Struggles in Arctic: Risk is the Price

28 January 2013 1 comment

Development plans for the Shtokman natural gas field were put on hold this last summer as agreements expired between Gazprom, Statoil, and Total. The Shtokman Development AG, the corporation formed by these 3 players to explore the field, had a 5 year charter that expired in July with no further plans for cooperation.  During the most open Arctic sea ice season in history, the challenges posed by Arctic ocean drilling remain daunting and are still prohibitory.  The Development AG was created to share the risk of Arctic operations among the 3 participants. Not only are the costs of operations, risks, and precautions extraordinary in the Arctic, but the unimaginable cost of cleanup of an accident in this harsh, remote, offshore environment remains staggering and damning.

The Shtokman natural gas field has been a viewed as one of the most feasible gems in Arctic Hydrocarbon exploration. Several factors make this play so enticing, including it’s promising reserves, but more importantly its location.  Located in the Barents Sea approximately 600km north of Murmansk, RU, the Shtokman Field is relatively close to the largest city in the Arctic. This means it has (relatively) easy access to the drilling infrastructure and equipment. It also means that in the case of an emergency, rescue and spill response teams  will be better able to assist in support and clean up. Location is also a crucial factor in that it is located near some of the warmest (again relatively) waters within the Arctic Ocean.  This corner of the Arctic is home to the 10 biggest cities in the Arctic because of the warm waters brought to this area at the tail end of Gulf Stream which keeps waters warm and ice-free.

While exploration of this play will certainly continue, this breakdown in cooperation shows hesitation in response to the great uncertainty present in this last frontier.  Risk is inherent in Arctic operations. A unquantifiable risk poses a difficult question of when to proceed in increasingly difficult plays, especially in the recent volatile global natural gas market.

Categories: Energy Tags: ,

Why We Sport

22 October 2012 Leave a comment

In a cliché storyline, the sports world has been “rocked” by a doping scandal. Because of overwhelming circumstantial evidence and numerous first-hand teammate accounts, Lance Armstrong was retroactively stripped of his seven Tour de France titles. The ruling, administered by the International Cycling Union (UCI) seven years after his last title, was handed down after Armstrong refused to continue appealing the findings of a report issued by the US Anti-Doping Agency (USADA).

Lance Armstrong represents a classic hero who overcame cancer and went on to become the greatest cyclist in history. He single handedly made cycling a noteworthy sport. He represented a champion, hoisted to victory only because of a complex team of support riders. Head of a popular foundation, he made a great storyline and represented a role-model far beyond racing. His storied career ends with the president of the UCI saying “he deserves to be forgotten” by the sport.

To be clear, I am in no way condoning doping or cheating in any realm of life, be it sport or otherwise. However, before we condemn Lance Armstrong to the depths of sporting purgatory, it is necessary to understand what exactly we mean by sport. The objective of sport is to attain maximum human performance within a set of constraining rules. In effect, it creates an alternate world where new constraints force competitors to maximize their abilities based on limits of that world. It has an objective and stated regulations. It is to the advantage of each competitor to exercise every advantage at their disposal in order to reach maximum performance within those rules. Cycling, as with any sport, explicitly states its rules so that competitors may train to maximize their ability. This includes certain tests to make sure they are conforming to the rules; these tests in effect constitute the rules.

Lance won 7 consecutive Tour de France titles all while passing these UCI mandated drug tests. He maximized his performance within the stated rules. Now, if the UCI chose to overlook some circumspect test results, that is a problem. But doing everything in his power to maximize his ability while abiding by the rules (apparently or actually— I argue the distinction is moot), that is sport. Retroactively prosecuting an athlete is akin to changing the rules, or moving the goal posts.

There have been many moral arguments made about how “cheating is bad”, and “Lance is no longer a role-model for our kids”. Sport takes place in an alternative world, one where we sanction punches to the face and have to state that attacks “below the belt” are disallowed. Morals are not implicit in sport! We admire athletes for one reason: physical ability. We don’t ask them to solve engineering problems or draft peace accords, so why is that we chastise them for moral misgivings? Why do we expect athletes, who we routinely stereotype as scholarly inept, to serve as our moral beacons?

