The Arctic might be the world’s final — and possibly most attractive — emerging market.

While most investors are focused on the economic potential of lower latitudes, the Arctic is — due to increased access from climate change — quietly undergoing a radical transformation that is attracting the attention of savvy investors. But the U.S. is asleep at the wheel, leaving some of the world’s largest oil, natural gas and mineral resources to be developed by others.

The U.S., an Arctic nation by virtue of Alaska’s 44,000 miles of coastline and a land area two-and-a-half times that of Texas, is at a critical juncture where it must decide if it wants to open up its 49th state to development. If so, the U.S. must manage the process so it is environmentally sustainable, coordinated with circumpolar neighbors, and done with the support of local populations.

Long literally and figuratively frozen to outside investors, the Arctic now has melting sea ice and thawing tundra that are yielding huge resource opportunities. According to the U.S. Geological Survey and Alaskan state studies, 22% of the world’s undiscovered oil and gas reserves are to be found in the Arctic. On the North Slope alone, there’s an estimated 40 billion barrels of oil and 236 trillion cubic feet of gas.

The Arctic is also home to some of the world’s largest zinc, nickel and rare earth mineral deposits, as well as fresh water, which is increasingly important in a warming world. Another resource is the Arctic’s sea routes, which, if realized, would be many thousands of miles shorter than traditional seaways around the two capes or through the two canals. The Bering Strait could one day host the next Singapore. With massive tidal, wind and geothermal capacity, the Arctic also has renewable energy potential.

Russia is actively working to open the Barents region. Canada is doing the same in the Yukon. Norway and Iceland each have multibillion-dollar energy projects underway. And Greenland, for now still under Danish rule, is exploring 31 billion barrels of oil estimated to be off its coast.

But the U.S. has left Alaska in the icebox. Energy production in the North Slope has been in decline for years to the point of threatening the viability of the trans-Alaskan pipeline. In contrast to other nations pocketing the Arctic’s bounty, the U.S. has no major new investment projects there.

If the U.S. wants to catch up, here are some policy initiatives that federal, state and native leaders might consider:

First, the U.S. needs to demonstrate political leadership. Secretary of State Hillary Clinton’s recent participation in an Arctic Council meeting — a first — in Nuuk, Greenland was a good start.

The U.S. should be taking a proactive approach to resolving disputes such as our disagreements with Canada over the Northwest Passage and over our maritime border in the Beaufort Sea.

Most importantly, we must finally sign on to the 1982 U.N. Convention on the Law of the Sea, which many voices in the U.S. national security establishment have long called for. Becoming party to this treaty would have many benefits in the Arctic and beyond. Crucially, it would allow the U.S. to participate in the established process of claiming exclusive rights to the resources over, on and under its extended continental shelf — a predicate for establishing a stable legal climate before attracting investment. (We will also need to revitalize our icebreaker fleet to support Arctic maritime activities.)

Second, the federal government should get out of the way of local commerce. This might be facilitated by a congressional “Arctic Preservation and Development Act” that could lay out the rules of the game, balancing environmental protection and the state’s economic interests.

Lastly, and consistent with President Obama’s formal commitment last month to an open national investment policy, federal and state governments should craft an ambitious strategy to attract foreign capital. Alaskan leaders might especially think about courting Asian investors that are in relatively close proximity, particularly Japan, South Korea and China. As our recent deficit challenges underscore, welcoming any investor interested in the American Arctic would create meaningful new jobs and contribute to economic recovery. Of course, any foreign investment will need to navigate the federal government’s review process, run by the interagency Committee on Foreign Investment in the United States, that is designed to safeguard national security interests.

Alaska should consider using its $40 billion Triple-A rated permanent fund from oil revenues like a sovereign wealth fund, emulating foreign models for investing alongside private monies. Deploying this capital reserve smartly would allow Alaska to accelerate Arctic development projects that are shovel-ready. If the money is steered toward increasing oil production and financing renewable energy projects — both Obama administration priorities — it would have the added benefit of helping the country reduce its dependence on Middle East oil.

