2016 ended with one of the most profound international agreements in the history of North American Arctic politics, even if it does not last.
On Dec. 20, 2016, Canada and the United States announced a joint agreement that bans offshore oil production in nearly the entire North American Arctic. In the last decade, countless editorials and reports have touted the potential of the Arctic to become a sort-of frozen Saudi Arabia. A widely cited figure is that the Arctic region, globally, contains 90 billion barrels of oil. Now, the commonly held view that the North American Arctic will be the oil producer of the future will not come to pass — at least for the time being.
Commentators who have long speculated on the future of the Arctic economy seemingly have a bit of clarity — namely that the future seascape will not include offshore oilrigs in North America. The fact that the pact arrived with such little warning shows bold leadership by Canadian Prime Minister Justin Trudeau and United States President Barack Obama. It is a significant agreement, even if it does not survive the Trump administration.
The reason for the agreement is clear. It follows up on a March 2016 agreement that saw each country promise to protect a minimum 17 percent of its Arctic land and 10 percent of its marine area before 2020. On that earlier agreement, Josh Caldon and I argued that, “Ideological unity, a desire to change course in Canadian Arctic policy and even the strength of friendship between the two countries’ leaders explains the new Arctic pledge from Canada and the United States.” These factors also explain the latest action, with one addition, namely that both leaders wanted to take strong environmental action before Donald Trump became President of the United States.
Never have governments declared such a large and potentially rich area off limits for development. The agreement says:
“The United States is designating the vast majority of U.S. waters in the Chukchi and Beaufort Seas as indefinitely off limits to offshore oil and gas leasing, and Canada will designate all Arctic Canadian waters as indefinitely off limits to future offshore Arctic oil and gas licensing, to be reviewed every five years through a climate and marine science-based life-cycle assessment.”
We know the area of marine territory protected from oil development in the United States is 500,000 square kilometers (about 195,000 square miles). Canada banned oil production in its “Arctic waters,” the definition of which is unclear and most likely deliberately left ambiguous. One might assume Canada will follow the definition in earlier legislation, such as the Arctic Waters Pollution Protection Act. Another concurrent press release from the government of Canada is more specific, stating that, “The Canadian Arctic Ocean will be indefinitely off limits to new oil and gas exploration licenses.” At a minimum, the protected area is millions of kilometers. Canada has 7.1 million square kilometers of ocean territory, which represents 70 percent of its landmass; the Arctic, meanwhile, represents 40 percent of its landmass.
This new agreement is significant because it seeks to end the debate as to whether the North American Arctic will become an oil-producing region, a dominant theme in academic literature throughout the last decade. It is profound, even though neither Canada nor the United States currently has offshore oil production in its Arctic waters. Debate can now focus on more pressing issues, such as Arctic shipping, fisheries, community development and environmental protection.
One reason behind the new policy is that it has little immediate economic cost. As mentioned, there is no offshore oil drilling in the North American Arctic, as climatic conditions (such as ice cover) hinder economic feasibility. The United States had allowed production in the Chukchi Sea and Shell Oil had attempted to drill there since 2012. In September 2015, Shell shuttered the production as extraction was not profitable given geological and environmental conditions. The United States’ Arctic contains nearly 25 billion barrels of oil. Alaska Republicans claim the resources could create 55,000 jobs.
Canada does not have any offshore oil platforms, but the government had an interest in finding resources. In 2014, the National Energy Board granted authority to a Norwegian company to carry out seismic testing in Baffin Bay and the Davis Strait, which could show that the area contains exploitable oil resources. The Canadian Association of Petroleum Producers estimates there are more than 10 billion barrels of oil located offshore in Canada’s Arctic.
In both countries, the move will have no economic costs and will be a boon to Obama and Trudeau’s climate change legacies. One can reasonably surmise that strong environmental action will not be forthcoming under Trump. In Canada, it increases Trudeau’s environmental credibility. In November 2016, Trudeau approved the construction of two new pipelines to transport Alberta oil, irking many environmentalists. This new action shows that both leaders have a keen interest in climate change, without spending political capital.
Some analysts criticised the new agreement, arguing that oil production could have been an economic boon for local communities. For example, Arctic expert Heather Exner-Pirot, writing for Open Canada/Arctic Deeply said, “The only ones who bear the costs are local residents who have lost the potential for future economic development.” The agreement, however, is not necessarily permanent. Canada will review the policy every five years, giving the government an opportunity for a change of heart if Arctic oil becomes more economically viable. Canada and the United States can alter this agreement if a company discovers a new deposit of easily exploitable oil that could benefit Arctic residents. Still, it is clear that interest from the oil industry is not strong. As noted, Shell has already stopped Alaska oil production and Canada has had even less interest. Yet, the deal has attracted criticism.
