Climate change, future Arctic Sea ice, and the competitiveness of European Arctic offshore oil and gas production on world markets

A significant share of the world’s undiscovered oil and natural gas resources are assumed to lie under the seabed of the Arctic Ocean. Up until now, the exploitation of the resources especially under the European Arctic has largely been prevented by the challenges posed by sea ice coverage, harsh weather conditions, darkness, remoteness of the fields, and lack of infrastructure. Gradual warming has, however, improved the accessibility of the Arctic Ocean. We show for the most resource-abundant European Arctic Seas whether and how a climate induced reduction in sea ice might impact future accessibility of offshore natural gas and crude oil resources. Based on this analysis we show for a number of illustrative but representative locations which technology options exist based on a cost-minimization assessment. We find that under current hydrocarbon prices, oil and gas from the European offshore Arctic is not competitive on world markets. Electronic supplementary material The online version of this article (doi:10.1007/s13280-017-0957-z) contains supplementary material, which is available to authorized users.


Fig. S2
March (a) and September (b) mean sea ice thickness in m for the regions (1) EBB2 in the southern Barents Sea, (2), WGEC2 off the west coast of Greenland and (3) WSB2 in the Kara Sea from four CMIP5 models with the emission scenarios RCP 4.5 (solid lines) and RCP 8.5 (dashed lines). If more than one ensemble member is available per model, the mean is shown by the line and the range over all ensemble members per model is indicated by the shading.  production platforms  Fixed shallow water production facilities  Onshore production facilities  Onshore plants for  raw product receiving  treatment (acid gas removal and drying)  liquefaction or compression or GTL processing  storage of products  service station for offshore facilities  Drilling vessels (for appraisal wells and workover)  Offshore supply vessels (with ice breaking ability)  Helicopters  Sea going emergency, evacuation and rescue (EER) systems  Riser (oil, gas)  Pipelines (oil, gas)  Flexible pipes and hard arms (for oil, gas or liquefied gas) for loading  Turrets, mooring systems and shuttle tankers (for gas or liquefied gas or oil)

Floating Production Facility
Floating production facilities can be both, platforms with a single main functionality (production and send-out of hydrocarbons) and platforms with combined functionality, production, treatment, processing and send-out.
All vessels operating in the Arctic have to provide ice breaking abilities and suitable rescue and evacuation schemes. Floating production facilities are permanently moored at location by means of internal turret mooring systems with gas production abilities.
In general, a cost share of 20-30 % of the overall costs has to be considered for oil / gas production.

Subsea Production Facility
Production from totally submerged facilities has the main advantage that during normal production no surface piercing structure has to withstand harsh environments and loads from drifting ice or icebergs. Nevertheless, the wells have to be maintained from time to time or in an emergency by means of work over drilling. Drilling vessels with significant ice breaking abilities have to be employed. These vessels are rare and expensive so that they are not purchased but long term contracted for the complete production campaign of >20 years.
The produced multiphase flow of gas, oil, water, and sand is processed and exported via pipeline to the shore receiving plant, where also the local operators of the subsea system are accommodated.
In general, a cost share of 20-30 % of the overall costs has to be considered for oil / gas production with transport from the reservoir to the treatment plant, including control umbilical and export pipelines.

Fixed Production Facility
The fixed concrete platform option provides production, pre-treatment and storage capabilities. These platforms are restricted in (deck) space and are normally not suited to allow liquefaction of gas. Thus, the produced gas is sent to a shore liquefaction plant via pipeline. Produced oil and condensate can be either exported via scheduled shuttle tankers or pumped to shore via pipeline.
As the platform cannot be moved from location, it has to withstand all occurring environmental conditions like severe sea states, heavy winds and icing of deck structures as well as drifting ice or icebergs. Consequently, ice management by means of ice breaking Offshore Supply Vessels (OSVs) has been considered to reduce these loads to the fixed structure.
In general, a cost share of 20-30 % of the overall costs has to be considered for oil / gas production with transport from the reservoir to the treatment plant, including gas processing and associated pipelines.

Shallow Water Production Facility
As stated above production facilities can be installed in shallow or even very shallow water. Examples are available for facilities which are constructed in benign areas like in middle or south of Europe and towed to an Arctic location by means of tugs.
Installation takes place at a prepared berm e.g. made of gravel. Due to a relatively short distance to shore and possibly restricted water depth send-out of the products is carried out by pipelines to separate onshore treatment and export facilities. The shallow water facilities have to be protected against drifting ice by means of passive ice barriers, optionally aided by an active ice management with Offshore Supply Vessels (OSVs).
In general, a cost share of 15-25 % of the overall costs has to be considered for oil / gas production with transport from the reservoir to the treatment plant, including gas processing and associated pipelines.

Onshore Production Facility
Production facilities located onshore in the Arctic have to consider related harsh environmental constraints. Although no wave, ice or iceberg loads can occur it is possible that future climatic changes might result in melting surface soils or even the development of swamp areas.
Due to the demanding environments in the Arctic construction at location often suffers from significant time delays caused by insufficient infrastructure, complicate or unsteady material supply, or problems with personnel provision. Nevertheless, realized examples can be found for Alaska and Siberia.
In general, a cost share of 15-20 % of the overall costs has to be considered for oil / gas production with transport from the reservoir to the treatment plant, including gas processing and associated pipelines.

Treatment, Storage, Loading, Shipping and receiving for gas production
Treatment of the raw products gas and oil is required to allow either send-out to the connected gas network or to export tankers. Case dependent treatment can comprise dehydration, de-sanding, recovery of flow assuring inhibitors (e.g. Methyl Ethylene Glycol, MEG) and removal of CO2, mercury or N2 and the liquefaction of the gas for efficient storage and transportation. Liquids like LNG, CNG or GTL products are stored until they are loaded to dedicated shuttle tankers. These tankers provide the worldwide market with the required energy deliveries, which can be comparably handled in terms of quantities of British Thermal Units (BTU).
For the assessment a mean transportation distance between the treatment plant and the European receiving plant of 5000 km has been considered.

Treatment, Storage, Loading, Shipping and receiving for oil production
Treatment of the raw oil is required to allow either send-out to the connected pipeline network or to export tankers. Case dependent treatment can comprise de-hydration, desanding, recovery of flow assuring inhibitors (e.g. MEG) and removal of CO2, mercury or N2 for efficient storage and transportation. Especially transportation by tankers allows providing the worldwide market with the required energy deliveries, which can be comparably handled in terms of quantities of British Thermal Units (BTU). Again a mean transportation distance between the treatment plant and the European receiving plant of 5000 km has been considered. Information about oil and gas production, infrastructure, transport volumes, logistics along Northern Sea Route. Comparison of most relevant gas production and export scenarios including relevant cost contributors.
OPEC. 2010. World Oil Outlook, OPEC Secretariat, Vienna, Austria Status quo of oil and gas production, demand, world economic development, outlook to 2030, consideration of all relevant fields of the energy supply chain.