arctic shelf in the near future, instead, their efforts in the Chukchi Sea represent “an attempt to take a foothold for the future.” So while the U.S. moves forward into the next frontier of oil and gas extraction, Russia is forced to sit this summer out on the sidelines.

From the space race to the Arctic shelf

As the Barents Observer reported, Russian Minister of Natural Resources and Environment Sergey Donskoy noticed the story, posting it to his Facebook page. His comments stating that he sees “no alternative” to exploiting deposits on the Arctic shelf made the headline. Yet his comparison of Russia’s development of the Arctic shelf to the Cold War space race is equally interesting. He suggested,

“Russia should intensify work on the Russian Arctic shelf to guarantee the resource base of our economy and the development of high technology. For Russia, development of the Arctic shelf can become a scientific and technological breakthrough on par with the conquests of the Soviet space industry in 60-70 years of the last century.

In outer space, Russia was the first to launch a satellite, Sputnik 1, in 1957. The U.S. trailed behind but ultimately pulled ahead as epitomized by the Apollo moon landing in 1969. On the Arctic shelf, Russia, too, was first. The country began producing offshore oil at the Prirazlomnaya field in 2014, which will ultimately have been years before any other Arctic country. While the U.S. has been trailing behind in the Arctic offshore just as it did in space, it may now be inching forward thanks to Shell’s plans to drill into the Arctic shelf this summer. Whereas Sputnik scared the U.S. into action in outer space, with the “Americans rushing to the Arctic”, to paraphrase the Gazeta headline, could Shell’s Chukchi Sea exploration have the same catalyzing effect on Russia’s activities on the Arctic shelf?

It’s hard to say, but Russia, cut off from U.S. technology and financing for its energy sector, is considering other options. On May 8, in remarks to the press after inking deals with Chinese President Xi Jinping on  integration of the Eurasian Union and the development of the Silk Road, Putin welcomed the participation of Chinese firms in the Arctic and Sakhalin shelf. He announced,

“We welcome Chinese companies to connect to the gas production in the Russian Arctic and Sakhalin shelf. In the development stage is the participation of our partners from China to develop the large Vankor oil and gas field in the north of Krasnoyarsk Territory.”

China National Petroleum Corporation (CNPC) holds a 10% stake in Vankor, one of Russia’s biggest new oil developments. Vankor may not be offshore, but it is in the Arctic, and oil from there may be transported via the Northern Sea Route. CNPC, which already has a 12-year history of activity in Russia, is the same company that signed a $400 billion, 30-year agreement with Gazprom last year to secure Russian gas supplies for China. Now, Vankor may symbolize CNPC’s establishment of a foothold in the Russian Arctic oil industry. It’s feasible that another Chinese oil company, China National Offshore Oil Corporation (CNOOC), could one day help jointly develop a field on the Russian Arctic shelf. The Ministry of Natural Resources, headed by the aforementioned Minister Donskoy, recently submitted a letter to the government in which it encouraged liberalizing activities on the shelf and allowing the participation of foreign companies. CNOOC Iceland, a subsidiary of CNOOC, is already a majority stakeholder in Dreki, an Icelandic offshore field. If Russia opens up its treasured Arctic shelf, the Chinese company might have its sights set there, too.

In other words, the competition between the U.S. and Russia in the Arctic offshore is not going to be as easy to confine into national boxes as the space race was.

Obama defends Arctic drilling weeks after Kerry promotes clean energy at Arctic Council

There's oil under them 'bergs... Photo: NASA Goddard Space Flight Center/CC License.

There’s oil under them ‘bergs… Photo: NASA Goddard Space Flight Center/CC License.

At the Arctic Council ministerial in Iqaluit, Canada on April 25, U.S. Secretary of State John Kerry waxed poetic about the prospects for clean energy in the Arctic. He remarked:

My friends, clean energy is the solution to climate change. If we got the whole world to embrace clean energy choices rapidly, we can meet our two-degree target. But the window’s closing. The extraordinary thing is all of the technologies we need – whether it’s wind or solar or hydro or whatever, they’re all there. It’s the economics that don’t drive people to make the choice, so we’ve got a lot of countries putting on coal-fired burning right now, and the coal-fired burning they’re putting on will totally erase the gains that a lot of other countries are making at the same time.

