Econintersect: Estimates for the production costs for arctic oil are ranging from $100 to $300 per barrel. And the estimates of how much may be produced for that cost are disappointingly low. Drilling in a region off the western coast of Greenland that was identified as a very promising area for oil has so far come up completely dry.The Greenland oil field that has so far not produced a sign of oil after $246 million spent on drilling is being downgraded by experts, including the U.S. Geological Survey. From Der Spiegel:
… the amount of oil that can actually be pumped out of this region is likely to be significantly lower than previous estimates indicated, according to the latest findings. Assuming production costs of up to $100 per barrel, only 2.5 billion barrels of oil could be lifted, according to the USGS calculations — and only with a 50 percent probability.
In order to reach further reserves, companies would have to spend much more. Even based on outlandish exploitation costs of $300 per barrel, only 4.1 billion barrels could be raised, with the same 50 percent probability. “And that is before paying a cent of tax or making any profit,” says Gautier.
The figures are based on statistical calculations and should therefore be treated with caution. But they indicate that only a fraction of the oil and gas believed to be in the Arctic could likely be exploited at economically viable costs. Canadian companies have already found that out for themselves. They carried out major exploration projects in the 1970s but ended up sealing off even promising test drillings because commercial production would have been too expensive.
The danger of causing environmental damage is a further factor. “Around the Arctic there is neither the technology nor the capacity to respond to oil accidents,” says Alexander Shestakov, the head of the WWF Arctic Program. “That isn’t just the opinion of an environmental organization, it’s an acknowledged fact.”
Source: Spiegel Online