Sustainability: The Path Forward for Arctic and Cold Region Resource Development

21 January 2012

by Mike Smylie and Jeff Leety

The Arctic may hold the key to some of the last great undiscovered oil and gas resources on the planet. As just one example, the United States Geological Survey estimates there are 85 trillion cubic feet of undiscovered, technically-recoverable gas under Alaska’s North Slope.1

Shell Oil is similarly convinced the next big US oil find will be in the Arctic. In fact, the company believes “the last huge undiscovered fields left on earth lay north of the Arctic Circle beneath the sea in areas once inaccessible because of fierce weather and treacherous ice.2

With pressure mounting on governments and oil and gas operators to find and exploit such reserves, the Arctic in general, and the state of Alaska in particular, have become an epicenter for new development – not only for oil and gas but also for other valuable mineral resources.

Without appropriate safeguards, this surge in activity could significantly harm the region’s unique ecosystem and community heritage.

The Arctic is already undergoing significant change due to regional climate change. According to the US National Snow and Ice Data Center, in the summer of 2012 the Arctic ice cap melted to 1.32 million square miles. This is the lowest summer minimum extent in the satellite record and nearly 50 percent lower than the 1979 to 2000 average.3

Less ice means new shipping lanes are opening up across previously inaccessible areas of far north latitudes. Transit via the Northern Sea Route increased from four vessels in 2010 to 34 vessels in 2011. This increase in activity brings with it the potential for shipping-related incidents -- a concern for many indigenous communities that depend on whaling for subsistence.3

New oil and gas wells and mines can also impact the region’s sensitive ecosystems, including diversity of tundra vegetation, thickness of permafrost, and offshore feeding grounds of marine mammals.

Safeguarding the Region’s Unique Ecosystem and Culture

The uniqueness of the Arctic extends beyond its ecosystem; the area is also home to a native population and culture steeped in thousands of years of history. Even in the 21st century, these first Nation residents continue to subsist off nature’s wildlife, vegetation and natural resources – a symbiotic relationship that has enabled them to adapt to, and survive, life in the extreme polar environment.

Working with these native communities and their village corporations is fundamental to understanding – and minimizing - the potential negative social, cultural and environmental impact of exploration and extraction activities in the region.

Many Arctic communities believe operators could put in more effort during the initial impact assessment when considering public concerns and could start earlier, preferably during the pre-feasibility stage.4

ERM recommends taking an integrated and iterative approach to stakeholder engagement that includes:

  • Developing a formal Stakeholder Engagement Plan; this should capture all impact assessment results and an audit trail of engagement activities;
  • Disseminating information early in the process across multiple channels and in all relevant languages; and
  • Applying engagement techniques that are appropriate to the social setting; do not just rely on ‘standard’ processes.4

As well as taking a collaborative approach, operators need to ensure they truly comprehend the complexity of working in a region where temperatures can drop as low as minus 70ºF – this is particularly key for new entrants to the Alaskan oil and gas market.

The state’s extreme climate and landscape impact everything from logistics and pipeline permitting to site construction and extraction. As a result, operators need to be prepared to invest more time and money in establishing and maintaining facilities and infrastructure. Even a simple valve replacement on a pipe can be a massive challenge in the Arctic.

Mitigate Risk with Specialized Skills and Local Knowledge

ERM has been helping oil, gas and mining companies take a sustainable approach to Arctic development for nearly 20 years. Our 70-person, Alaska-based team is uniquely positioned to help clients understand the challenges, risks and opportunities of doing business in polar environments.

Our team includes specialists in Arctic permafrost, marine life, wildlife and vegetation as well as individuals that have grown up in native Alaskan villages. This expertise is complemented with substantial experience of oil and gas operations in this harsh and demanding environment.

As well as facilitating positive interactions between operators and local communities, we assist companies throughout the entire spectrum of the permitting and impact assessment processes required for new development. Our experts help identify, assess, control and mitigate risks that threaten projects or delay their completion.

For example, ERM is currently helping a new entry to the Alaska oil and gas market to obtain permits for drilling and operation of their first oil prospect on the North Slope. As is often the case, new companies just beginning North Slope oil and gas exploration and development activities can become overwhelmed with not only the number of permits necessary, but the number of different federal, state and local agencies that must be consulted. ERM’s years of local experience understanding the complexity of North Slope permitting helped quickly guide the client through the permitting morass to successful project implementation.

Maintain Visibility of Impacts throughout the Extraction Lifecycle

A robust environmental management system (EMS) is key to ensuring environmental, social and cultural impacts are recognized and mitigated - both as part of new developments and during ongoing operations.

We help companies implement ISO 14001-compliant EMSs aligned both to their business processes and the unique impact factors found in the Arctic.

For example, ERM was contracted to develop an EMS that supported improved environmental performance, demonstrated regulatory compliance and protected subsistence resources for a large zinc mine located in a remote area of Alaska's pristine Arctic adjacent to subsistence communities and federally-protected land. Operating under some of the world’s most stringent regulations, ERM custom-built an ISO 14001-conformant EMS and web-based application that tracks thousands of compliance tasks, responds to incidents and provides for regular reporting. This EMS has helped the mine improve its overall performance and maintain its license to operate.

Our teams also assist established operators in the region with cleaning up contaminated sites, reducing the lifecycle of emissions from upstream facilities and minimizing the risks associated with maintaining an aging infrastructure.

Failure to mitigate environmental, social and culture risks and impacts could not only permanently damage the Alaskan ecosystem and economy, but also prevent operators from exploiting valuable untapped resources throughout the region for years to come.

[1] United States Geological Survey (USGS). 2008. Gas Hydrates on Alaska's North Slope, audio recording, (accessed October 2012).
[2] Reiss, B. 2012. The Eskimo and The Oil Man: The Battle at the Top of the World for America's Future. Grand Central Publishing
[3] Southam, A., Mitchell, R., Rowley, P., et al. 2012. The Need for Arctic Oil. Oilfield Technology, May.
[4] Southam, A. and Swanzey, K. 2011. Key Lessons in Social Engagement and Impact Assessment in the Arctic. Paper SPE 149721 presented at the SPE Arctic and Extreme Environments Conference and Exhibition, Moscow, Russia, 18-20 October 2011. 10.2118/149721-MS.

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