Major battle looms over plans to explore for ‘extreme oil’

Following the catastrophic BP oil spill in the Gulf of Mexico, a major battle is now looming over fresh plans by oil companies to try and explore for and access so-called ‘extreme oil’.

With global reserves of ‘conventional oil’ running out, major oil firms are increasingly looking to do more deep sea drilling, including off the West of Shetland and in the Arctic, as well as exploit oil from tar sands in Alberta, Canada and other environmentally sensitive areas of the world.

The Guardian splashed on this today with its front page lead saying that BP have pulled out of a plan to join in with attempts to explore for oil reserves in so-called ‘Iceberg Alley’ near Greenland in the Arctic. The United States Geological Survey estimates that 90 billion barrels of technically recoverable oil lies in offshore reservoirs in the Arctic.

The explanation of BP’s pull out is most likely to be that the government of Greenland wanted to avoid fuelling the PR disaster. They have already faced media attention after granting licenses for deep sea drilling in the area to Exxon Mobil, Chevron and the UK-based company, Cairn Energy.

A Gulf-style ‘blow out’ in the Arctic would almost certainly be more devastating than the BP spill. The short summer window when conditions allow for drilling mean there simply isn’t time for a relief well to be completed – meaning a blow out in the area could see oil gushing for two years, with oil becoming trapped under thick ice.

With freezing weather, seas so much colder, and conditions much more challenging than in the Gulf of Mexico, the risks attached to any dangerous deep sea drilling are also higher. The risk of collision between oil rigs and icebergs means that companies already have to literally tow away some icebergs, water-cannon away others, and in some cases, move the rig quickly enough to get out of the path of the biggest icebergs.

The US Minerals Management Service estimates that there is a one in-five chance of a major spill occurring over the lifetime of activity in just one of the blocks of leases in the Arctic Ocean. The risk of an even more terrible accident than the BP spill, and the likelihood of any emergency response being hampered by the severe nature of the area and its remote location, explains why ‘extreme oil’ like this is turning into a major frontline for environmental campaigners.

Green groups are concerned that warnings from scientists of the need to leave much of the world’s remaining fossil fuel reserves underground are simply being ignored, but they’re also particularly concerned that Baffin Bay, near Greenland, where Cairn is already doing exploratory drilling. It is a particularly fragile habitat, home to 80 to 90 per cent of the world’s narwhals. The region also boasts blue whales, polar bears, seals, sharks, cormorants, kittiwakes and numerous other rare and migratory birds.

On Sunday, it was revealed that UK taxpayers are financially assisting Cairn Energy’s risky drilling projects through a £100m loan from the Royal Bank of Scotland. Among the 66 companies backed by RBS are well-known names like BP, Shell, ConocoPhilips, Tullow Oil, Trafigura and Cairn Energy.

Despite this, Cairn has refused to release their plans outlining how they’d respond in the event of a spill. Their CEO, the former Scottish Rugby player Sir Bill Gammell is on the record having said: “I learned a lot about the oil business from George W Bush” – somebody he worked with earlier in his career, after attending school with one Tony Blair.

Greenpeace have already begun a world wide campaign to go beyond oil, and the environmental group – who I should say I work for – has also already sent a ship to the Arctic to confront Cairn Energy, the first company to begin drilling there. Closer to home, pressure is mounting for the UK government to follow President Obama’s lead and introduce a moratorium on deep sea drilling in UK waters, something recently recommended by EU Energy Commissioner, Günther Oettinger.