1. The High North
The Natural Resources
The Northeast Passage
Jan Magne Markussen
Managing Director, Senior Research Fellow
Ocean Futures, Oslo
Norwegian Business Delegation to The Republic of Korea
Seoul 15 May 2012

2. Part 1: Introduction
Ocean Futures, Oslo © 2012. All rights reserved

3. Natural Resources – Oil and gas
Possibilities
– 22% of the Undiscovered petroleum resources
in the High North
– New Border with Russia in the Barents Sea
– New Petroleum Province in the Barents Sea due to recent, major
petroleum discoveries
– 5 May 2012: Agreement between Rosneft and Statoil
Uncertainties
– The remaining 78%
– Shale gas
– Cost

4. Northeast Passage
Possibilities
– Strong Increase in the Number of Sailings
– Increased Sailing Season
– Improved Ice Conditions
– Significantly Bigger Ships
– Increased International interest
Uncertanties
– Commercial TEST sailings
Major Shipping Focus in the High North
– Destinational Shipping
– Intra Arctic Shipping

5. Environment
Major Paradox
– Global Climate Change has created the
opportunities
Necessary Focus on the Environment
– We are witnessing the fastest and biggest changes
in the Climate in the High North
– Resources explotation and transit sailings must be
done in an environmentally sustainable way

6. Part 2: Ocean Futures
Ocean Futures is co-located with the FAFO research center in Oslo

7. Ocean Futures Competence
• Independent, multidisciplinary research
institute
• Polar regions, oceans and seabed
• International projects
• Holistic approach
• Cooperation with foreign and Norwegian
research communities - and with
representatives of industry and shipping.

8. Ocean Futures Projects
(High North Projects 2012-2011)
• November 2012: The Shipping in Arctic Waters-
report will be published as book on Springer
Verlag
• September 2012: Circumpolar Maps
• May 2012: Planning Document for “The First
International Narvik Conference on Arctic Ports”,
to be Organized 9-11 April 2013

9. • April 2012: The Fishing Fleets Future
Framework Conditions
• May 2011: Arctic Wiki
• April 2011: Arctic Shipping – The Effects for
Northern Norway

10. • April 2011: Arctic Shipping – Status and
Research Gaps
• March 2011: Natural Resources in the High
North
• March 2011: Safety at Sea in Northern, Ice-
Covered Waters

11. New Ocean Futures High North Programme
from October 2012 Focusing on:
• Natural Resources
• Trade Flows
• Ports
• Shipping
• Logistics
• Environment
• Safety at Sea
• Industrial Development

12. Ocean Futures organisational CV
• The org CV is available by contacting
janmagnemarkussen@gmail.com
(temporary address)
• Ocean Futures new web site will be available July
2012

13. Part 3: Northeast Passage
Danish vessel Nordic Barents sailing through the Northeast Passage Oct 2010

14. Part 3 A
Some Introductory Remarks

15. Research on Arctic Shipping
1. The International Northern Sea Route Programme (INSROP) was a six-
year (1993-1999) international research programme (Russia, Japan and
Norway) that produced 167 working papers, and several articles, reports
and books.
2. Arctic Marine Shipping Assessment (AMSA) report (2009), Arctic Council.
3. Ocean Futures completed in May 2010 a multi-disciplinary 339-pages
study, Shipping in Arctic Waters, to be published by the Springer
publishing house in November 2012.
The study compares the Northeast, Northwest, and Trans Polar Passages,
and includes natural resources, infrastructure, geopolitics, legal issues
and environmental aspects.
Initiated by Ocean Futures, commissioned by CHNL, financed by
Innovation Norway, CHNL and Ocean Futures.

16. Northeast Passage
• Northeast Passage (NEP): connects the Atlantic
Ocean and the Pacific Ocean on the northern
coast of Eurasia, from Murmansk to the Bering
Strait.
• Northern Sea Route (NSR): The main stretch is
known by its Russian name, the Northern Sea
Route.
• The difference between NEP and NSR is that the
former consists of NSR in addition to the Barents
Sea.

