Risk management in the Arctic for the implementation of the activities of oil and gas industry is associated with the adoption and realization of decision-making which aimed at reducing the likelihood of an adverse result and minimizing possible losses of the project caused by its implementation.
Among the major trends in ratings of the oil and gas industry risks [1-3 authors identified two dominant positions. They are associated with the geopolitical and geoenvironmental factors. The first position "Health, Safety, and Environment and Legal Compliance Risks" (HSE) is related to the GER. The second one "Access to Reserves or Markets: Political Limitations and Competition for Proven Reserves" (ATR) is related to the GPR. Thus, in the realization of projects for the development of Arctic oil and gas fields from the point of view of environmental and national security, it is extremely important to analyze the GER considering geopolitical challenges.
The Arctic is a territory where, on the one hand, there is a geoenvironmental threat, leading to serious climate change, as the scientific research indicates. On the other hand, it is the climate change and the melting of ice as a result of it that opens the Arctic to the frees access for large-scale arrival of industry here and opens up huge prospects for the development of energy resources. It is the cause of the geopolitical threats due to fact that this area where strategic interests of a number of countries cross each other [4, 5].
Environmental debates are also relatively new intervention in the field of geopolitics, therefore, environment and its impact in different regions including that of Arctic is new in geopolitics modelling. But now, as the impact of climate change and global warming is becoming a reality and the environment geopolitics is increasingly making space the debate of mainstream geopolitics. Therefore, the Arctic being so vast, resourceful, and strategically located is bound to become a topic of geopolitical debate. In near future Arctic region may emerge as core area of geopolitical debates.
The relevance of geopolitics increases significantly with consideration of the generally harsh environmental and climatic conditions in the Arctic regions rich in oil and natural gas resources. This pushes the research of GERs for different oil and gas industry. The GER indicators are defined as risks which occur in the environmental and climatic conditions and the geopolitical conditions of the Arctic in the "industry - environment" system, as related to the mutual impacts of industrial facilities on the environment and of the environment on industrial facilities [2-5, 6]. The evaluation of GERs reflects the nature and extent of interaction in these reciprocal relations between man-made and natural factors. At the same time, the global level of GPRs is associated with the worldwide processes and trends whereby international access is claimed to the Arctic zone and its natural resource potential. A disturbance of the status of strategic stability in the geostrategic domain of the Arctic is considered to be an indicator of possible GPR effects. In this context, the GPR is the probability of a change in the geopolitical situation at the regional and global levels, which can lead to adverse conditions (risk of a hybrid war, military conflicts, etc.) or additional opportunities.
1. Geopolitical challenges of the oil and gas industry in the Arctic: GPR
GPPs are objective, predictable and difficult to quantify risks. They are often only to qualitative expert evaluation, as well as evaluation through historical analysis. If adapted to the new external environment, the GPRs will have a weaker impact in the long term or will be offset by other factors, such as diversification of energy supplies and the development of unconventional hydrocarbons, such as offshore Arctic oil and natural gas resources. For the development of Arctic shelf hydrocarbons, this risk is to a greater extent a risk of uncertainty.
One of the main problems faced by the oil and gas industry facilities in the Arctic is the accessibility to enough reserves of hydrocarbons. It also connected with obtaining control rights over its natural resources. These risks are associated with environmental and geopolitical factors [4, 5]. None of the states that until now have been referred to as Arctic states are wholly “Arctic”. Except for Russia, which has most of her sea territory in the Arctic and Russia is the only oil producer with clear mineral rights.
The Russian Arctic coast joins to the most extensive in the World ocean shelf area with unique resources. According to Russia Arctic is a territory which contains a wide range of threats and challenges for the national interests and security of their country. It includes other countries maintaining a stable interest in the Arctic zone of the Russian Federation (AZRF) and the Northern Sea Route (NSR), which is reflected in the activity of governmental and non-governmental organizations, mainly of the US and Norway, with support from the political and business communities of the West, as well as Japan and China, pursuing projects intended to increase influence on the border regions of the RF, with the goal of transforming the NSR into an international transit line. Russia’s Northern Sea Route will link Russia’s energy rich Arctic zone to the Atlantic and Pacific, potentially creating the third biggest energy corridor in the world. This condition may lead to fierce competition and even conflict among different counties surrounding this region for the control of mining, oil and gas, sea routes and of course territory for military purpose also. This scenario seems to be more realistic as the United Nation law of sea is not clear about the status of the Arctic sea and US has also not ratified the existed law.
