The New Cold War – Canada fires the first shot

By Frank Came
September 2008

The Author is Editor of GLOBE-Net – a division of the GLOBE Foundation – which provides a distinctly Canadian window on the global environment industry and allows potential buyers and sellers of environment-related goods, services and technologies to be better informed on what Canada has to offer.

“We know from over a century of northern resource exploration that there is gas in the Beaufort, oil in the Eastern Arctic, and gold in the Yukon.  There are diamonds in Nunavut and the Northwest Territories, and countless other precious resources buried under the ice, sea and tundra,” said Prime Minister Stephen Harper on the eve of his most recent visit to Canada’s Arctic.

And in no uncertain terms, he made it clear Canada was not going to let access to those riches slip away from Canada’s control. By extending Canada’s jurisdiction over the Arctic waters to 200 nautical miles – doubling the range at which Canada’s environmental laws and shipping regulations could be enforced – the Prime Minister emphasized that our environmental standards and sovereignty are not up for debate. “...if you are in Canada’s Arctic you will be playing by Canada’s rules,” he stated.

Change in Permanent Arctic Sea Ice Coverage
Arctic roll-back
Source: National Snow and Ice Data Center (NSIDC)

His concern is prompted in part by competing claims to the Arctic seabed by American, Russian and Norwegian authorities, and by the fact that global warming has led to a record decline in the size of the polar ice cap. For the first time ever, both the Northwest and the Northeast Passages of the Arctic Ocean are free of ice, and as the ice disappears, the previously impossible becomes potentially profitable – commercial navigation across the top of the earth.

“Whether it is the thawing of the Northwest Passage or the suspected resource riches under the Arctic seabed, more and more countries are taking an interest in the waterways of the Canadian Arctic,” said Harper.

And the federal government is putting its money where its mouth is. In addition to the establishment of new protected areas for polar bears, bowhead whales and other animals in Nunavut and allocating $100 million for a five-year program of geological surveys of the Arctic Ocean, the Prime Minister announced construction of a new polar class ice-breaker to replace the aging Coast Guard vessel the “Louis St. Laurent” which will be retired by 2013. The new $720 million Polar class icebreaker, to be named after former Prime Minister John G. Diefenbaker, will possess greater icebreaking capabilities than any other vessel currently in the Canadian fleet. 

At one time, possession of the most powerful ice breaker was the key to the assertion of sovereignty in treacherous, ice packed Arctic waters. But the huge decline in seasonal sea ice (see chart) and advances in shipbuilding have rendered that advantage obsolete.

Samsung Heavy Industries has constructed one of the most advanced Arctic oil tankers in the world, the Vasily Dinkov, for Russian shipping company Sovcomflot Group. The ship is fitted at one end with an ice-breaking bow and at the other with a more conventional open-sea bow. The tanker can ply the open sea or plow through ice without sacrificing fuel efficiency.

Declining Extent of Arctic Sea Ice
Arctic roll-back
Source: National Snow and Ice Data Center (NSIDC)

In its maiden voyage, the tanker delivered a shipment of crude oil from the Varandey oil terminal in the Barents Sea to the port of Come by Chance, off the coast of Newfoundland through the treacherous, icy waters of the Barents Sea without icebreaker escort.

Regardless of a ship’s design capabilities, the Prime Minister made it clear all ships navigating or destined for the treacherous waters will be required to report their presence to Canadian officials, which under present rules is only voluntary. Changes are planned to the Canada Shipping Act and the Arctic Waters Pollution Prevention Act in the coming months.

Canada has high hopes that the geological mapping of the area will confirm once and for all that the continental shelf off Canada’s northern coast extends well into Arctic waters, thereby bolstering Canada’s claims of sovereignty over a wider area of the northern seabed and ownership of the resources that lie beneath it.

The United Nations Convention on the Law of the Sea (UNCLOS) confirms the sovereign rights of coastal states over the continental shelf for exploration and the use of natural resources within 200 nautical miles. In cases where the continental shelf extends beyond 200 nautical miles, UNCLOS requires that a coastal state delimit the shelf’s outer limits using scientific criteria.

Canada has until the end of 2013 to submit information on the extent of its continental shelf for the Arctic and Atlantic regions to the United Nations Commission on the Limits of the Continental Shelf.