Babe Ruth could hit and pitch, all while smoking, drinking, and womanizing. Tiger Woods was winning ½ the tournaments he entered, even if he didn’t maintain the most wholesome personal life. It’s most likely that Lance took performance enhancing drugs to maximize his physical ability to compete. If he failed to meet the objectively stated rules, then yes, punish him appropriately. But if we are punishing him based on subjective criteria that we are superimposing on the most explicitly objective of human activities, then we are we are failing to understand why we sport.

Categories: Musings Tags: ,

We don’t make heroes anymore

14 October 2012 Leave a comment

Today I watched a man rise to the edge of space, and then with a brief salute, hurl himself back to the Earth. He went higher than anyone in a balloon ever has, and he fell. He fell faster than any human in history, breaking records that have stood for over 60 years. Born in the 80s, I never had an Apollo moment. I’ve never experienced genuine awe. I’ve never had a hero. That all changed today. Felix Baumgartner spent 2 hours climbing to the edge of space and 5 minutes coming back. When that capsule door opened, and that stark line between the Earth and space became visible, Felix stood up, walked to the door, and jumped. He selflessly threw himself into a perilous freefall, exposing himself to the harshest environment we’ve ever journeyed. He went to edge of human existence and pushed it further. That is what a hero does. That’s what Armstrong, Aldren, and Collins did. Today, I found my first hero.

Prospecting on Greenland: Speculations on Economics and Sovereignty

13 September 2012 1 comment

The island of Greenland has a long and storied past. It has been inhabited continuously, though sparsely, for over 800 years, and intermittently since 2500BC. Long falling under the Kingdom of Denmark, in 1979, Greenland was granted Home Rule allowing it to exercise semi-autonomy on some political, economic, and social issues. In 2008, Greenland passed a referendum reaffirming home rule and acceding to Self-Rule, moving one step closer to sovereignty.

Greenland is a fascinating island in that it has a huge but mostly uninhabitable landmass. It’s 25% bigger than Alaska, but with 1/6th the population. It’s not only a very small country by population (~55,000 inhabitants) it’s also a very young country, only having semi-autonomy for 33 years. This politically young, environmentally dynamic country will face unique and complex problems brought on by climate change. Not only will they face enormous challenges in managing their own systems and resources, they are also likely to face an influx of outside pressures as to how they should proceed.

From what’s known about Greenland’s coastal geology, it is likely that the island contains significant amounts of precious metals and minerals (in addition to the substantial known hydrocarbon reservoirs). Climate change, through receding glaciers, is likely to expose large tracts of land bearing these coveted reserves. This is already piquing global interests from Europe to Australia, within both governments and mining companies alike.

The economic potential for Greenland is huge. Currently, Greenland is economically dependent on its fishery. Opening of its frontier to mineral exploration will present an economic boom. Revenue from increased mining will bolster Greenland’s government, giving them a much firmer hand in political discussions with Denmark. One foreseeable path is that this will lead to further self-governance and ultimately independence from Denmark.  There will reach a point when Denmark has little left to offer that the Greenland can’t secure for itself either through trade or collaboration with other Arctic nations. This path requires strong leadership and firm negotiations with mineral companies to make sure that Greenland receives an appropriate amount of mining revenue and that regulations are followed. It may also be preferable that the mining be conducted by domestic companies thereby forcing the development of manufacturing and support industries which may help diversify the economic base. This will require great foresight and adept policy making; the kind forged through years of hard fought progress. This path may provide an equitable and environmentally balanced approach to the future of Greenland as it continues to grow into a major player on the world stage.