If the U.S. can wake up to the Arctic potential it possesses, Secretary of State William Seward’s 1867 purchase of Alaska for $7.2 million could turn out to be the single greatest investment in American history.

—

Mr. Borgerson is a co-founder and managing director of CargoMetrics. Mr. Minerd is a co-founder and chief investment officer of Guggenheim Partners.

Copyright (c) 2011, Dow Jones & Company, Inc.

Over the next 30 days, the U.S. government and its partners in the International Energy Agency will release 60 million barrels of oil onto the world market, the Department of Energy said in a statement.

“We are taking this action in response to the ongoing loss of crude oil due to supply disruptions in Libya and other countries and their impact on the global economic recovery,” Energy Secretary Steven Chu said in a statement.

The administration has faced growing pressure in recent months to release oil from the reserves as unrest has pushed gas prices upward. The administration–up until now–had declined to tap into the reserves, saying the stored oil should only be released during major supply disruptions.

The reserves now hold 727 million barrels of oil, a historic high, according to the DOE.

The average price of regular gas is $3.61 in the U.S.

The DOE said its decision is intended to complement production increases recently announced by other countries. “The United States welcomes those commitments and encourages other countries to follow suit,” the DOE said in a statement.

-By Jared A. Favole, Dow Jones Newswires

To accurately asses this data it’s not enough to look solely at the number of deaths in each industry per year, we must gauge that figure against the amount of each fuel extracted from the earth AND the amount of energy each compound is capable of producing. The Next Big Future tells us:

I wrote this back in 2008and with one new death that is somewhat nuclear energy related (a death at one of the japanese nuclear plants following the 8.9 earthquake) the statistics are not changed. Japan should have had sealed backup diesel generators or updated some of their designs. However, nuclear still compares very, very well to the other energy sources. The air pollution data is mainly from the World Health Organization and the european study Externe. The World Health Organization compiled peer reviewed health studies on air pollution from many institutions. Occupational health and safety statistics track the deaths of workers in the different industries.

Energy Source              Death Rate (deaths per TWh)

Coal – world average               161 (26% of world energy, 50% of electricity)
Coal – China                       278
Coal – USA                         15
Oil                                36  (36% of world energy)
Natural Gas                         4  (21% of world energy)
Biofuel/Biomass                    12
Peat                               12
Solar (rooftop)                     0.44 (less than 0.1% of world energy)
Wind                                0.15 (less than 1% of world energy)
Hydro                               0.10 (europe death rate, 2.2% of world energy)
Hydro - world including Banqiao)    1.4 (about 2500 TWh/yr and 171,000 Banqiao dead)
Nuclear                             0.04 (5.9% of world energy)

Nothing is perfectly safe. Chasing perfection can cause us to ignore just improving and trading worse for a lot better. Non-roof installations of solar is safer than roof installation. Nuclear, wind, solar and hydro are a lot safer than coal and oil. Natural gas is safer but not as much as nuclear and those others. The focus needs to be on getting rid of the most dangerous energy sources which are coal and oil first. Then after that decades long project is done to look at the other energy sources. Safety and improvements for all energy sources should be made as we go.

Continue reading…

TWO factors determine the price of a barrel of oil: the fundamental laws of supply and demand, and naked fear. Both are being tested by the violence that is tearing through Libya, the world’s 13th-largest oil exporter. The price of a barrel of Brent crude now hovers around $115. On February 24th, however, it rose to almost $120, as traders realised that they might have to do for a while without some or all of Libya’s exports: some 1.4m barrels a day (b/d), or about 2% of the world’s needs.