Arctic oil and gas resources the greatest extent attract the attention of the main geo-strategic players - the US and Russia. The Arctic is perceived in the US as a region, control over which can significantly impact the balance of power in the world [6]. For the next few decades, Arctic oil and gas exploitation will be predominantly in the Exclusive Economic Zone (EEZ) of the Arctic five (Russia, USA, Denmark, Canada, Norway) and perhaps further into the Arctic Ocean outside or close to the Arctic Circle. This involves a large amount of proven and estimated oil and gas reserves, primarily to be found within the Russian borders. There are still uncertainties concerning the legal status of the AR, which will undoubtedly increase the current attention of the main geo-strategic and regional players for geo-economic and geopolitical purposes that lead to increasing GPR.
Many experts have even predicted environmental warfare in near future geopolitical scenario. Arctic environment as weapon may be used to destroy enemies and their properties as example like in South Asia, rival countries have been blamed for floods in Pakistan, India, Bangladesh and even China by the media of each country. Indian media claims that China has created some artificial lakes to use against India in war situation. Though, the potential of environmental warfare to destroy the enemies and their property may be debated but it is clear the first causality would the environment and ecology of that region itself. And all these war tactics may possibly be used in the Arctic region also.
The potential of such an environmental war to destroy enemies and their property includes a combination of GER and GPR. Though, the potential of environmental warfare to destroy the enemies and their property may be debated but it is clear the first causality would the environment and ecology of that region itself. And all these war tactics may possibly be used in the Arctic region also. Though, the potential of environmental warfare to destroy the enemies and their property may be debated but it is clear the first causality would the environment and ecology of that particular region itself. And all these war tactics may possibly be used in the Arctic region also. At the same time, the initial damage will be caused to the ecology and environment of the region. In particular, Arctic sea disputes will certainly result in increasing military build-up and related activities in the region and a fair assessment of these activities is compulsory. There is also needed to discuss how submarines, aircraft carriers, thousands of jet fighters and other military activities are responsible for global warming and environmental problems.
At the same time, the issue of the GER is one of the priorities of US attention in relation to Russian actions in the Arctic. The theme of environmental protection is traditionally used to exert pressure on Russia in connection with its plans to develop Arctic infrastructure and construction oil and gas complex. The analysis of the Arctic countries' goals and actions shows that they are aimed at proving that Russia has no legal backing for a claim to develop offshore natural resources and to use the NSR as an internal passage and blame Russia as incapable of ensuring environmental safety in production of natural resources in the region. These aspects show the hybrid nature of the threats that Russia faces in the Arctic.
At present, there is no common understanding of the term "hybrid wars" which denotes a coordinated use of political, diplomatic, informational, psychological, economic tools and force to achieve strategic objectives. However, NATO experts already use the notion of "hybrid wars" when referring to Russia's role in crisis areas. Some of the aspects of the hybrid nature of Russia's threats in the Arctic are presented in the following research of the authors.
Thus, with the melting of ice and the opening of the sea, there will be the development of seaports, pipelines, rail lines, infrastructure and other activities, leading to increased geopolitical competition mainly between Russia and the US, including European countries. This is due to the likelihood of Russia becoming a key player in the region and it will be contested by US and its allies and they may use Arctic region ecology and environment as a geopolitical tool/weapon against Russia.
2. Geoenvironmental challenges of the oil and gas industry in the Arctic: GER
2.1. GER’s factors
The specifics of the GER's management with the development of Arctic fields are security problems of their exploitation as natural and human-made objects. World experience of exploration and production development of several oil and gas fields in the North Sea, the Arctic continental shelf of Canada and Alaska indicates unexpected difficulties that may arise in the course of carrying out these works.
Let us review some of the GER's specific factors for oil and gas facilities, operating in the Arctic:
1. Natural- climatic conditions: extreme cold almost all year round, long polar night, the threat of damage to offshore drilling rigs by Arctic ice, deep freezing of rocks, the presence of submarine permafrost and the concomitant hydrate accumulations, swampy tundra and the seasonality of activities in many regions, limited biological activity extremely negative impact on personnel and equipment.
