Hot spots to fan the flames of oil's critics

Shell's Alaskan incident has raised more fears at the supermajors' move into new territories. Mark Leftly and Tom Bawden report

Tug boats battled 50 knot Arctic winds and 14-metre-high waves as they attempted to tie tow cables to the Kulluk oil rig. But Mother Nature won, leaving Royal Dutch Shell facing an unpleasant start to the new year when the Kulluk, which was carrying around 140,000 gallons of diesel, ran aground off the southern coast of Alaska near an uninhabited island.

There have been no signs of any oil leaks or environmental damage, while a Shell spokesman argues: "It's important to reflect that this is a maritime transportation incident, not a drilling incident. The core problem was the failure of the vessel towing Kulluk, the Aiviq, during exceptionally poor weather conditions."

Yet the problems have been seized on as another reason why big oil should not go near one Earth's last pristine ecosystems. Greenpeace blasted Shell for "staggering ineptitude" and campaigner Ben Ayliffe argues it is evidence "we're moving closer to a major catastrophe in the Arctic".

Shell has invested $4.5bn (£2.8bn) in Alaska as it seeks the oil needed to keep the world's ever-growing population warm, fed and on the move. Others have followed, though few doubt how difficult it is to drill in the Arctic, which includes territories belonging to Canada, Russia, Norway and Denmark.

US oil prices briefly fell below $92 a barrel on Friday, but this was due to fears over the US economy. Prior to 2007, the idea that oil could crash through the $100 barrier and then remain in or around that mark for several years seemed fanciful.

Now, that's the reality. As consumption increases, so the supermajors must check areas they previously wouldn't have ventured to find the vast reservoirs to sate demand and please investors with record profits and huge dividend pay-outs.

One problem is that they are under greater environmental scrutiny than ever before as a result of the BP and Transocean's Gulf of Mexico disaster in 2010. But all of the great new territories for oil exploration and production will prove difficult, and not all due to environmental issues.

Here are seven hot prospects – with real challenges ….

Iraq: North vs south

The south has long been the centre of Iraq's oil industry, while to the north the semi-autonomous Kurdistan's vast reserves have been neglected. This situation has changed in recent years, as $10bn of investment from foreign oil companies – including former BP boss Tony Hayward's venture, Genel – in Kurdistan shows.

Big Oil had been put off by a bitter row with Iraq's central government over who owns Kurdish oil. Last April, Kurdistan's regional government suspended oil shipments in protest at Baghdad's delay in disbursing $1.5bn owed to northern operators. Relations have improved, but the political situation is unstable.

Canada: Tar sands and the economy

Canada's oil reserves are the third largest in the world – the only problem is that most of it is in the form of tar sands, a mixture of bitumen, sand, water and clay.

The process of turning tar sands into oil is highly energy intensive, which means production is expensive and widely opposed on environmental grounds.

With the oil price expected to remain somewhere around its current, relatively high, level for some time to come, the Canadian tar sands industry is preparing to ramp up production. But backers are reluctant to finalise investments because they remain worried about the global economy.

The Arctic: Environment and the economy

The Arctic is one of Earth's last unspoilt environments and is home to important species of fish as well as endangered animals such as beluga whales and walruses. Shell is not alone in realising how much oil and gas lies beneath these treacherous waters, with BP and Russian majors among those seeking black gold.

Maria Damanaki, the EU's maritime commissioner, was moved to say "Arctic reserves could hold enough oil and gas to meet global demand for several years – this is a need the world economy has".

The Falklands: National battles

More than three decades after 900 British and Argentinian lives were lost over what the South American country calls the Malvinas, mutterings are again being heard over a potential for new conflict.

Just last week, Argentinian President Cristina Fernandez de Kirchner wrote an open letter to David Cameron in an advertisement taken out in several British newspapers including The Independent, demanding that the Falklands be returned to her country.

The difference now is that oil has been found in the North Falklands basin, with commercial production set to start in 2017. At present, most Falkland revenue comes from fishing.

East Africa: Taxation vexation

There were few regions hotter for prospectors in 2012 than East Africa. For years, small UK drillers hunted off the coast as majors turned their noses up when the fields turned out to contain more gas than oil.

However, Asian demand and the huge fields found have resulted in mind-boggling bids for small stakes in these projects, while ENI and Anadarko have teamed up to develop natural gas finds in the waters of Mozambique.

The problem, as Shell found when bidding for Cove Energy, is that governments are prone to changing tax rules to get a bigger share of the loot.

US: Fracking questioned

The US is set to leapfrog Saudi Arabia to become the world's biggest producer of oil by 2017, thanks to the controversial practice of fracking.

The technique, which involves blasting a mixture of sand, water and chemicals into shale rock to release hydrocarbons, has traditionally been used to extract gas. But it is increasingly used to produce oil in states such as North Dakota and Texas. However, a recent Opec report said the future of shale production is "likely to be beset by several constraints and challenges, such as environmental concerns, questions over the availability of equipment and skilled labour, rising costs".

