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18. Discussion on Technology and Economics of Minerals Development in Polar Areas REMARKS BY GEOFFREY F. LARMINIE Larminie elaborated on the projected costs of minerals exploration and recovery in Antarctica and termed antarctic logistics ~murderous. n He presented the following example: North of 62N latitude in the Norwegian sector of the North Sea, it costs about 320 million to drill an exploration well. Two to three million dollars of that cost is for actual drilling, and the rest is accounted for by logistics activities. In Antarctica, the ratio of logistics to drilling costs would be an order of magnitude greater. He suggested that it could cost about 8300 million just to drill a land well on an island adjacent to Antarctica (for example, on James Ross Island). DISCUSS ION In the discussion of offshore technologies, the experts reiterated that, in contrast to existing exploration technologies, which if costs could be accommodated make it nearly possible to conduct exploratory drilling in Antarctica, production systems suitable for potential hydrocarbon exploitation in Antarctica are still in the development phase; complete subsea production systems will be required in Antarctica because water depths there are too great to permit floating operations. Croasdale and Larminie stressed again the effect that the high costs of working in Antarctica will have on the rate of technology development and the development of a cost-effective production system for Antarctica. More- over, before any development activities could commence, 265

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266 as Croasdale mentioned (Chapter 17), research on environ- mental impacts and safety will be required, and the effec- tiveness of the technology will have to be demonstrated. The economics of antarctic offshore development will also be affected by distance from large consumer markets; the southern lands nearest Antarctica are not comparable to the high-population/high-oil-consuming areas of North America and Europe. With respect to the question whether gas, rather than oil, might exist in offshore Antarctica, geological science in Antarctica is rudimentary, and geochemical data will be required to determine whether gas exists there. With respect to environmental considerations, an example of Canadian-Danish cooperation in the transport of liquefied natural gas (LNG) from Arctic Canada was presented--the Arctic Pilot Project. When Canada was faced with a choice between carrying LNG by means of a pipeline or a very large crude (oil) carrier (VECC) through the Northwest Passage and south between Canada and Greenland, the Greenlanders became concerned about possible effects of VLCC transport on their environment. The Canadians favored pilot tests, but the Danes were concerned that even a test project could have long-term detrimental effects prejudicial to the wellbeing of the Greenlanders. The Arctic Pilot Project was set up as a working group of technical experts from the two countries to study potential impacts of VLCC transport. It focused par- ticularly on noise that might result from VLCC propellers and icebreakers and on how the noise might affect the use of the water column for communication by whales and seals. There was also concern that if permanent sea lanes were designated for the VLCCs, this could cut off local Eskimo traffic. On August 26, 1983, Canada and Denmark signed an agreement that, inter alla, provides for consultations with respect to tanker routing if such transport takes place. During these deliberations, the question arose of access by foreigners to the ongoing environmental impact assessment process in Canada, and the Greenlanders were ultimately admitted to the Canadian process. [As was noted by Croasdale (Chapter 17), the Arctic Pilot Project has been postponed because of low market demand for LNG.1 With respect to the effects on marine mammals of noise from offshore exploration and production activities, one participant pointed out that research in the Arctic Beau-

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267 fort Sea area indicates that the frequency ranges used for transmitting by marine mammals are different from those where noise resulting from offshore oil operations travels. He stated that there is a high level of ambient noise generally in the Arctic because of such natural processes as the creation of pressure ridges; this has necessitated the development of special submarine- detection equipment, as conventional noise detection procedures are virtually useless. In his view, high- frequency sounds produced by gas turbines in power stations located on the coast could have far more effect on marine mammals than the sounds associated with con- ventional offshore exploration and production activities.

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