17. Displaying two shipping routes. The Northeast
Passage (red) compared to the Suez Canal route
(yellow)
Source: PAME 2006

18. Types of Shipping
• Intra-Arctic shipping is shipping between
destinations within the Arctic Ocean, for example
between Dudinka and Murmansk.
• Destination-Arctic shipping is shipping from the
Arctic to destinations outside the region, for
example between Murmansk and Rotterdam.
• Transit-Arctic shipping is transit sailings between
ports in the Pacific and the Atlantic Oceans via
the Arctic Ocean, for example sailings from ports
in Japan to ports in Germany, via the NEP.

19. Ice Conditions in the Arctic
• The extent of the Arctic sea ice was at its second lowest
in the satellite record, on 9 September 2011.
• The minimum extent was only slightly above 2007, the
record low year, even though weather conditions this
year were not as conducive to ice loss as in 2007.
• Northeast Passage had a record long sailing season in
2011, spanning from 29 June to November 18 (Barents
Observer, accessed 20 December).
• The Northwest Passage was open for a period during
September.

20. Sea ice extent in the Arctic
September 18 2011.
Source:
National Snow and Ice Data
Center, Boulder, CO

21. Part 3 B
Northeast Passage
Status and Prospects

22. Northeast Passage Sailings
Some Transit-/Destination Sailings Summer Seasons 2009 og 2010
Owner Ship Dwt Destinations Cargo Comments
(Date)
Beluga Shipping MV Foresight 12 000 Ulsan (21.08.09) - Components to First foreign ship in
Group Novy Port (07.09.09) power plant transit through the
MV Fraternity 12 000
- Northeast Passage
(NEP)
Murmansk-
Beluga Shipping MV Houston 12 000 Norrkoping - Components to Destinational
Group Novy Port (26.07.10) power plant shipping, where
MV Fortitude 20 000 parts of the NEP are
used
Murmansk Shipping Indiga 16 000 Murmansk Diesel fuel Startet the transit
Company Varzuga 16 000 (14.07.10) - Pevek season 2010
(22.07.10)
Sovcomflot SCF Baltica 100 000 Murmansk Gas condensate The biggest gas
(14.08.10) - Pevek transport in transit
through NEP in 2010
(25.08.10) -
season
Ningbo (Kina)
(06.09.10)
Nordic Bulk Carriers MV Nordic Barents 41 000 Kirkenes (04.09.10) Iron ore First foreign bulk
- concentrate ship in transit
Kina (30.09.10) through NEP
Norilsk Nikkel Monchegorsk 18 000 Murmansk Metal concentrate First ship without ice
(15.09.10) - Dudinka breaking assistance
- in transit through
NEP
Shanghai (17.10.10)
Russian state owned Georg Ots 12 600 Murmansk Passenger ship First passenger ship
(09.09.10) - Anadyr in transit through
(26.09.10) - NEP
Petropavlovsk -
Vladivostok
(10.10.10)
Source: Ocean Futures 2011

23. Northeast Passage Sailings Cont.
Some Transit-/Destination Sailings Summer Seasons 2011
Cont.

24. Some Transit-/Destination Sailings Summer Seasons 2011 Cont.
Sources: Ocean Futures 2012 and CHNL 2012

25. Volume of transit-Arctic shipping cargoes
transported on the Northeast Passage
in 2011
Volume of transit cargoes transported on the Northeast Passage in 2011
Cargo Volume ton Voyages
Gas condensate 600 607 9
Kerosene 64 500 1
Diesel fuel 21 409 5
Iron-ore concentrate 109 950 3
Fish 27 535 4
General cargo 10 930 4
Total 834 931 26
Source: CHNL’s High North Logistics Information Office

26. Part 3 C
Northeast Passage
Some Additional Comments

27. Developments Last Year
Within Transit Sailings
• The number of transit sailings have increased considerably
(32/34 in 2011)
• The ships are becoming increasingly bigger – cf the 162.000
Capesize “Vladimir Tikhonov”
• Different types of raw materials are still being transported
• Ice conditions have been extremely good last two seasons
• The sailing season has increased due to the ice conditions
• Russian sailings versus Western and Asian sailings
• We are still talking about commercial test sailings
• Test sailings without ice breaker support cause
environmental challenges – how safe is this?

