Market mechanisms will determine the future of Arctic energy business

Overlapping and disputed claims of economic sovereignty present an obstacle to developing Arctic resources (source: macpixxel for GIS)
Overlapping and disputed claims of economic sovereignty present an obstacle to developing Arctic resources (source: macpixxel for GIS)

Shell’s decision to suspend its Alaskan Arctic drilling activities in September 2015 confirms what many experts have long argued: the day for extracting hydrocarbons in the region has not yet come. In fact, given today’s oil prices and increasing competition from more accessible sources, large-scale extraction of oil and gas in the Arctic could be decades away.

In the United States, oil companies have set their eyes on Arctic hydrocarbon extraction for nearly a century. However, excitement over the region’s potential riches tends to come and go in cycles. Investor enthusiasm is usually curbed by the emergence of cheaper and more easily accessible alternatives, which in turn has transl...

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