So we have to have a serious conversation about this, which is why President Obama has been pushing our national program so hard, and why we are so focused on this. Clean energy is the solution to climate change. It also happens to be the world’s biggest market. It will make many people rich. Enormous numbers of jobs will be created. Environmental responsibility can be lived up to. People’s health will be better. And security will be greater for a lot of countries that today are blackmailed by one source of fuel of one kind or another.

So many benefits. How many public choices do you get to make where there are so many plusses on the good side versus the negatives on the downside? Very few.

So it is essential, especially in the Arctic, to providing affordable, reliable energy that is needed here. We got to find the ways to do it. During our chairmanship, we’re going to examine every chance for greater circumpolar collaboration to develop renewable energy and promote energy efficiency in Arctic communities.

Despite Kerry’s statement that the U.S. would promote renewable energy in the Arctic, the first major choice that the U.S. has made as Arctic Council chair has been to conditionally approve Shell’s exploratory drilling plans in the Chukchi Sea off Alaska this summer. This is a clear about-face from the climate-change focused agenda Kerry said the U.S. would pursue as chair of the Arctic Council.

During a press conference at Camp David yesterday, President Barack Obama defended the Bureau of Ocean Energy Management’s decision. After Michael Viqueira, the White House correspondent for Al-Jazeera, asked whether it is “really worth the risk to drill in such a delicate ecosystem,” Obama responded:

“With respect to the situation in the Arctic, I think it’s fair to say that I know a little something about the risks of offshore drilling given what happened in the Gulf very early in my presidency.  And so nobody is more mindful of the risks involved and the dangers.  That’s why, despite the fact that Shell had put in an application for exploration in this region several years ago, we delayed it for a very lengthy period of time until they could provide us with the kinds of assurances that we have not seen before, taking account of the extraordinary challenges if, in fact, there was a leak that far north and in that kind of an environment, which would be much more difficult to deal with than in the Gulf.  Based on those very high standards, Shell had to go back to the drawing board, revamp its approach, and the experts at this point have concluded that they have met those standards.

But keep in mind that my approach when it comes to fracking, drilling, U.S. energy production of oil or natural gas has remained consistent throughout:  I believe that we are going to have to transition off of fossil fuels as a planet in order to prevent climate change.  I am working internationally to reduce our carbon emissions and to replace over time fossil fuels with clean energies.

Obviously, we start at home with all the work that we’ve done to, for example, double the use of clean energy.  But I think that it is important also to recognize that that is going to be a transition process.  In the meantime, we are going to continue to be using fossil fuels.  And when it can be done safely and appropriately, U.S. production of oil and natural gas is important.

I would rather us — with all the safeguards and standards that we have — be producing our oil and gas, rather than importing it, which is bad for our people, but is also potentially purchased from places that have much lower environmental standards than we do.

The idea that importing oil is “bad for our people” is populist pandering. If it’s really so bad, why has the U.S. continued to increase oil imports from Canada, the nation’s biggest oil supplier (not the Middle East, contrary to popular opinion)? Furthermore, in an article for Foreign Affairs, energy expert Daniel Yergin suggests that building a global network of trade and investment would be better for global energy security than a “mercantilist, state-to-state approach.”

For Obama to justify his decision by discussing the benefits of oil drilling for Alaskans and the Alaskan economy would be one thing. But for him to state that he’s going ahead with drilling in the Arctic because “importing oil is bad for our people” is sheer dishonesty. In other words, the president appears willing to put the Chukchi Sea at risk because of concerns about dependency on foreign oil. If Obama were really so concerned about imports, however, why is he advocating enormous free-trade agreements like the Trans-Pacific Partnership or the Transatlantic Trade and Investment Partnership?

