The Great Game: Why Halliburton Doesn't Care If the Poles Melt

[Bold emphasis mine]

CHURCHILL, Manitoba - It seems harsh to say that bad news for polar bears is good for Pat Broe. Mr. Broe, a Denver entrepreneur, is no more to blame than anyone else for a meltdown at the top of the world that threatens Arctic mammals and ancient traditions and lends credibility to dark visions of global warming.

Still, the newest study of the Arctic ice cap - finding that it faded this summer to its smallest size ever recorded - is beginning to make Mr. Broe look like a visionary for buying this derelict Hudson Bay port from the Canadian government in 1997. Especially at the price he paid: about $7.

By Mr. Broe's calculations, Churchill could bring in as much as $100 million a year as a port on Arctic shipping lanes shorter by thousands of miles than routes to the south, and traffic would only increase as the retreat of ice in the region clears the way for a longer shipping season.

With major companies and nations large and small adopting similar logic, the Arctic is undergoing nothing less than a great rush for virgin territory and natural resources worth hundreds of billions of dollars. Even before the polar ice began shrinking more each summer, countries were pushing into the frigid Barents Sea, lured by undersea oil and gas fields and emboldened by advances in technology. But now, as thinning ice stands to simplify construction of drilling rigs, exploration is likely to move even farther north.

Last year, scientists found tantalizing hints of oil in seabed samples just 200 miles from the North Pole. All told, one quarter of the world's undiscovered oil and gas resources lies in the Arctic, according to the United States Geological Survey...

In 2001, Russia made the first move, staking out virtually half the Arctic Ocean, including the North Pole. But after challenges by other nations, including the United States, Russia sought to bolster its claim by sending a research ship north to gather more geographical data. On Aug. 29, it reached the pole without the help of an icebreaker - the first ship ever to do so...

Increasingly, big corporations, the eight countries with Arctic footholds and other nations farther south are betting on the possibility of a great transformation. Energy-hungry China has set up a research station on the Norwegian island of Spitsbergen and twice deployed its icebreaker Snow Dragon, which normally works in Antarctica, to northern waters to conduct climate research.

Interest in Arctic-hardy vessels has picked up so much that in January, Aker Finnyards, a giant shipbuilder based in Helsinki, created a subsidiary just to develop ice-hardened ships. Its new double-ended tanker slips smoothly through open water bow first but can spin around and use an icebreakerlike stern to smash through heavy floes. A Finnish energy company bought two for about $90 million apiece, and after buying one Russia licensed the design and is building two more.

In January, the State Department's Bureau of Intelligence and Research held a closed two-day meeting to hear from experts on the implications of a warming, opening Arctic...

Just like Bu$hCo, to try to classify something everyone else already knows.

Back to the story:

...A look at a map of the globe with the North Pole at its center explains why a new frontier matters. Some countries that one might think of as being half a world part appear as startlingly close neighbors, and relatively speaking, they are.

In the days of empire, Rudyard Kipling called jockeying among world powers in Central Asia the Great Game. Christopher Weafer, an energy analyst with Alfa Bank in Moscow, says this new Arctic rush is "the Great Game in a cold climate."

...Charlie Lean easily recalls when he realized that big changes were sweeping the fish stocks along the northern shores of Alaska.

Just over 10 years ago, when Mr. Lean was the state's fisheries manager for the northwest region, a call came in from the tiny Eskimo outpost of Kivalina, on the Chukchi Sea 150 miles northeast of the Bering Strait. A village elder was reporting "a massive fish kill" in the Wulik River, Mr. Lean said. Everyone assumed it was from some toxic spill upriver at the giant Red Dog zinc mine.

"I rounded up a plane and blasted off and flew up there," he said. "Flying overhead I could see right away it was the end of a pink salmon run. They were dying of natural causes as they always do once they spawn."

The elders had never seen a run of this salmon species. But they have shown up every year since.

The colonization of new rivers by pink salmon is just one of many changes in fish and crab stocks that appear linked to retreating sea ice and warming waters in the Chukchi Sea and, farther south, the Bering Sea. The changes are important because the Bering is rich with pollock, salmon, halibut and crab, already yielding nearly half of America's seafood catch and a third of Russia's.