A second, more problematic path feeds on the weakness of burgeoning political institutions. Though they have strong political models to follow, it is always tempting for new governments to slip into the curse-of-natural-resources. With great economic wealth on the horizon, it may be easy for Greenland’s leaders to open up bidding to the highest company, outsource the manufacturing, development, and planning jobs; get paid for their resources; and have nothing else to show for it. Nascent governments may have undeveloped or underdeveloped regulations and/or enforcement mechanisms that allow for excessive contamination and recklessness that may result in environmental impacts, and squandered opportunities.

The third, and most likely approach is that Greenland will take advantage of both its mineral assets and its political relationship with Denmark to develop a hybrid, balanced approach building off established regulation models. Greenland does have a Bureau of Minerals and Petroleum and has already established a progressive exploration block licensing program. Legislation has been passed in 1965, and updated in 1978, as well as 1991 (a nice, though dated summary of Greenland Mining Policy see here). Current legislation focuses more on rent recovery and taxation with less emphasis on environmental protection and enforcement measures.

There are many complex questions associated with mining development.  Mines require technical, intellectual, and physical workers; more than a small population can support. Managing boom-towns is always a difficult proposition.  Mines also require support and service industries, possibly furthering the rapid, short-term, short-lived growth. Finally, there is always an environmental legacy of mining.  Whether it be accidents, pollution, contamination, or just landscape reshaping, Greenland will be forever shaped by the next chapter in its history.

Managing natural resource wealth is immensely difficult. There are few examples of safe, effective, and equitable resource nations, and with the size of Greenland’s economy, it will undoubtedly become dominated by the resource industries. Greenland is being presented a great opportunity to become economically advanced and diversified. Attaining that economic development in balance with its unique cultural and physical environment is monumental challenge. The rest of the Arctic is looking to Greenland, for how Greenland proceeds will set a precedent for the rest of Arctic development.

Categories: Economics, Politics Tags: ,

Polar Bear Protest Ends in Arrest

8 September 2012 Leave a comment

In a symbolic protest Greenpeace activists  dressed as polar bears were arrested by Russian police. The protesters were blocking access to the Gazprom headquarters in Moscow with blocks of melting ice. 10 people were arrested, 4 of whom were dressed as polar bears. The protest was staged in objection to drilling projects in the Barents Sea, and comes just days after the European Commission launched an anti-trust investigation into a 2009 event when the Russian state-owned Gazprom cut supply to Ukraine over pricing disputes.

This appears to be an opportunistic protest with Greenpeace seizing a moment when Gazprom is already in the spotlight for dubious monopolistic/politically-motivated actions, unrelated to environmental concerns. Greenpeace is calling for an Arctic nature preserve that would prohibit natural resource exploitation and industrial fishing, and is largely absent from economic debates.

Russia, a dominant player in global hydrocarbons, is especially dominant in the European natural gas market. The investigation is focused on Gazprom’s operations in Eastern Europe. The proximity of these countries to Russia and the nature of the commodity itself  presents Gazprom with a natural monopoly. The actions of concern are whether or not Gazprom used this advantage to unjustly control prices, and/or to control supply for political advantage. Russia already has pipeline infrastructure supplying natural gas to Europe, and much of Europe is already dependent upon Russian natural gas, so it is in the interest of both parties to find an amicable solution. The economic issues in discussion are Gazprom’s real issues this week, but Arrested Polar Bears make for a much better picture than Economic Discussions.

Categories: Economics, Energy Tags: , ,

Arctic Sea Ice: A New Minimum, Again

3 September 2012 Leave a comment

The Arctic sea ice extent has reached a new record low with 2 weeks left to go in the melt season. This marks a more than 40% decline in sea ice minimums over the last 40 years.  Moreover, this new record low comes in a series of months and years of perpetual record breaking melt seasons, with the 6 lowest annual sea ice minimums being recorded in the last 6 years.  Until this year, 2007 held the record reaching then-unfathomable minimum of 4.2 million sq.

miles. This was thought to be due to a confluence of several climatological factors coinciding to produce a shockingly high rate of melt. The 2007 event, like most climate change events, was interpolated as an extreme,  once-in-a-lifetime type event. It’s only when the record is re-broken in short succession by an even stronger melt event, that we start to realize this is not a coincident, but a long-term, severe pattern.