The situation in Libya is grim, as the rebels and the forces of Muammar Qaddafi battle for control of the country’s only resource. Brega, the seat of the Sirte Oil Company in the east of the country, has changed hands three times in recent days. Most of the oil workers have fled, and production has fallen by two-thirds. The ports of As Sidra, Brega, Ras Lanuf, Tobruk and Zuetina, which together handle almost 80% of Libya’s oil exports, were all seized by the rebels; two have now been retaken by Colonel Qaddafi’s forces. The rebels remain in control of Africa’s largest oilfield, Sarir, pumping some 400,000 barrels on a normal day. But for how long? Continue Reading…

In our country’s race to become more energy independent, offshore wind farms have taken a back seat to the offshore drilling debate that is currently heating up in our politics.  Realistically, we could be seeing these offshore wind farms begin to pop-up off the Atlantic coast sometime in the near future, way before any oil rigs.  CNN.com tells us:

Delaware hopes to be the first state to construct a wind farm off its coast. The project, scheduled to be completed in 2012, is one of several offshore wind proposals that have cleared significant hurdles in recent months.

Proponents say wind offers more long-term energy independence than offshore oil. Residents along the Eastern seaboard are embracing it as a stable-priced, environmentally friendly energy alternative.

“When people see the price of gas hit $4, they are very open to having discussions about alternatives,” said Stephen Smith, executive director of the Southern Alliance for Clean Energy, a nonprofit group.

Wind energy today accounts for only 1 percent of the nation’s electricity. A May report from the Energy Department concluded wind energy could generate 20 percent by 2030, with offshore sources accounting for nearly 20 percent of that. Projects mostly would be located along the Atlantic coast because the seabed floor elsewhere drops off too quickly to anchor turbines.

Offshore wind farms present a promising source of unlimited energy.  According to an article written by TreeHugger.com, there is as much potential wind power off our coasts as the current capacity of all power plants in the U.S. combined.

Some benefits of offshore wind farms over land based ones include:

• Less obtrusive.  Apparent size and noise can be mitigated by distance to land.
• Higher average wind speed due to less surface roughness than land.
• Average cost relative to the higher fixed cost of installation can be reduced by size of turbines.  Although harder and often more expensive to install and maintain (especially in deeper water), offshore wind turbines tend to be much larger than those on land and are capable of producing more energy.

Currently, there are many offshore wind farms in operation off the coast of European Nations including Denmark, The Netherlands, Sweden and the UK.

Why has the U.S. been slow to follow suit?

Well for one thing, these nations are simply to densely populated to make any sizable wind farms on land.  However, the U.S. does have plenty of open space for onshore farms, especially in the Great Plains.  Also onshore wind farms can provide economic growth to rural communities in the form of tax revenue and rent to land owners.

Notable Links:
CNN: Offshore Wind Farms May Line U.S. Coast
Forbes: State-by-state Summary of Offshore Wind Proposals
Wickipedia: List of offshore wind farms

American Wind Energy Association

The race to go green is on in the shipping industry.  Not only is the price of oil soaring, but more and more stress is being put on the shipping industry to decrease its carbon emissions and its harmful affects on the global environment.  This has led shipping companies to turn to sources of a renewable energy to power their vessels.

Two Japanese companies have taken the initiative to tackle this important issue saying that they plan to begin work on the first ships to have propulsion engines partially powered by solar energy and they could be ready as soon as 2010.  According to an article in Reuters:

Japan’s biggest shipping line Nippon Yusen KK and Nippon Oil Corp said solar panels capable of generating 40 kilowatts of electricity would be placed on top of a 60,000 tonne car carrier to be used by Toyota Motor Corp.

The solar panels would help conserve up to 6.5 percent of fuel oil used in powering diesel engines that generate electricity at any given moment.

Solar panels for an average home usually generate 3.5 kilowatts of electricity.

The system is expected to help reduce carbon dioxide emissions by 1-2 percent, or about 20 tonnes per year, said Hideyuki Dohi, general manager at Nippon Oil’s energy system development department.

Nippon Yusen will invest about 150 million yen ($1.4 million) in the solar panel system to be designed by Nippon Oil.

Solar panels capable of generating several kilowatts of electricity have been used on large vessels before but their use has been limited to power for the crew’s living quarters.

While this system would have to be implemented on a large scale to have any significant impact on emissions from the industry as a whole, it is a step in the right direction and could potentially persuade other companies to follow.

Check out gCaptain’s post on Skysails and more information on other green ship designs HERE.

Thanks to Sea-Fever for the link.