Russia Plays Game of Arctic Roulette in Oil Exploration

by Benjamin Bidder, Matthias Schepp and Gerald Traufetter, translated by Ella Ornstein, Der Spiegel, August 24, 2012

Oil production in the Komi Republic: Russian exploration programs are harming the Arctic. Yevgeny Kondakov / DER SPIEGEL

Thawing sea ice and improved technology is opening up the race for natural resource exploration in the Arctic Circle, home to nearly a quarter of the world's untapped oil reserves. Russia leads the race and has promised to adhere to environmental guidelines. But accidents and other damage resulting from the country's oil exploration tell a different story.

The instruments hanging in the Russian city of Severodvinsk -- one by the mayor's office at Victory Square, two more at buildings belonging to the Disaster Prevention Agency -- look like oversized clocks.

But rather than showing the time, they indicate radioactivity. They're dosimeters, and they're meant to reassure people here on Russia's northwestern coast, in this city that serves as a home port for Russian nuclear submarines between their trips north into the seas. Less reassuring is the knowledge that just a year and a half ago, one of the submarines caught fire.

For decades, these fleets have been both a blessing and a curse in this region with little other infrastructure. The boats have provided jobs, but they have also brought with them the fear of a Chernobyl at sea. Now the region has another cause for hope, as well as a new source of danger: oil.

The shipyards in Severodvinsk, on the White Sea, where nuclear submarines were once built, have turned their attention to assembling drilling platforms. One was just recently assembled for use at the Prirazlomnoye oilfield in the Pechora Sea, also along Russia's northwestern coast. The enormous metal construction, operated by a subsidiary of Russian energy giant Gazprom, is expected to start drilling sometime in the coming months.

Growing Environmental Threat

Although these plans were made with no particular fanfare, unexpected resistance has sprung up around the drilling rig. Greenpeace Russia presented an alarming study last week. "If an accident were to occur at the platform in the Pechora Sea, it would contaminate an area twice the size of Ireland," warns Roman Dolgov, director of Greenpeace Russia's Arctic program.

There are protected natural areas, home to endangered species such as walruses and beluga whales, just 50 to 60 kilometers (31 to 37 miles) from the platform. An accident could cover the entire 3,500-kilometer coastline in a toxic slick. But, owing to the particular conditions of the Arctic, it would only be possible to remove a small portion of that oil.

The danger of environmental damage is growing elsewhere in the far north, as well, as the countries that border the Arctic race to exploit previously inaccessible resources. Sea ice here is disappearing and may even drop this year below its previous record low of 4.3 million square kilometers, reached in 2007.

"We are witnessing a unique historical situation," says Rüdiger Gerdes, a physicist studying sea ice at the Alfred Wegener Institute for Polar and Marine Research, in Bremerhaven, Germany. "As new ocean territory opens, it awakens new greed."

The Last Frontier

According to a United States Geological Survey estimate, around 22% of the world's as yet undiscovered, exploitable oil reserves will be found in the Arctic. This is the last frontier for multinational oil corporations -- and even that border is crumbling, as sea ice melts and energy prices rise:

• Corporations Statoil and Cairn are exploring for oil in Baffin Bay, west of Greenland, with the help of a fleet of icebreaker ships capable of dragging icebergs out of the way.

• The Dutch-British corporation Shell plans to start test drilling north of Alaska. The oilfield there was discovered in the 1980s, and its exploitation has American President Barack Obama's support.

• This spring, American energy corporation ConocoPhilips, in test drilling performed together with a Japanese oil company, managed for the first time to extract methane hydrate from natural gas trapped inside ice crystals deep under the earth.

Traditionally, though, it is Russia, with its massive reserves of oil, gas and ore in northern Siberia that has been the pioneer in tapping the Arctic's resources. Barely noticed by the rest of the world, Russia's explorations here have frequently shown that a great deal can go wrong when machinery and brute force are used to extract natural resources from such a sensitive region, in what amounts to a game of Arctic roulette.

Hollow Promises

But environmental protection has never been a high priority for Kremlin strategists, who see the energy sector as the instrument Moscow can use to cement its position as a world power. Prime Minister Dmitry Medvedev introduced a package of laws early this month that establishes tax incentives for oil extraction. Just to complete extraction projects that have already begun, around 60 drilling platforms will be built by 2020, at a cost of $60 billion (€48 billion).