Commentators also predict that President Trump will simply undo Obama’s action. Exner-Pirot also wrote, “It is valid to wonder how wise it is for Canada to so publicly hitch its wagon to a lame duck president when the incoming U.S. president (however odious) and his nominee for secretary of state, Rex Tillerson, are almost certain to have different priorities.” Indeed, one of President Trump’s first actions was to pause President Obama’s “lame duck” executive orders.
Yet, there is hope that the agreement will stand. Obama permanently banned the production based on the obscure 1953 Outer Continental Shelf Lands Act; the law allows presidents to protect parts of the continental shelf unilaterally. The bill says, under the “Reservation of Lands and Rights” subsection, that, “The president of the United States may, from time to time, withdraw from disposition any of the unleased lands of the Outer Continental Shelf.” Previous Presidents have used this bill to stop oil production on a seemingly temporary basis. As reported by the New York Times, the Obama Administration was confident that their new use would withstand legal challenge, since nothing in the bill specifies bans must be temporary and it does not indicate that future presidents can cancel the action. Presidents Eisenhower, Nixon, Bush and Clinton each used the provision to protect federally controlled waters, but never in such a large area. The New York Times quoted a White House official who said that President Dwight Eisenhower used the bill during the 1950s to ban oil production in an area of the Florida Keys. Nonetheless, Republicans can overturn Obama’s action through legislative action or a court challenge.
The agreement has drawn strong criticism from Arctic political leaders; the seeming lack of consultation is a failing of the agreement.
Alaska Governor Bill Walker tweeted that the agreement is “akin to saying that outside voices are more important than the voices, lives, and livelihoods of Arctic residents.” Alaska Senators Dan Sullivan and Lisa Murkowski, as well as Congressman Don Young, all Republicans, released a press release condemning the action. Murkowski said, “The only thing more shocking than this reckless, short-sighted, last-minute gift to the extreme environmental agenda is that President Obama had the nerve to claim he is doing Alaska a favor.”
Peter Taptuna, premier of Nunavut, told the Canadian Broadcasting Corporation: “We do want to be getting to a state where we can make our own determination of our priorities, and the way to do that is gain meaningful revenue from resource development. And at the same time, when one potential source of revenue is taken off the table, it puts us back at practically Square 1 where Ottawa will make the decisions for us.”
Bob McLeod, premier of Northwest Territories, said to Canadian Broadcasting Corporation: “It feels like a step backward. We spent a lot of time negotiating a devolution agreement, and we thought the days were gone when we’d have unilateral decisions made about the North in some faraway place like Ottawa, and that northerners would be making the decisions about issues that affected northerners.”
McLeod said he found out about the agreement on the day of the announcement. One Northern political leader initially stayed silent, Yukon Premier Sandy Silver, elected in November 2016. He is a member of the Liberal party (the same as Prime Minister Trudeau). In January 2017, Silver also said that the Trudeau government did not properly consult his territory. Consultation could have avoided at least some of this criticism.
The stoppage of oil production has received the most attention; however, the agreement includes more than action on oil in the Arctic. It sets a new course for North American Arctic relations, focused on environmental protection. Academics criticised the previous Canadian government for focusing too narrowly on economics and acting unilaterally. The new agreement promises a new, collaborative policy: “Canada is committing to co-develop a new Arctic Policy Framework, with Northerners, Territorial and Provincial governments, and First Nations, Inuit, and Métis People that will replace Canada’s Northern Strategy.”
The agreement also sees Canada promise new spending in “basic marine infrastructure and safety equipment to help sea lifts and community re-supply operations,” among a list of new investments. These priorities will enhance environmental protection in Canada’s Arctic and slightly improve the quality of life in Northern communities. The agreement also promises new scientific co-operation between Canada and the United States, with an eye toward environmental action. It promises, “the first processes ever to identify sustainable shipping lanes throughout their connected Arctic waters, in collaboration with Northern and Indigenous partners,” actions to “phase down the use of heavy fuel oil” and sustainable fishing. Altogether, this action points to a new direction in North American Arctic relations.
The agreement will always be significant, even if President Trump alters it in some way. It is likely that Canada will follow through with its end, regardless of what happens south of its border. Given the lukewarm interest from industry in Arctic oil, President Trump and Congressional Republicans may not bother altering the pact. It could be a token for environmentalists and those who care about climate change. Yet, the agreement is a key symbol that the future of the Arctic does not lie in oil production, but rather thriving communities. That significance will not change, even if President Trump balks at the ban on oil production and Canada follows suit.
Dr. Andrew Chater serves as Expert in Arctic Governance and International Decision Making at Polar Research and Policy Initiative. He is also a professor in Political Science at Brescia University College in London, Ontario.
This article was originally published by The Polar Connection and is republished here by permission.
The views expressed here are the writer’s and are not necessarily endorsed by Arctic Now, which welcomes a broad range of viewpoints. To submit a piece for consideration, email commentary (at) arcticnow.com.