Verdantix Says The Arctic Will Rival Other Emerging Economies By 2025, But Environmental Risk Management Will Pose Huge Challenges

Share Article

This year Arctic sea ice is at its smallest extent since records began. Warmer temperatures and scientific forecasts of further warming have encouraged firms to invest. But operations face a plethora of risks, and firms targeting the Arctic economy need to anticipate a bumpy ride, prioritizing environmental risk management to protect the Arctic wilderness and preserve corporate reputation.

Verdantix:The Authority On Sustainable Business
Risk management must be the top priority. An environmental disaster in the Arctic would crush a corporation.

Rising temperatures in the Arctic will drive an investment boom that will rival the market opportunities currently seen in oil and gas rich emerging economies such as Kazakhstan and Venezuela, according to a new report from independent analyst firm Verdantix.

“Despite oil firms such as Total backing away from oil exploration in the Arctic and environmental NGOs attempting to block economic development, investment is growing rapidly” commented Patricia Satkiewicz, Verdantix Analyst and author of the report. “Our study found that the Canadian, Danish, Norwegian, Russian and United States governments are actively promoting economic development in the Arctic both onshore and offshore. A vibrant Arctic economy is now inevitable.”

The Verdantix report, Ice Rush: Making The Arctic Economy Sustainable, combines analysis of scientific data, scientific forecasts, government policy and commercial investments to provide a holistic view on the Arctic economy. As the Arctic seas become navigable for more months of the year, Verdantix identifies three major market opportunities.

Transport and communications infrastructure. Development of infrastructure is a pre-requisite for other economic activities to expand. The Russian government is supporting a $30 billion transport hub at Sabetta. In Canada, the port and railway at Churchill received $90 million of investment. In the US, research is underway to identify new deepwater ports. By 2025 the Arctic will be ringed by modern, deepwater ports that will alter global shipping routes.

Natural resource extraction. A 2008 US Geological Survey estimated that 13% of the world’s undiscovered oil reserves and 30% of undiscovered natural gas is in the Arctic region. Norwegian oil firm Statoil has already drilled 89 wells in the Barents Sea. Shell is seeking to open up new oil fields in the Chukchi Sea. On land, improved transport infrastructure has enabled iron ore mines including Sydvaranger in Norway to be re-opened. ArcelorMittal, MMG, Vale and Xstrata are all prospecting.

Arctic support services. Large-scale infrastructure and energy projects generate demand for Arctic support services that already run into billions of dollars. Engineering firms such as CH2M HILL, environmental services providers with remediation expertise and environmental lawyers will provide the services to get permits, design, build and operate Arctic assets. Sustainability communications agencies will help infrastructure, energy and mining firms avoid a meltdown in stakeholder support.

“Today, the Arctic ice sheet is at its lowest extent since records began in 1979. This will trigger renewed interest among investors” stated David Metcalfe, Verdantix CEO. “But investing in the emerging Arctic economy is not for the faint hearted. Many projects have been plagued by cost overruns and delays due to unpredictable weather, borderline business cases, cheap shale gas, permit delays and environmental protests. Risk management must be the top priority. An environmental disaster in the Arctic would crush a corporation.”

Note To Editors.
Verdantix is an independent analyst firm. We provide authoritative data, analysis and advice to help our clients resolve their energy, environment and sustainability challenges. Through our global primary research and deep domain expertise we provide our clients with strategic advice, revenue generating services, best practice frameworks, industry connections and competitive advantage.

For more information visit: http://www.verdantix.com

Contact
Francesca Macnaghten
Marketing Executive
Verdantix
+44 203 3716792

Share article on social media or email:

View article via:

Pdf Print

Contact Author

Francesca Macnaghten
Follow us on
Visit website