Canada auctions Arctic oil rights

Friday, September 14, 2012

As the hunt for new energy resources intensifies, the warming Arctic climate prompts some oil exploration and production companies to look north for untapped petroleum sources.  Earlier this week, Royal Dutch Shell started drilling the first new oil well in the U.S. Arctic in over twenty years, only to have the drill ship pushed off the site by encroaching sea ice a day later.  But the United States is not alone in seeking to develop its Arctic energy resources, as other circumpolar nations offer upstream oil companies lease opportunities in the northern seas.

Last week Canada held an auction for oil lease rights to over 900,000 hectares (about 3,500 square miles) of the Beaufort Sea, the Arctic sea off the Northwest Territories and Yukon.  The auction was won by a small British oil company (reportedly staffed by only two people, for now) called Franklin Petroleum Ltd. for just $7.6 million, a fraction of the price paid by some auction winners In recent years.

This month's lease auction is not the first time the Beaufort Sea oil resources have been pursued.  Major oil and gas reserves lie under the Mackenzie River Delta, where the river flows into the Beaufort.  Other fields lie farther offshore in Canadian waters.  On the U.S. side, Alaska's Prudhoe Bay oil patch abuts the Beaufort.

Franklin Petroleum was named for Sir John Franklin, a British explorer whose 1845 expedition to the Canadian Arctic vanished.  The lost Franklin party triggered many subsequent expeditions to the Canadian Arctic, but only trace evidence of their fate was found.  This summer Canada launched another expedition to discover new information about the Franklin party; Canadian motivations appear to be a mix of archaeological research and promotion of popular awareness of Canada's Arctic environments and resources.  As international pressure on the Arctic grows in the coming years, public excitement about the Canadian Arctic may support Canada's claims of sovereignty over valuable lands and sea spaces.

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