One other strategy to spur the reduction of oil imports, if they are in fact “bad for our people,” might be to enact measures to decrease domestic oil consumption. Importing oil or reducing consumption, however, might negatively affect the Alaskan economy, as it would make the state’s resources less desirable to develop. Thus, many people in Alaska are happy with BOEM’s decision. If Shell hits the black stuff in any of the six exploratory wells it is planning to drill this summer, this could bode well for future royalties paid to the Alaskan state treasury. Senator Lisa Murkowski (R-Alaska) tweeted:

Rather than being a leader, however, the U.S. is simply following in the footsteps of Russia and Norway – two countries that have already begun or are making progress towards Arctic offshore drilling. The decision in favor of Shell’s plans also puts Alaska on the pathway of dependency on oil extraction for many more years to come instead of turning it into a leader in more cutting-edge industries like clean energy.

So whether or not you think drilling offshore Alaska is a good strategy for the nation or the state, BOEM’s decision does not make the U.S. look like a leader. Instead, the Obama administration seems to be following a time-tested strategy of rinse and repeat. Drill for oil, clean up the spill (ExxonValdez in 1989, Deepwater Horizon in 2010), start drilling again. BOEM’s decision also makes the U.S. appear hypocritical as Arctic Council chair given all its talk about the environment and combating climate change in Iqaluit. Contrast this with the Russian Minister for Natural Resources, who wrote on his Facebook page on Tuesday, “There is no alternative to the fields on the shelf.” He may not say what environmentalists want to hear, but at least he can’t be accused of going back on his word.

Throwback Thursday: Pre-War Photos of the Aleuts

The internet likes its memes, and Throwback Thursday happens to be one of them. While I admit it is somewhat silly, at the same time, it might be interesting to look back every odd Thursday at photographs of the Arctic of yesteryear. In a region changing as quickly as the Arctic, and where the stories woven about its people and places are so often about the future rather than the past (e.g. When will the ice caps melt? What shipping lanes will be open by 2050? When will the new oil field come on stream?), it’s worthwhile to look back at how the Arctic was a mere 50 or 100 years ago.

To start off the series, here are three photographs of people in the Aleutian Islands that I came across on the United States Library of Congress’ website. Their online resources boast thousands of photographs that are free to reproduce and within the public domain.

This first photo was taken in August 1938 by the photographer V.B. Scheffer and is part of the 175,000-photograph Farm Security AdministrationOffice of War Information Photograph Collection. From 1935-1944, the U.S. government funded the photographic documentation of American life, including rural and urban conditions. Three of Scheffer’s photographs taken in the Aleutians are included in the collection, and they illustrate a way of life about as rural and remote as one can get in the U.S. The Aleutian Islands are closer to the eastern Russian city of Petropavlovsk-Kamchatsky than Washington, D.C.

Living on the far-flung arc of volcanic islands in the Pacific, the Aleutians are a people separate from many of the other indigenous groups in Alaska, even the nearby Alutiiq and Yup’ik. (Here is a map of the indigenous peoples and languages of Alaska.) Aleuts, known as Unangax in their native language and Алеуты in Russian, inhabit the Aleutian Islands, while a small population remains in Kamchatka Krai in Russia, across the Bering Strait. The Aleuts probably crossed over from the Eurasian landmass into the Aleutian Islands 9,000 years ago. Studies of their genetic structure are fascinating and reveal the high degree of admixture spurred by the centuries of traders, fishermen, and people moving throughout the North Pacific. A paper published in Human Biology in 2010 notes, “The underlying patterns of precontact genetic structure based on Y-chromosome markers of the Aleut populations is obscured because of the gene flow from Russian male colonizers and Scandinavian and English fishermen.”