Recent studies have projected that in a few decades there could be lucrative fishing grounds in waters that were largely untouched throughout human history.

In a 2002 report for the Navy on climate change and the Arctic Ocean, the Arctic Research Commission, a panel appointed by the president, concluded that species were moving north through the Bering Strait. "Climate warming is likely to bring extensive fishing activity to the Arctic, particularly in the Barents Sea and Beaufort-Chukchi region where commercial operations have been minimal in the past," the report said. "In addition, Bering Sea fishing opportunities will increase as sea ice cover begins later and ends sooner in the year."

...physical features matter enormously to nations seeking to expand their undersea territory under a murky clause, Article 76, in the Law of the Sea. With only fragments of the Arctic ever surveyed, by icebreaker or nuclear submarine, various countries are mounting new mapping expeditions to claim the most territory they can.

The exclusive economic zone controlled by a country generally extends 230 miles from its shores. But under Article 76, that zone can expand if a nation can convince other parties to the treaty that there is a "natural prolongation" of its continental shelf beyond that limit.

The shelf is the relatively shallow extension of a landmass to the point where the bottom drops into the oceanic abyss. But in many places, the drop-off is a gentle slope or is connected to long-submerged ridges that, if precisely mapped, might add thousands of square miles to a country's exploitable seabed.

Claims of expanded territory are being pursued the world over, but the Arctic Ocean is where experts foresee the most conflict. Only there do the boundaries of five nations - Russia, Canada, Denmark, Norway and the United States - converge, the way sections of an orange meet at the stem. (The three other Arctic nations, Iceland, Sweden and Finland, do not have coasts on the ocean.)

"The area does get to be a bit crowded," said Peter Croker, chairman of the Commission on the Limits of the Continental Shelf, which assesses claims. It is composed of experts appointed by countries that ratified the treaty.

Disputes over overlapping claims must be worked out by the countries involved, but the commission weighs control over areas that would otherwise remain international waters.

Countries that ratified the treaty before May 13, 1999, have until May 13, 2009, to make claims. Other countries have 10 years from their date of ratification.

Russia adopted the treaty in 1997, and four years later laid claim to nearly half the Arctic Ocean. The commission's technical panel rejected the claim, and now Russia hopes the recent voyage of its research ship Akademik Fyodorov to the North Pole will yield mapping data in its favor.

In June, Denmark and Canada announced that they would conduct a joint surveying project of uncharted parts of the Arctic Ocean near their coasts.

Denmark is particularly interested in proving that a 1,000-mile undersea mountain range, the Lomonosov Ridge, is linked geologically to Greenland, which is semiautonomous Danish territory. If it finds such a link, Denmark could make a case that the North Pole belongs to the Danes, Danish officials have said.

Canada could also claim a huge area, and then face challenges from the other Arctic nations. The United States could petition for a swath of Arctic seabed larger than California, according to rough estimates by Dr. Mayer and other scientists. But while the government financed Dr. Mayer's survey, it has not made a definitive move toward staking a claim.

American ratification of the Law of the Sea treaty has repeatedly been blocked by a small group of Republican senators, now led by Senator James M. Inhofe of Oklahoma. They say, among other things, that the treaty would infringe on American sovereignty.

In a Senate hearing last year, Mr. Inhofe said, "I'm very troubled about implications of this convention on our national security." The deadlock has persisted even though the Bush administration in 2002 described ratification of the Law of the Sea and four other treaties as an "urgent need."

Many proponents of the treaty, including the Pentagon, the American Petroleum Institute and Senator John McCain, Republican of Arizona, say this paralysis leaves the United States on the sidelines while others carve up an ocean.

"We need to be in the game, at the table, talking about fisheries management, mineral extraction, freedom of navigation," said Adm. James D. Watkins, a retired chief of naval operations who is chairman of the United States Commission on Ocean Policy.

Mr. McCain said, "I think what it would require really is a hard push from the president."

Treaty or no, territorial disputes ultimately imply questions about a country's ability to defend its interests. Here, too, the United States has shown less urgency while Canada has acted more aggressively to ensure sovereignty over a fast-changing domain it had long neglected...

