NCPA - National Center for Policy Analysis

Frustrated By U.S. Rules, Oil Drillers Check Out Russia

September 4, 2002

With environmentalists effectively blocking President Bush's plan to pump oil from the Arctic National Wildlife Refuge in Alaska, drilling companies are concentrating on Russia's Sakhalin Island, located in the North Pacific.

  • Two multinational consortia -- led by Exxon-Mobil and Royal Dutch/Shell -- are drilling and building rigs offshore, and making plans to lay hundreds of miles of oil and gas pipelines at Sakhalin Island.
  • A third consortium -- led by British Petroleum -- has secured an exploration permit and is making plans to join them.
  • These are the first such projects approved by Moscow, and although the Sakhalin ecology is just as "sensitive" as that of off-bounds Alaska, Russia hasn't imposed the same sort of environmental restraints that are hampering oil and gas development in the U.S.
  • The oil companies believe that as many as 13 billion barrels of oil lie beneath the waters around Sakhalin -- and local and national Russian leaders are welcoming the huge sums the companies are expected to spend to substantially boost their economies.

Although there have been reports that the groups aren't following many of the protective measures which would be required in the United States, they cite their industry's experience in Alaska and the North Sea as evidence they will protect sub-Arctic ecosystems from harm.

Source: Jim Carlton, "Stymied in Alaska, Oil Producers Flock to a New Frontier," Wall Street Journal, September 4, 2002.


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