The geological survey will be conducted in cooperation with U.S. authorities in a joint effort to collect information that will assist both countries in delimiting the continental shelf in the Arctic Ocean. While the U.S. and Canada are allies in countering other country sovereignty claims in the region, particularly Russia’s assertions that its continental shelf extends almost to Alaska, American policy does not recognize Canada’s ownership rights to the vast riches under the polar seabed.

From Canada’s point of view, working closely with the Americans is perhaps an expression of keeping your friends close, and your potential competitors closer.

The stakes are very high. As reported in an earlier GLOBE-Net article, the U.S. Geological Survey’s first publicly available petroleum resource estimate of the entire area north of the Arctic Circle suggests the potential of 90 billion barrels of undiscovered, technically recoverable oil; 1,670 trillion cubic feet of natural gas; and 44 billion barrels of natural gas liquids – in 25 geologically defined areas, most (84%) of which are in offshore locations. This represents about 22% of the world’s undiscovered but technically recoverable fossil fuel resources: 13% of undiscovered oil; 30% of undiscovered natural gas; and 20% of undiscovered natural gas liquids. (See GLOBE-Net article “Things are heating up in the not so frozen North.”)

And the heavy hitters in the oil and gas sector are gearing up for what clearly will be a new cold gold rush to exploit these vast resources. BP plans to spend $1.2 billion to explore a block of the Beaufort Sea recently put out for bid by the U.S. federal government – the biggest sum ever committed to the hunt for petroleum in the region. Exxon Mobil and its Canadian subsidiary, Imperial Oil, have committed $585 million to probe another parcel off the coast of the Northwest Territories.

The heat is on for these players, particularly in the wake of political declarations by both U.S. presidential candidates to reduce America’s dependency on Middle East oil. Over the next decade the U.S. will be looking north to Canada’s oil and gas wealth as a more acceptable source of supply.

In addition to the increased traffic such exploration activities will generate, other international shippers equipped with new ice-capable vessels likely will want to use the shorter distances made possible by reduced ice cover to carry goods between Europe and Asia – possibly even oil and gas resources.

But while the distances may be shorter, the risks are not any lower. The Arctic can be cruel and unforgiving, and accidents like the 1989 Exxon Valdez disaster only show how difficult it will be to clean up a massive spill in this ecologically sensitive region.

Canadians generally are not insensitive to these risks. A recent Ipsos Reid poll for the Canwest News Service suggests Canadians have serious reservations about resource exploitation in the Arctic. Fifty-seven per cent of respondents agreed with the statement that “the Arctic ecosystem is too fragile for the extraction of natural resources that threatens to destroy the sustainability of the ecosystem, so we should leave it relatively untouched.”

Prime Minister Harper’s opening salvo in the new ‘cold war’ for the arctic is wrapped in terms of protecting the northern environment and enforcing Canadian sovereignty – messages that resonate well in the pre-election south. But there is no doubt that economic imperatives are at play as well. “Managed properly, Canada’s share of this incredible endowment will fuel the prosperity of the country for generations,” he said during his northern tour, and “what we’ve found so far is merely the tip of the proverbial iceberg.”

Canadians are also concerned about the well being of the other Canadian icon – the polar bear. So in a deft political move Environment Minister John Baird announced a national Roundtable to be held later this year on conservation measures to protect Canada’s polar bear population.

Coming in the wake of a report by the Committee on the Status of Endangered Wildlife in Canada that classes polar bears as a species of “Special Concern”. The Minister said the Roundtable “will bring together environmental groups, the Inuit and First Nations, provinces and territories, and other experts in one place to chart Canada’s course on protecting this majestic animal.”

In truth, conditions for Canada’s polar bears are not likely to improve anytime soon. Global warming will continue to exert its influence in the north, resulting in reduced ice cover, changing weather patterns, and increased competition for available resources.

Canadians face the same challenges, but unlike our furry icon, we are better able to do something to lower the ecological risks and to adapt to this changing environment.

The message is clear, however, protecting the polar bear is synonymous with protecting our interests in the new theatre of the cold war – the Arctic. It’s a bold and risky move, but one that had to be taken.


Copyright © 2008, ECO Services International