Once again, Poppy's son is a day late, a dollar short, and slow on the draw. All hat and no cattle, he takes a side on a treaty his own military tells him he's going to lose with. No wonder the Saudis love this guy.

Back to the story:

... The advantage of maritime shortcuts across the top of the world can be startling. For example, shipments from Murmansk to midcontinental North America by the well-worn route through the St. Lawrence Seaway and Great Lakes to Thunder Bay, in western Ontario, typically take 17 days. The voyage from Murmansk to Churchill is only 8 days under good conditions, and from Churchill, rail links snake down through Manitoba, the American Midwest and points south all the way to Monterrey, Mexico.

For Murmansk, an extended shipping season in Arctic ports that are now frozen much of the year could mean a boon in traffic - to the west and, perhaps once again, to the Far East.

The city was once the anchor of the Soviet Union's Northern Sea Route, which stretched to nearly 3,500 miles to the rich nickel mines at Norilsk and on to newly established Arctic colonies at Dikson, Khatanga, Tiksi and Pevek before reaching the Bering Sea.

At its height, in 1987, more than seven million tons of cargo traversed the icy route. But when the Soviet Union collapsed, so did the Northern Sea Route. Today it handles only 1.5 million tons.

The Murmansk Shipping Company, newly privatized, now uses its icebreakers for tourist cruises to the North Pole - $15,000 to $20,000 a ticket, depending on the cabin.

The same way an Arctic Bridge could drastically cut the distance to Canada, a revived Northern Sea Route could shorten the journey for goods and raw materials from Northeast Asia to Europe by 40 percent.

Vladimir M. Chlenov, the transportation minister from the Siberian republic of Sakha, a vast region that borders the Laptev Sea, envisions dozens of ships carrying gold, timber and other resources up the Lena River to the port of Tiksi, and from there through ice-free seas to Europe and Asia.

...some Canadian officials, eyeing what will happen in 20 years, say it is all the more justification for investing in the rebirth of Churchill.

"We're gearing up for the future," said Mr. Lemieux, the Manitoba transportation minister. "We look to be the gateway, the logistical hub of the world for circumpolar navigation."

A lucky winner would be Pat Broe, the American who bought the Port of Churchill in 1997 almost as an afterthought, for a token $10 Canadian. Looking to expand his railroad company, OmniTrax, he had already paid $11 million for 810 miles of denationalized tracks in Manitoba. He acquired the port at auction, figuring he would rather own it than have someone else use it as a "toll booth" for his railroad.

Mr. Broe, a private man, declined to be interviewed for this article.

Since his acquisitions, OmniTrax estimates it has spent $50 million modernizing the port to accommodate big ships carrying exports like grain and farm machinery to Murmansk, and incoming Russian products, including fertilizer and steel. By some hopeful estimates, Churchill's shipping season could eventually grow to 8 or even 10 months a year, compared with the current 4.

Michael J. Ogborn, OmniTrax's managing director, said he could see a future for Churchill when "the activity at the port will be as busy as an anthill, with machines, people, freight and ships at dock."

For now, though, there is a problem. While the port has continued to ship grain to Europe and North Africa, it is still waiting for its ship to come in - any ship from Russia, to demonstrate the advantages of the Arctic Bridge.

"There is still a huge marketing effort needed to educate shippers why they should ship through Churchill," Mr. Ogborn conceded.

And in an arena where sharp elbows are often the norm, there is great cooperation between Canada and Russia, not least through Russia's ambassador to Canada, Georgy E. Mamedov. A spreader of good will, the ambassador has even suggested using decommissioned nuclear submarines to transport cargo under the ice. On a visit to Churchill last year, he appointed his local driver honorary Russian consul, and stopped at the "jail" for polar bears that wander into town, laying his hand on the big black nose of one anesthetized inmate and addressing it fondly in Russian.

In the months since, Mr. Mamedov has talked ebulliently of the Arctic Bridge in meetings with Canadian officials, business groups and reporters. "Go to Churchill," he said in one interview. "Go there."