For elements of the technical systems deployed in the North, defining the external factor is the low temperature of atmospheric air, which deteriorates the physic-mechanical properties of structural materials, increases their tendency to brittle fracture as a potential source of possible accidents, which pose a serious environmental hazard. For example, the accidents with destruction of brittle reservoirs involve the ejection of significant amounts of petroleum products. In connection with Arctic's natural-climatic conditions permafrost soils differ of weak resistance in relation to oil pollution. Period of its self- healing there at an average level of pollution with petroleum products different researchers is estimated from 10 to 15 years.
International experience shows that it is possible to collect and dispose of only 10-15% of spilled oil in the Arctic conditions. Residual oil contamination in permafrost conditions can be becoming a source of petroleum hydrocarbons flow from river to the sea and its coastal part for years. Biogeochemical cycling in the primitive Arctic desert and tundra ecosystems can be defined as very depressed which includes a long period of mineralization of organic residues (from 10 to 50 years or more). At the same time the prolonged winter period contributes to the accumulation of various pollutants in the snow cover with their explosive impact on the ecosystem during the spring-summer period.
Thus, the low potential of self-healing for Arctic soils due to the short growing season and low temperatures necessitates the GER analysis, including its assessment and management. GER analysis is required for all industrial-technological stages to preserve the natural communities and the rehabilitation of disturbed ecosystems of the Arctic. The authors offer to use of models for the GER analysis, published in the following sources.
2. On the background of severe climatic conditions a factor of poor infrastructure play important role coupled with significant GER. Special equipment (tankers, icebreakers), summarizing extensive communications, supply and logistics are required for the Arctic.
3. Spills of liquid hydrocarbons: prevention and elimination.
Even a relatively minor spill, depending on the timing and location, can cause significant harm to individual organisms and entire populations. Regarding aquatic spills, marine mammals, birds, bottom-dwelling and intertidal species, and organisms in early developmental stages—eggs or larvae—are especially vulnerable. However, the effects of oil spills can vary greatly. Oil spills can cause impacts over a range of time scales, from only a few days to several years, or even decades in some cases. Conditions in the Arctic may have implications for toxicological effects that are not yet understood [7].
4. Due to the ongoing climatic changes, it is obvious that CH4 and CO2 which are being released in large volumes due to the melting of ice, increase the temperature. It can lead to major changes in the distribution of flora: the composition of northern plant species will be suppressed by the migration of those from the southern region. This will impact the existing life, as the insects which are an important pollination carrier, will be endangered. Distribution of plant life also bears upon the distribution of animal life which is directly or indirectly dependent on plants. Fish population as well as migratory birds will also be adversely affected owing to an increase in the sea temperature; and thereby reducing the availability of food and affecting the habitats. Due to higher CO2 composition, the acidity in the sea water will rise. Many species like walruses will lose their natural habitats as food scarcity mounts. It is premature to estimate precisely the adverse impacts of climate change on the Arctic region. Nevertheless, it will be too late by the time these changes happen.
Thus, in the oil and gas development of the Arctic region, it is globally important to analyze the GER in connection with the above specific factors on the background of geopolitical challenges.
2.2. GER’s analysis
The expansion of oil and gas development projects, particularly offshore, on the background of ongoing climatic changes and geopolitical challenges, can aggravate the environmental situation, for example, due to the resulting acid-forming pollutants during the implementation of hydrocarbon production programs. In this regard and taking into account transboundary pollution (circumpolar transport of pollutants from the West) in the Russian Arctic requires monitoring of acid deposition as a component of a unified system of environmental monitoring.
In this regard, the authors propose a model for the GER's analysis from activity of oil and gas industry in the Arctic on the basis of critical loads (CL) of acidity of pollutants. The analysis includes the stages of GER assessment and GER management. Considering to the influence of geopolitical challenges, the choice of evaluation criteria recognized in the world community is extremely important. The proposed GER assessment based on international approaches to the calculation of the CL is made using already established international methodological approaches and the results of the studies [8].