West Africa: Political unrest

This side of the continent holds 45 per cent of its proven oil reserves, with major producing countries including Nigeria, Ghana and Angola. Already this year, Ivory Coast officials announced plans to increase production after finds by Tullow Oil and Vanco Cote d'Ivoire.

However, fears remain over the stability of countries only recently ravaged by war and corruption, as they do in North Africa post Arab Spring. The Ivory Coast's civil war claimed 3,000 lives in 2011 and Mali was hit by a coup last year.

PROMOTED VIDEO
News
Bryan Cranston as Walter White, in the acclaimed series 'Breaking Bad'
news
News
Those who were encouraged to walk in a happy manner remembered less negative words
science
Sport
footballChelsea 6 Maribor 0: Blues warm up for Premier League showdown with stroll in Champions League
Arts and Entertainment
Princess Olga in 'You Can't Get the Staff'
tvReview: The anachronistic aristocrats, it seemed, were just happy to have some attention
News
Renee Zellweger as Bridget Jones
i100
Life and Style
tech

Board creates magnetic field to achieve lift

News
ebooksAn unforgettable anthology of contemporary reportage
News
There have been various incidents of social media users inadvertently flouting the law
news

Life and Style
Stack ‘em high?: quantity doesn’t always trump quality, as Friends of the Earth can testify
techThe proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
News
Bourgogne wine maker Laboure-Roi vice president Thibault Garin (L) offers the company's 2013 Beaujolais Nouveau wine to the guest in the wine spa at the Hakone Yunessun spa resort facilities in Hakone town, Kanagawa prefecture, some 100-kilometre west of Tokyo
i100
Sport
CSKA Moscow celebrate after equalising with a late penalty
footballCSKA Moscow 2 Manchester City 2: Premier League champions let two goal lead slip in Russia
Environment
Sudan, the last male northern white rhino
environmentThe death of a white northern rhino in Kenya has left the species with a single male. These are the other species on the brink
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Helpdesk Analyst

£23000 per annum + pension and 22 days holiday: Ashdown Group: An established ...

Senior Helpdesk Analyst / Service Desk Co-ordinator

£27000 per annum + pension, 22 days holiday: Ashdown Group: An established ind...

Senior Pensions Administrator

£23000 - £26000 Per Annum: Clearwater People Solutions Ltd: Our client is curr...

Corporate Actions Administrator / Operations Administrator

£25 - 30k: Guru Careers: A Corporate Actions Administrator / Operations Admini...

Day In a Page

Indiana serial killer? Man arrested for murdering teenage prostitute confesses to six other murders - and police fear there could be many more

A new American serial killer?

Police fear man arrested for murder of teen prostitute could be responsible for killing spree dating back 20 years
Sweetie, the fake 10-year-old girl designed to catch online predators, claims her first scalp

Sting to trap paedophiles may not carry weight in UK courts

Computer image of ‘Sweetie’ represented entrapment, experts say
Fukushima nuclear crisis: Evacuees still stuck in cramped emergency housing three years on - and may never return home

Return to Fukushima – a land they will never call home again

Evacuees still stuck in cramped emergency housing three years on from nuclear disaster
Wildlife Photographer of the Year: Intimate image of resting lions claims top prize

Wildlife Photographer of the Year

Intimate image of resting lions claims top prize
Online petitions: Sign here to change the world

Want to change the world? Just sign here

The proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
Ed Sheeran hits back after being labelled too boring to headline festivals

'You need me, I don’t need you'

Ed Sheeran hits back after being labelled too boring to headline festivals
How to Get Away with Murder: Shonda Rhimes reinvents the legal drama

How to Get Away with Murder

Shonda Rhimes reinvents the legal drama
A cup of tea is every worker's right

Hard to swallow

Three hospitals in Leicester have banned their staff from drinking tea and coffee in public areas. Christopher Hirst explains why he thinks that a cuppa is every worker's right
Which animals are nearly extinct?

Which animals are nearly extinct?

Conservationists in Kenya are in mourning after the death of a white northern rhino, which has left the species with a single male. These are the other species on the brink
12 best children's shoes

Perfect for leaf-kicking: 12 best children's shoes

Find footwear perfect to keep kids' feet protected this autumn
Anderlecht vs Arsenal: Gunners' ray of light Aaron Ramsey shines again

Arsenal’s ray of light ready to shine again

Aaron Ramsey’s injury record has prompted a club investigation. For now, the midfielder is just happy to be fit to face Anderlecht in the Champions League
Comment: David Moyes' show of sensitivity thrown back in his face by former Manchester United manager Sir Alex Ferguson

Moyes’ show of sensitivity thrown back in his face... by Ferguson

Manchester United legend tramples on successor who resisted criticising his inheritance
Two super-sized ships have cruised into British waters, but how big can these behemoths get?

Super-sized ships: How big can they get?

Two of the largest vessels in the world cruised into UK waters last week
British doctors on brink of 'cure' for paralysis with spinal cord treatment

British doctors on brink of cure for paralysis

Sufferers can now be offered the possibility of cure thanks to a revolutionary implant of regenerative cells