The following article appears with permission from the author. It was first published in Issue 28 (February 2010) of Lloyd's Register's publication, Horizons.
According to US Geological Survey (USGS) assessments about 1669 trillion cubic feet (47 trillion cubic metres) of gas still remains to be found inside the Arctic Circle. This is about a quarter of the volume of proven global gas reserves, a huge amount considering the Arctic Circle encompasses only six percent of the Earth's surface area.
Based on current consumption levels this represents about an additional 15 years of supply. As well as the obvious extreme environmental conditions in the far north other factors have delayed previous efforts at exploitation. These have included concerns over damage to the unparalleled natural environment in the Arctic and agreement of mechanisms that could benefit the local communities, who in some cases own the land.
But the greatest obstacle is the lack of infrastructure in the Arctic to deliver the energy to the consumers. Clearly, the timing of development is dependant on the prevailing economic conditions; vast quantities of fairly cheap gas still remain to be extracted from less challenging fields. But despite the challenges northern states are still eager to support their economies and sell their hydrocarbon resources.
With new technologies maturing in other industries and closer accounting of total carbon dioxide emissions new alternative options become interesting and desirable candidates.
Since the energy crisis of the 1970s, when Arctic gas fields were first studied, several different methods have been proposed to bring the gas south. These have included:
These alternatives have their own pros and cons and as the technology has developed new opportunities have evolved for each solution. There is no one optimum solution that fits all projects; the optimal is sensitive to a number of different factors such as: the quantity of gas, production and transportation costs, impact on the environment, reliability in winter conditions and benefits to the Arctic economies.
In fact to properly assess the alternatives the complete supply chain from the well
to the market must be assessed, as well as consideration of the end use.
Using this total supply chain approach a study was carried out by Lloyd's Register to examine the technical pros and cons of alternative supply chain scenarios using Canada's Melville Island as a case study. Studies of this kind require assumptions that in time can prove inaccurate, for example earlier studies have favoured CNG shipment to a proposed northern gas pipeline that still remains on the drawing board. But also recent and expected technical progress must be considered.
Floating installations built in temperate regions are clearly advantageous given the short season for building onshore, the challenges of permafrost and the sensitive ecosystems. Ever since the Arctic Pilot Project of the early 1980s FLNG was seen as a viable strategy. In recent years many strides have been made in the area of FLNG, with several projects close to fruition. Proposals have also included trans-shipment to storage areas in ice free locations, such as Greenland's Disko Island, using Arctic LNG carriers.
The LNG could then be shipped further using conventional gas carriers. Once the first assets are developed within the Arctic subsequent gas projects will benefit.
Emerging regulatory factors will also favour other novel solutions, such as GTL. With increased pressure to use low sulphur fuel for road transport the demand for GTL fuel is set to rise.
The energy cost in producing GTL is currently higher than LNG, but the technology is evolving and the storage and transportation costs are lower. Floating GTL production units are currently under design and shipment could be handled by fewer and smaller ships compared with the equivalent heat content of LNG.
Looking further into the future other interesting technologies become attractive. Carbon capture and storage is seen as a viable strategy to reduce the amount of carbon dioxide in the atmosphere. However several challenges still remain, such as the opposition to storing gas in the rock formations under populated regions.
However, challenges also remain in creating the economic conditions to make large scale transportation of carbon dioxide a viable business proposition. However, developments in HVDC could provide solutions, as the losses to transport energy over long distances are significantly lower than High Voltage AC infrastructure. The hydrocarbons could then be harnessed directly using generating capacity in the arctic with the carbon dioxide captured and re-injected into the rock.
Arctic methane clathrate (or gas hydrate) is another resource that has recently caught the media's attention. The gas is caught within the structure of water ice and remains stable in the temperatures and pressures found just below the surface in permafrost. However some have predicted that global warming could cause the release this gas. According to studies by the USGS much methane clathrate lies below existing gas field infrastructure on Alaska's North Slope, making extraction feasible. But the safe and controlled release of the gas from the ice remains a challenge.
Recent studies have shown that carbon dioxide can be injected into clathrate formations resulting in the controlled release of methane as the carbon dioxide takes its place in the ice, thus maintaining the stability of the neighbouring methane clathrate. Therefore with the help of local power generation and HVDC infrastructure these alternative resources might find the market.
Christopher Ridgewell
Lloyd's Register's Senior Surveyor, Helsinki