28. Part 4: Natural Resources
Melkøya, Finnmark Foto: Allan Klo.

29. Why Are Northern and Arctic
Areas Attracting so Much Interest?
1. Resources, especially oil and gas - plentiful
2. Climate change and global warming – easier access
3. The new boundary line in the Barents Sea
between Norway and Russia
4. Military-strategic issues - less prominent
5. Increasing interest in northern and Arctic affairs on the part
of non-Arctic states

30. The New Boundary Line in the Barents Sea
© Ocean Futures 2012. All rights reserved.

31. Petroleum Exploitation in the
Norwegian Part of the Barents Sea
• In 2007, Norwegian LNG plant in Melkøya in the
Barents Sea started to produce and ship liquefied gas
from Snøhvit field for export.
• The oil field Goliat is expected to start producing in
2013, but it is still uncertain how much it will
produce and thus how much will be transported at
sea.

32. • Two more discoveries in April and August 2011:
– Skrugard, a large oil field and Norvarg, a
significant gas field in the Barents Sea,
respectively.
• In January 2012, Statoil announced that they had
found another oil field, Havis, only 7 kilometers
Southwest of Skrugard.

33. • Combined, Skrugard and Havis are the 16th largest
discovery on the Norwegian continental shelf all-
together and the volume lies in the range of 400-600
million barrels of recoverable oil equivalents
(statoil.com and e24.no, 9 January 2012, ).
• Havis is the second most significant oil discovery in
the Barents Sea in nine months. It has approximately
the same volumes and reservoir properties as that of
its twin Skrugard.
• With these two significant findings, a new petroleum
province opens in the Norwegian part of the Barents
Sea.

34. Share of World Reserves of Oil and Gas 2010
Country Oil (bbs) % World Gas (tcm) % World
___________________________________________________________________
United States 30.9 2.2 7.7 4.1
Canada 32.1 2.3 1.7 0.9
Russia 77.4 5.6 44.8 23.9
Norway 6.7 0.5 2.0 1.1
Arctic states 147.1 10.6 56.2 30.0
total
World total 1383.2 100.0 187.1 100.0
Source: BP Statistical Review of World Energy June 2011

35. Arctic Areas Share of Oil and Gas
Reserves of Arctic States in 2007
At end 2007 Arctic share At end 2007 Arctic share
billion total tcm total
barrels Oil reserves Oil Natural Gas reserves
Natural Gas
United States 4.2 20.0 % 0.18 3%
Canada 2.0 0.1 % 0.16 10 %
Russia 59.2 75.0 % 38.07 90 %
Norway 0.2 2.0 % 0.21 7%
Arctic total 65.6 5.3 % 38.41 22 %
Source: BP Statistical Review World Energy June 2008 and Arctic Oil and Gas 2007

36. Arctic Proven Reserves of Oil and Gas
• Oil: 5.3% of world reserves
• Gas: 22.0% of world reserves
Arctic Production of Oil and Gas
• Oil: 10.0% of world production
• Gas: 25.0% of world production
of which
Russia produces 80% of the oil and 99% of the gas

37. Oil and Gas in the Barents Sea
© Ocean Futures 2012. All rights reserved.

38. Arctic Undiscovered Oil and Gas
US Geological Services estimated in 2008 that
22 % of world undiscovered O&G (o.e.)
are to be found in the Arctic
- 13% of undiscovered oil
- 30% of undiscovered natural gas
- 20% undiscovered NGL
(Arctic defined as all land and sea territory north of the Arctic Circle)