President Vladimir Putin has promised to adhere to "strict environmental guidelines," but just how little these assurances mean can be seen in the pioneering project at the Prirazlomnoye oilfield. If an accident occurred here, the platform's crew would be left completely to its own devices, with the closest rescue team stationed 1,000 kilometers away in the Barents Sea port city of Murmansk.

Gazprom Neft Shelf is the Gazprom subsidiary that holds the license for the Prirazlomnoye oilfield, and its emergency plan for handling potential environmental damages currently consists of 3 axes, 25 buckets, 15 shovels, 15 rakes and 2 all-terrain vehicles. The drilling platform's insurance against environmental damage amounts to a laughable €180,000.

Russian corporations' lack of experience with offshore projects has led to accidents time and again. Last December, a mobile drilling platform called Kolskaya sank in the Sea of Okhotsk, 200 kilometers off the coast of Sakhalin island, while being towed by an icebreaker. Gazflot, another Gazprom subsidiary, had been using the platform outside of the approved season. With 53 of the 67 crew members on the rig declared dead or missing in the icy sea, it was the largest number of causalities that an accident in the Russian oil sector has seen.

Reputation for Catastrophe

Since the Soviet era, Russia's oil and gas companies have had a reputation for catastrophe. Few people know this better than Greenpeace activist Dolgov. Together with his colleague Tatyana Khakhimullina, the bearded, broad-shouldered man is traveling this summer around the Komi Republic, located at the Arctic Circle in northwestern Russia. Equipped with a GPS device, an old laptop and images from an American research satellite, the two Greenpeace members are searching the taiga for pipeline leaks.

According to state-run regulatory authorities, pipelines here in the world's largest country burst at over 25,000 locations each year. Greenpeace estimates this leads to leaks of 5 million tons of oil -- seven times the amount that flowed into the Gulf of Mexico in 2010 after the explosion on the Deepwater Horizon oil platform. Snowmelt here in spring and rain in summer wash around 500,000 metric tons of oil into the region's major rivers and then into the Arctic Ocean.

Roman Dolgov swings himself down from the vehicle. The Arctic wind that sweeps across the mountain pines and marshes carries with it a stench like that of a diesel pump at a gas station, and oil pipes can be seen on the taiga's horizon, glinting silver. In January, temperatures here drop to minus 50 degrees Celsius (minus 58 degrees Fahrenheit). "When the first snow falls in October, it lays a white blanket over hundreds of lakes of oil," Dolgov explains. When the snow melts again in May, black-colored ice floes drift down the Pechora River toward the Arctic Ocean.

Dolgov marches out across the marshy land. A few hundred meters on, he finds two fresh oil spills, spread across an area of 10 hectares (25 acres), where an underground section of pipe has burst. There are deep wheel tracks in the moss -- the Lukoil corporation that owns this pipeline simply sent an exploratory vehicle out to this lake of oil, then took no further action.

"The companies would rather pay the laughably low fines," Dolgov says. When Greenpeace reported 14 oil spills in Komi last year, Russia's environmental authorities fined Lukoil, a company with annual sales of €80 billion, a total penalty equivalent to €27,500.

'Black Plague'

A half hour's drive away is the village of Ust-Usa, population 1,300. Wooden huts and a handful of concrete high-rises hunker here on the bank of the Pechora. Once the villagers drank the water from the river, but to do so now could be fatal. In between the rainbow-colored streaks of oil, pale foam floats toward the Arctic.

One rural doctor here has kept records of patients' medical histories in Ust-Usa and the surrounding villages. The incidence of cancer is 50% higher than it was in 2000, and children and teenagers suffer from respiratory illnesses twice as often. Few men in these villages ever reach retirement age. Average life expectancy here is 58, compared to a national average of 70.

Residents at a town hall meeting express their anger at the oil corporations and the Kremlin. One retiree rages against "Putin's regime, exterminating its own people." Yekaterina Dyakova, a biology teacher here in the village, believes that monitoring is "the only solution." She's fighting to establish an independent institute that would monitor pipelines, water quality and pollutants. "The government can't leave that to the oil corporations," she says. "They'll only find what they want to find."

Dyakova sent her suggestion "to the president of the Russian Federation" two years ago, and she's still waiting for an answer. "Everywhere else, oil is seen as black gold," she adds. "For us, it's the black plague."

http://www.spiegel.de/international/business/russian-oil-exploration-in-arctic-circle-causes-major-environmental-damage-a-851617.html