Conservative estimates garnered from the IPCC 4AR suggest that we may see an ice-free Arctic sometime in the latter half of this century. The more progressive estimates suggest this may occur by mid-century. Until this year, the most extreme estimates put an ice-free Arctic as decades off.  Now some experts are saying this may happen before the end of the current decade.

What does an ice-free Arctic mean?

Sea Ice is classified by its age: first-year, second-year, and multi-year. First-year ice is what forms every winter. It can be up to ~1 meter thick. Though it’s tough going, most Arctic Class icebreakers are able to break through ice of this thickness. If first-year ice persists through the summer, it becomes second-year ice and can grow up to 2m thick. Anything beyond 2m thickness is generally referred to as multi-year ice and can be up to 20m thick at ice-ridges. Second-year and multi-year ice creates nearly impenetrable ice packs. While first-year ice will always reform during the winter, an ice-free summer would eliminate all multi-year ice. The subsequent summer would only have thinner, first-year ice which is less likely to persist through the summer, making it very difficult for multi-year ice to reform.  If the Arctic was to experience an ice-free summer, it would signify that a dramatic threshold had indeed been crossed. This, in conjunction with the associated changes in albedo, creates a pretty strong positive feedback loop, which may entrench the ice-free pattern for the foreseeable future.

A completely ice-free Arctic is unlikely for several decades, as the thickest and most stubborn ice is landfast against the brutally harsh north shore of Canada. But landfast ice is of  little concern for mariners as its location is known and predictable. It’s the large, thick, drifting ice packs that provide that largest impediments to Arctic access and nautical navigation, and these would be eliminated by an ice-free summer.

Categories: Climate Tags: , ,

Greenland Melting 2012

31 August 2012 1 comment

Extent of surface melt over Greenland’s ice sheet on July 8 (left) and July 12 (right). By July 12, nearly 97% of Greenland was experiencing surface thaw. Image Credit: Nicolo E. DiGirolamo, SSAI/NASA GSFC, and Jesse Allen, NASA Earth Observatory

The mighty Greenland Ice Sheet retains enough water to raise global sea level by 7 meters. Luckily, the bulk of the ice sheet resides at altitudes greater that 1000m meaning most of it rarely is exposed to melt; that is until now. Summer heat records were broken around the world this summer with the Continental US recording its hottest June ever. This heat also found its way to Greenland where melt was recorded at higher elevations on the ice sheet than ever before. Generally, the portion of the ice sheet exposed to melt during a season looks like the map on the left, with melt occurring along the lower elevation periphery while the high elevation dome remains untouched. This year however, melt reached nearly all of the surface (97%).

Ice sheets are controlled by a complex set of mechanisms and physics that result in a dome shaped pile of ice. Simply put, when they’re cold, they flow slow; when they’re warm they flow faster. They’re affected by air temperature and sea temperature, but also by melt water formed on the surface of the glacier. Water, which is denser than the ice, has the potential to flow down beneath the glacier which lubricates the bed and allows for faster flow. Normally, melt is constrained to the lower portions of the glacier and the upper elevations flow very slowly until they reach the melt zone. This year however, melt reached far higher elevations than usual. This is cause for concern because melt at higher elevations has the potential to lubricate and accelerate a larger area of the ice sheet. This is further complicated by a feedback measure by where faster ice, by laws of conservation, becomes thinner ice. Thinner ice sheets lower in elevation, thus exposing more of the ice sheet to to melt, thus completing the feedback mechanism.

While a single year of anomalously high reaching melt in itself will not have much impact on the ice sheet, this, in conjunction with gigantic icebergs breaking off of Petermann Glacier and record breaking velocities of the Jakobshavn Glacier presents a strong argument for an ice sheet, and a climate, in change.

Categories: Climate Tags: ,