Claire Hamlett, Climate Campaigner, BankTrack
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Arctic drilling and its impacts
The United States Geological Survey estimates that 30% of the world's undiscovered gas and 13% of the world's undiscovered oil is to be found north of the Arctic Circle. Of this oil, 84% - approximately 90 billion barrels - is expected to be found offshore, some of it in deepwater. Harsh conditions, low temperatures, operational windows cut short by the winter freeze-over, icebergs that threaten to collide with rigs and a delicate ecology that requires meticulous protection all conspire to make oil production here difficult, risky and expensive, possibly more so than any other region in the world.
Many social and environmental issues characterize Arctic drilling including:
- the contribution to climate change with some parts of the Arctic among the fastest warming areas on the planet, and the massive Greenland Ice Sheet losing ice at record rates,
- the impact of climate change which threatens the livelihood of local communities,
- the health impacts from contaminated water, species, and influence on air quality,
- the very high vulnerability of Arctic ecosystem to oil spills,
- the important threats towards wildlife.
A 2017 study commissioned by the Wilderness Society found that conditions in the Arctic mean development of its oil and gas reserves are costlier, riskier, and lengthier than such development elsewhere in the world, and that revenues and jobs projected to come from leasing land for development in the Arctic National Wildlife Refuge were based on "undiscovered economically recoverable reserves estimated using now-outdated financial data and technological assumptions." In addition, these projections "did not consider external costs such as climate change, loss of habitat, human health effects of the release of toxins, and spill preparedness and response."
Arctic oil and gas 'dodgy deals'
The largest producing oil field in North America is the Prudhoe Bay field, located within the Arctic Circle on Alaska's North Slope. The Trans Alaska Pipeline System (TAPS) includes the trans-Alaska crude-oil pipeline, 11 pump stations, hundreds of miles of feeder pipelines, and the Valdez Marine Terminal, to which oil is delivered from Prudhoe Bay. The North Slope is home to thousands of migratory birds, caribou, and other creatures. An oil spill in 2006 led to the oil field operator BP being fined $20million for neglecting severely corroded pipelines.
Alaska wants to develop a $43 billion LNG export terminal designed to commercialize the state's 34 trillion cubic feet of stranded North Slope gas, which would then mostly be sold to China. A 2017 study commissioned by Friends of the Earth found that LNG has an enormous climate footprint, due to methane leakage throughout its lifecycle as well as the significant amount of energy required to transport and freeze gas for export. Estimates of greenhouse gas emissions from LNG supply chains are nearly double those of average pipeline supply chains.
US Congress has approved a bill to open the Arctic National Wildlife Refuge (ANWR) up to drilling for oil and gas. The ANWR is a habitat for caribou, moose, black and brown bears, polar bears, seals, wolves, up to 200 species of migratory birds, and many species of fish and insects. The caribou population here has provided subsistence for the Vuntut- Gwich’in first nation for thousands of years. All of this is put at risk by potential oil and gas development.
Bank moves out of Arctic oil and gas
Some banks have begun to restrict finance for arctic oil and gas development. The following pages list the moves by international banks to restrict project finance and general corporate finance:
- Banks that ended direct finance for Arctic oil and/or gas projects
- Banks that restricted finance for Arctic oil and gas companies
What must happen
To avoid the devastating impacts of their investments, private sector banks must take steps to disengage from all activities and projects that substantially contribute to climate change and environmental and communities degradation, by ending support for all new oil extraction and delivery.