Royal Dutch Shell Plc (RDSA) is leading the hunt for oil in the Arctic, which may hold the equivalent of a fifth of proven global reserves, followed by Repsol YPF SA (REP) and ConocoPhillips (COP), according to Sanford C. Bernstein & Co.
Shell, Europe’s largest energy producer, has spent about $4 billion in advance of a drilling campaign planned for next year, Bernstein said. Greenland offers the best profit potential, followed by Alaska, Canada, Russia and Norway.
Shell has won Environmental Protection Agency air permits and asked the Interior Department to approve its 2012 exploration plan. It wants to start drilling early next year when ice melts in the Chukchi Sea, which may contain as many as 15 billion barrels of oil.
The frontier region is “capable of being a game changer even for a company the size of Shell,” Oswald Clint and Alexey Pavlov, analysts at Bernstein, wrote in a report today. “Shell, like all the majors exposed to the Arctic, will primarily be seeking oil as gas discoveries will be marginal.”
The Arctic may hold about 412 billion barrels of oil and gas resources, with the majority located off Alaska, Russia and Norway, Bernstein said. U.S. environmental groups have opposed Shell’s Alaskan exploration plans, citing risks of pollution and wildlife concerns.
Exxon Mobil Corp and OAO Rosneft in August agreed to team up to explore Russia’s Arctic, with the first drilling expected in 2015. Cairn Energy Plc, which spent about $600 million on drilling off Greenland this year, said earlier this month it discovered traces of oil and gas at an offshore well.