Oil Drilling Necessary for Development

A new study concludes that advancement and growth of Port Clarence area in the Bering Strait is only economically feasible if oil and gas company activities continue to develop in Alaska´s Arctic waters. 

The study is done by the Anchorage-based Northern Economics consulting firm, and shows that progress in Port Clarence could provide support for a number of industries and watercraft – cruise ships, research vessels, cargo shippers, and fishing boats – however, the oil and gas industry is the only one with economic viability to actually support such development. 

Exploration is necessary

Continued oil and gas exploration in the area and the resulting revenues, the study purports, is necessary to justify capital expenditures required to develop Port Clarence, according to an article in Anchorage Daily News. 

The estimated cost to building a modern deep-water port at Port Clarence is about $34 to $72 millions, with an expected annual operating cost of $1.4 million.  The study assumes that half of the capital cost would be covered by debt, with an annual loan payment of $2.75 million. 

Unpromising future

The future development of Port Clarence looks unpromising, however, since no major oil or gas company is planning any initiatives in the area for the foreseeable future. 

Shell announced in January 2014 that it would not attempt to drill in the area, and ConocoPhillips stated that they do not believe it to be financially prudent to drill in the area at the moment. 

Statoil had plans in 2010 to possibly drill in the area, although the plans have been deferred indefinitely as of 2012 with no decision about timing or if they will actually drill.