BUS604: Innovation and Sustainability

Exploration for natural resources in the Arctic Circle goes back many centuries, since the discovery of Spitsbergen by the Dutch explorer Willem Barents in 1596; and competition between nations for northern riches is nothing new. In the Spitsbergen archipelago, English and Dutch whalers competed in the seventeenth century; Norwegian and Russian hunters competed in the next century; and in the nineteenth century a coal industry was created that operates to this day. Russia had sought to increase control over Spitsbergen, but Norway enforces its sovereignty there in accordance with its interpretation of the 1920 Spitsbergen Treaty.  Since Barents's explorations, such competition for control over Arctic lands, waters and resources has been a staple of the region. Today, the main prizes in the Arctic are minerals, energy, and fish. Given that nearly all maritime boundaries are settled, the pursuit of these economic interests is a stabilizing factor, because all concerned stand to gain more from cooperation and shared risk.

The new treaty delimiting the maritime boundary between Russia and Norway in the Barents Sea is a promising example of a formalized mechanism for resource sharing.  With fish stocks at their highest level in 60 years, Norway has generously given 40 percent of its fish quota to Russian fisheries and takes a 'business over bullets' approach of economic incentives and fines to regulate activity.

North of the Arctic Circle there are diverse mineral resources.  There are active mining industries in Alaska, Canada, Greenland, and Scandinavia, as well as many Russian Arctic mining operations around Murmansk, Norilsk, and the Kola Peninsula. Greenland has great potential for mining iron, uranium, diamonds, rubies, and, above all, the largest deposits of rare earth minerals outside China.  The entire region has great hydrocarbon energy deposits. In 2008 the US Geological Survey published the Circum-Arctic Resource Appraisal, which concluded that the region contains 30 percent of the world's undiscovered gas and 13 percent of the world's undiscovered oil, mostly offshore under less than 500 meters of water.  In this assessment, undiscovered natural gas is three times more abundant than oil.

By 2007, more than 400 oil and gas fields, containing 40 billion barrels of oil, 1,136 trillion cubic feet of natural gas, and 8 billion barrels of natural gas liquid had been developed north of the Arctic Circle. It is estimated that 84 percent of the undiscovered oil and gas lies offshore. The total mean undiscovered conventional oil and gas resources are estimated to be approximately 90 billion barrels of oil, 1,669 trillion cubic feet of natural gas, and 44 billion barrels of liquid natural gas. Altogether, the Arctic region contains around 25 percent of the world's undiscovered conventional hydrocarbon energy resources.

Because more than 95 percent of these northern resources are found within the jurisdictions of agreed national and maritime boundaries,  the economic competition is not between nations, but rather between multinational corporations competing for national contracts and concessions. For purposes of risk-sharing and technological support, it is in the strategic interest of Norway as much as of Russia to attract investment from energy companies. These interests and incentives drove the decision to settle the Barents Sea maritime boundary, and it is the absence of such incentives that is holding up settling the disputed maritime boundary between the United States and Canada in the Beaufort Sea.