During the holidays, the thoughts of many turn to the North Pole. It’s mostly youngsters imagining reindeer and Santa Claus and all of the goodies they will get under the tree. However, others are looking to this region for the potential oil that it might hold. Denmark recently claimed the North Pole, feeling that it has a massive energy potential despite the fact that developing in the region is difficult. Russia also has its hands involved in Arctic exploration, and wants to spend the coming years seeing just what it will be able to get out of the region.
Billions of tons of oil and gas are in the region, which is why it is getting so much attention. While it’s been difficult to develop there, historically, the melting of the polar ice is actually starting to make development seem far more feasible. This also opens up new shipping lanes, cutting down on the costs of transporting the oil and gas, which makes it even more attractive. In 2008, the U.S. Geological Survey found that the Arctic is actually home to about 13% of the undiscovered oil in the world, and about 30% of the undiscovered natural gas.
Still, there will be a massive challenge for Denmark when they try to develop the area. It’s cold, there’s little actual land, and it is very remote. These working conditions are not ideal, and it could be hard to keep staff aboard the rigs. Additionally, some of the equipment the rigs currently use will not function properly in these subzero temperatures. This means they will have to invest in better quality equipment that will work well in the cold, and they will need to have staff on hand who can repair the equipment when the need arises.
The area certainly has plenty of potential, which is why so many countries have an interest in the arctic. However, there is still a large amount of uncertainty when it comes to making the exploration and development stages work. In fact, it’s even uncertain if Denmark’s claim to the North Pole is even valid. It may take years before the final decision of whether they have the right to claim the area or not is made. Additionally, to make the development worthwhile, the price of oil will have to come back up. At $60 a barrel, it is simply too large of a risk to start development in a new area.
About Oil Works Inc.
Oil Works, Inc. is a complete drilling rig equipment manufacturer and service provider based in the Permian Basin for over 20 years. OWI’s product and service offerings include Derricks, Substructures, Drawworks, Mud Systems, Walking Systems, Power Generation, Control Systems, Iron Roughneck Repair and Upgrades and complete Rig Solutions built to API and ISO standards. OWI is also proud to offer 24/7 Service and Support.