39. In the Arctic, but where?
ProvincesMMBO Million barrels of
Oil Oil Provinces (Mil Natural Gas Billion cubic feet
oil Provinces
barrels Oil)
Arctic Alaska 29.960.94 West Siberian Basin 651,498.56
•Natural Gas
Amerasia Basin
East Greenland Rift
9,723.58 East Barents Basin 317,557.97
Basin 8,902.13 Arctic Alaska 221,397.60
MMBO (Million barrels Oil)
East Barents Basin 7,406.49
•Natural Gas Provinces
West Greenland-
East Canada 7,274.40
Sub total (70.3%) 63,267.54 Sub total (71.3%) 1,190,454.10
•vinces
Total Arctic 89,983.21 Total Arctic 1,668,657.84
•MMBO (Million barrels Oil)
•Natural Gas Provinces
•SSSOurceSourceBCFG (Billion CF

40. Source: US Geological Survey

41. Will the 22% undiscovered Arctic
petroleum resources be found and
recovered?
Probably yes

42. BUT
Let’s not forget the other 78% of the world’s
undiscovered oil and gas!
Where are they?

43. In areas of the world that are climatically friendlier
and much less costly to develop.
Some Examples
1. Four West African geological provinces from Senegal in the northwest, almost
uninterrupted to Namibia in the south. OIL – 72 billion barrels. GAS – 187 trillion
cubic feet. NGL – 11 billion barrels.
2. 22 geological provinces in Southeast Asia. OIL – 22 billion. GAS – 299 trillion cubic
feet.
3. Geological provinces in the eastern Mediterranian and Egypt. OIL – 3,5 billion
barrels. GAS – 345 trillion Cubic feet.
Source: EIA, US Dept of Energy

44. Costs
Estimates suggest that costs of developing onshore gas
projects in Alaska can be 50-100% more than similar
projects in Texas.
Estimates of cost of offshore exploration and
development in the Arctic vary from twice to four times
or more as financially demanding as elsewhere.

45. To be profitable Arctic oil and gas activities are
dependent on high prices and strong demand, or, put
differently, weak or insufficient supply from other
sources.
This is precisely the «condition» that does not obtain
today as far as Arctic offshore gas is concerned.
The main reason:
US Shale Gas

46. Potential Shale Gas Producers
(onshore)
(Select countries)
• UK 200 trillion cubic feet
• Poland 187 - « -
• France 180 - « -
• Norway (existing offshore
• gas reserves 72) 83 - « -
• Ukraine 42 - « -
• Sweden 41 - « -
• China 1,275 - « -
• US 862 - « -
• Canada 388 - « -
Source: Energy Information Admnistration (EIA), US Dept of Energy

47. When and how fast Arctic petroleum resources will be
developed will depend on
1. The state of the world economy.
2. On economic growth in the big energy consuming countries that
now experience little or anaemic growth, for instance in the US and
Europe.
3. On demand in emerging market economies like China and India
that now grow somewhat less strongly than in past years.
4. On availability of sources of supply not located in the Arctic of
which there are plenty.

48. Part 5: Announcements
Port of Narvik

49. First International Narvik Conference on Arctic Ports
Narvik 9-11 April 2013
The Conference will be focusing on Resources, Trade Flows, Shipping, Ports,
Logistics, Environment and Industrial Development.
For further information please contact:
• Rune Arnøy, Port of Narvik, Conference Co-Chairman ra@narvikhavn.no
• Jan Magne Markussen, Ocean Futures,
Conference Co-Chairman/responsible for the programme
janmagnemarkussen@gmail.com (temporary address)
• The planning document for the conference is available by contacting Jan
Magne Markussen
Conference organizers
In coop with

50. New Book November 2012
SHIPPING IN ARCTIC WATERS
written by
Willy Ø streng, Karl Magnus Eger, Arnfinn Jørgensen-Dahl, Brit Fløistad,
Lars Lothe, Morten Mejlæ nder-Larsen and Tor Wergeland
Approx. 500 pages
To be published by Springer Verlag
in cooperation with Ocean Futures
Available from Springer.com and book shops

51. A special thanks to my colleagues
Senior Research Fellow, Dr. Arnfinn Jørgensen-Dahl,
Ocean Futures
Researcher Ø ystein Russ Kristiansen,
Ocean Futures

52. Thank you for your attention
janmagnemarkussen@gmail.com
(temporary address)