2.2.1. Method assessment of the GER
The methodology is based on [8] and on the understanding of the GER in the narrow sense, namely as a two-dimensional indicator which characterizes the probability of negative changes developing in the condition of ecosystems as the recipients of impact, and the extent of such changes. The quantitative assessment of GER is based on the calculation and dimensional analysis of exceeded CLs for pollutant Х (Ex(X)) within an area affected by an industrial site. Exceeded CLs reflect the relation between exposure (actual or forecast pollutant load) and safe impact level (pollutant CL value). It is proposed that the impact on ecosystems should be calculated as the percentage of portions where CLs are exceeded in relation to the total area of a given group of portions. The selection of acceptability criteria for expected changes depends on the nature of ecosystems involved. The CL values are calculated for internally homogeneous receptor areas (portions) of ecosystems. For example, for ecosystems considered particularly valuable or vulnerable, the CL values must not be exceeded across 100 % of their area. Otherwise, it is proposed to apply the “95% protection” principle according to which the load level of top pollutants is acceptable if Ex(X)≤0 for 95 % of the area in question. It is proposed that the GERs of acid-forming deposition should be calculated using probabilistic modelling of exceeded CLs based on the Monte Carlo method. As opposed to the conventional calculation of exceeded CLs, arrays of bio/geo/chemical parameter values rather than isolated values (default or average) are used as input data for the simulations. Input data arrays can be prepared based on both field survey data and a review of similar projects. The simulation for each individual receptor area results in the array of values for Ex(X). The frequency distribution of these values allows calculating the probability P(Ex(X)>0) that positive values of Ex(X) will be reached for each of the portions within a given area. Each value of P(Ex(X)>0) will correspond to a value of M(Ex(X)>0) i.e. the total area of portions with exceeded CLs. The arrays of values (M; P) are used to determine the risk function (R(X)):
The GER function is a distribution function. For large receptor areas, the array of values (M; P) can be well approximated by a continuous normal distribution function. If the number of portions is not large, transition to normal distribution is not possible, and the function will be a step function. The distribution function allows to calculate the probability P1 that CLs will be exceeded in an area smaller than M1 and for a given range of values M (M1 ≤ Mi ≤ M2): P=P2 – P1.
2.2.2. Model analysis of the GER
Model of the analysis of GER for acid-forming deposition in areas affected by oil and gas industry in the Russian Arctic is shown in Figure 1.
Figure 1. Model of the analysis of GER for acid-forming deposition in areas affected by oil and gas industry in the Russian Arctic
The GER assessment study must be finalized by reviewing the uncertainty of obtained results. For this purpose, the sources of uncertainty must be described for each risk assessment stage and the accuracy of calculation results must be estimated. Результаты оценки ГЭР предлагается использовать для ранжирования отдельных проектных альтернатив и выработки подходов к смягчению воздействий на окружающую среду в рамках процедуры оценки воздействия на окружающую среду намечаемой хозяйственной деятельности.
The GER management for acid-forming deposition in areas affected by oil and gas industry is a decision-making procedure aimed to achieve acceptable levels of total GERs associated with existing or future industrial sites. This procedure considers GER estimation for acid-forming deposition as well as technological and environmental capabilities of risk prevention, reduction, monitoring, response, communication, etc. Geopolitical opportunities and threats are also considered here. Thus, strategic and tactical goals should be laid down in the principles of management of the GER. Strategic purposes should reflect the commitment to achieve the maximum possible level of public welfare in general, tactical purposes should pursue an improvement in the safety of all groups of live forms in the Arctic region [9,10].
Conclusion
Development of Arctic oil and gas fields are interrelated risks of geoenvironmental and geopolitical nature. The melting of ice and the opening of the sea stimulates the development oil and gas infrastructure and other connected activities, leading to increased geopolitical competition mainly between Russia and the US, including European countries. In particular, the environment is used as a tool of geopolitical rivalry and competition of the countries concerned. Therefore, when planning and implementing oil and gas projects from the point of view of environmental and national security, it is extremely important to analyze the GER considering geopolitical challenges.
The proposed GER analysis model allows for quantitative assessment of both the extent of estimated changes to ecosystems, as well as their probability. It provides a detailed profile of an ecosystem as subject to industrial impact. Furthermore, strong interrelation between individual components of land and aquatic ecosystems, as well as the natural variability of parameters characterizing the state of these components, have been considered in this procedure. The findings of GER analysis shall help to make decisions in oil and gas industry projects in such areas with poor accessibility of information and high degree of uncertainty as the Arctic Region.
The model of GER analysis also involves a management step and considers geopolitical factors, including a qualitative expert assessment or evaluation through historical analysis. The principles of GER management should include desire to achieve the highest possible level of well-being of society, as well as striving to increase the safety of all groups of live forms in the Arctic.
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