Developing the Arctic: Balancing Energy Security and Commercial Opportunities with Environmental and Social Responsibilities

With a rapidly changing climate, Arctic nations are now adjusting their policies to meet the more navigable and less hostile Arctic. Estimations indicate that the Arctic could hold 30% of the world’s undiscovered gas, 13% of the world’s undiscovered oil, and 44 billion barrels of natural gas liquids.

In this sense, the aim of this Capstone project was to illustrate the opportunities and challenges related to future Arctic oil and gas development. In particular, the team researched offshore oil and gas given that this is the main focus of future exploratory activity. Although Arctic drilling is not commercially viable at this time and is not expected to be in the near future, a careful analysis of its expected costs and benefits remains relevant, especially since Shell and other industry leaders have continued their activity in the region. 

Taking a long-term view, the project outlined the key motivations for oil and gas development, focusing on geopolitical tensions; the interests of the three most important Arctic states (Russia, the U.S. and Canada); environmental challenges; shipping; technology; infrastructure; and tax regimes and investment activities. The team looked at each of these aspects in turn, using the different Arctic countries as the unit of analysis where appropriate.