While the Scandinavian and English genetic markers may be surprising, the Russian influence is obvious, for not only was Alaska (and the Aleutian Islands) part of the Russian Empire until its purchase by the United States in 1867. There was also a great deal of mixing as well between European Russians and the indigenous peoples they encountered during their centuries-long eastward expansion. One Alaskan website claims, “Alaskans generally recognize the Russian occupation left no full-blooded Aleuts.” Relatedly, the caption of the first photograph explains:

“The population of the Aleutians, which is sparse, consists mainly of Aleuts and a few Russian and Russian-Aleut types. The Aleuts are a mongoloid people and are quite distinct from the Eskimo. Even in the cold, foggy Aleutians, youngsters like to go barefoot, as this picture shows. The Aleuts are under the protection of Interior Department’s Office of Indian Affairs.”

The caption also speaks volumes about government attitudes towards Alaska Natives and indigenous peoples in general. The fact that the caption states that the Aleuts were “under the protection” of the extant Bureau of Indian Affairs highlights the government’s long history of misguided paternalism. The photograph was taken two years after the Indian Reorganization Act was applied to Alaska, which was intended to try to grant Alaska Natives more independence and powers to self-govern. The Act, for instance, granted “Any Indian tribe, or tribes, residing on the same reservation, shall have the right to organize for its common welfare” (Section 16). Yet still, as the photograph’s caption notes, the government continues to claim them to be under their “protection.”

In the first photograph, notice the boy with the bowl cut in the bottom row, second from the right. Here he is again, this time by himself. The caption reads,

“This booted and overalled young man is an Aleut. He clearly shows his kinship with the people of Asia.”

While the tone of the caption is admittedly old-fashioned, the noted relationship between Asia and the Arctic and the long history of encounters between the two regions recalls a guest blog post I wrote for the University of Nottingham’s China Institute Policy Blog in March on ancient ties between China, northeastern Russia, and the North Pacific.

Finally, the third photo, of a man sitting outside a fox ranch in the Aleutian Islands next to what appears to be an upside-down boat.

The caption reads:

“Fox ranching is about the main commercial operation on the various inhabited Aleutian Islands. The islands form a vast wildlife refuge but fox ranching is permitted under license by the United States Fish and Wildlife Service of the Department of the Interior. There are very few wild animals on these islands although there were once a number of wild foxes. The foxes which form the basis of the Aleutian industry were generally imported.”

The introduction of foxes, first for hunting and later ranching, underscores my point earlier this week about the Arctic’s long history of anthropogenic environmental change. The “FOX RANCHING – NO TRESPASSING” sign on top of the building simultaneously captures the regularization and industrialization of fur production and the introduction of private property into the Aleutian Islands beginning with the arrival of the Russians in 1741. Almost two centuries prior to this photograph being taken, the Russians essentially conscripted the Aleuts into the global fur trade. In fact, it was Russian fur traders who gave them the name “Aleuts.” But they also bestowed upon to them many other problems. A story recounted on the Alaskan website referenced above recounts a story that sheds light onto how damaging the fur trade was for indigenous peoples and the environment up and down the western Pacific coast:

“In 1811, in order to obtain more of the now commercially valuable otter pelts, a party of Aleut hunters traveled to the coastal island of San Nicolas, near the Alta California-Baja California border. The locally resident Nicoleño nation sought a payment from the Aleut hunters for the large number of otters being killed in the area. Disagreement arose, turning violent; in the ensuing battle nearly all Nicoleño men were killed. This, along with European diseases, so impacted the Nicoleños, that by 1853, only one living Nicoleña person remained.”

In the Aleutian Islands, once the fur trade had almost rendered the local otter population extinct, fur traders introduced Arctic foxes (the same animal that’s now almost extinct in the European Arctic, as I mentioned the other day) to the islands. This had a number of negative consequences for the ecosystem, described here in more detail.

Four years after these photographs were taken, the Aleutian Islands would again be wrapped up in global events. The Japanese invaded the westernmost islands of Kiska and Attu in 1942 and occupied them for over a year before the Americans were able to launch a campaign to retake them. The Aleutian Islands may be geographically remote, but that has not prevented the forces of trade and war from ensnaring them.