Arctic Oil Infrastructure Faces Climate Karma

(Bloomberg Opinion) -- Beaches, clear blue seas, scorching temperatures and long days. Forget the Caribbean, your next summer beach holiday could be on the shores of Russia’s Arctic Ocean..Temperatures at Nizhnyaya Pesha, some 840 miles (1,352 kilometers) northeast of Moscow and just 12 miles from Arctic Ocean coast, reached 86 degrees Fahrenheit (24 degrees Celsius) in early June — a disaster for anyone worried about the planet's future. Further to the east and further inland, things got even hotter. Russia's state weather authority confirmed that the temperature at the small town of Verkhoyansk — which sits about 70 miles north of the Arctic Circle and boasts the Pole of Cold District Museum of Local Lore as its only tourist attraction listed on Tripadvisor — hit 100.4 degrees Fahrenheit on June 20..Most alarming, though, is not the temperature itself, but the fact that this wasn’t an isolated incident. Rather, it is part of a heatwave that has persisted since the end of last year. On average, temperatures in western Siberia have been 10 degrees Fahrenheit above normal since December, according to the European Centre for Medium-Range Weather Forecasts. .Uncontrolled fires are already sweeping across the forests of Russia, and have been for months. On Friday, the Russian Ministry of Natural Resources reported that efforts were being made to extinguish 272 forest fires covering an area 12 times the size of the District of Columbia, including 10 on specially protected natural territories extending over an area bigger than Manhattan..As I wrote here, rising Arctic temperatures strike at the heart of the Russian economy, which is largely built upon the extraction of oil and gas. Rising temperatures are melting the permafrost and impairing its ability to support structures built on it. The changes threaten the “structural stability and functional capacities” of oil industry infrastructure, according to the Ocean and Cryosphere in a Changing Climate report adopted in September by the Intergovernmental Panel on Climate Change (IPCC)..We’re already seeing the impact. As my colleague Clara Ferreira Marques wrote here, a devastating Arctic fuel spill on May 29 appears to have been caused by melting permafrost. More than 20,000 tons of diesel fuel (or about 150,000 barrels) leaked from a storage tank owned by MMC Norilsk Nickel PJSC, polluting rivers and lakes that drain into the Arctic Ocean’s Kara Sea. The company blamed the “sudden subsidence of supports which served for more than 30 years without problems” for the damage that allowed the fuel to escape from the tank..Russia's Prosecutor General's office ordered thorough checks to be carried out on particularly dangerous installations built on territories exposed to permafrost melting. For the oil and gas sector, that’s likely to cover pipelines and processing plants, as well as storage tanks. It’s going to be a massive undertaking. Some “45% of the oil and natural gas production fields in the Russian Arctic are located in the highest hazard zone,” according to the IPCC report..While many of the country’s newest oil and gas fields are situated far to the north, in areas of continuous permafrost, many of the older ones, which form the bedrock of the industry, are in the discontinuous permafrost zone. That area is also crossed by the major pipelines that carry hydrocarbons to customers and export terminals..The heatwave experienced so far this year in Siberia reflects temperature changes that weren’t generally forecast to occur until the end of the century. The rapid changes that are happening to the climate of the world’s northern regions means that even the infrastructure built on areas of continuous permafrost may soon be at risk, too. And that mitigation measures deemed appropriate now may soon be viewed as inadequate..And what’s true in the Arctic north of Russia may also hold in the Arctic north of the Americas. Most of Alaska is underlain by permafrost — continuous across the North Slope (the borough that covers the northern third of the state and is home to its oil production), discontinuous over most of the rest of the state. The risks that bedevil oil and gas infrastructure are no less severe here. .The U.S. Bureau of Land Management plans to open an Indiana-sized region of the National Petroleum Reserve-Alaska to new oil and gas development. Doing so is meant to be a boon to U.S. oil independence and Alaska’s state budget, capable of delivering 500,000 barrels of oil a day, according to BLM estimates..It could also be a curse. The bureau warns in its environmental impact statement that the new development could be responsible for greenhouse gas emissions equivalent to about 1% of the U.S. total in 2018. Increased industrial activity in the area, on top of the already altered landscape thanks to global warming, creates a host of risks to wildlife from polar bears to eagles and could lead to deadly walrus stampedes. Environmental groups vow to fight the move, which is expected to be finalized by the end of July..Whether oil companies will rush to pour their dollars into frontier exploration in a region that will expose them to unflinching scrutiny and, very likely, unwanted social media campaigns, is questionable — particularly at a time when those investment dollars have become scarce and companies are increasingly focused on the quick returns from investing in the shale deposits of Texas, New Mexico and other, more climatically benign, states..If the northern latitudes continue warming as they are, the implications will be grave for all of us..This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners..Julian Lee is an oil strategist for Bloomberg. Previously he worked as a senior analyst at the Centre for Global Energy Studies..©2020 Bloomberg L.P.

Bloomberg

Company

Financial Products

Enterprise Products

Media

Customer Support

Communications

Industry Products

Media Services

Follow Us

Bloomberg Customers

BloombergQuint

BloombergQuint

Arctic Oil Infrastructure Faces Climate Karma

Bloomberg Quint