* Arctic estimated to have 90 billion barrels of reserves
* Statoil does not expect major production before 2030
* High development costs, harsh weather are big obstacles
* Some wells cost $500 million to drill, firm says
By Joshua Franklin
LONDON, Nov 29 (Reuters) - Norway’s Statoil said it would be decades until drilling begins for much of the Arctic’s vast untapped oil and gas reserves due to the challenges of working in one of the world’s harshest environments.
State-owned Statoil hopes to tap into the reserves of about 90 billion barrels of oil equivalent that the U.S. Geological Survey estimates lie in the Arctic, amounting to almost three years of total global demand or a third of Saudi Arabia’s remaining petroleum reserves.
But the company’s exploration chief, Tim Dodson, said the likely costs involved, regulatory complexities and harsh weather conditions meant drilling in much of the Arctic would move at a slower pace than first thought.
“We don’t envisage production from several of these areas before 2030 at the earliest. More likely 2040, probably not until 2050,” he said, without elaborating on the timeframe.
Dodson, speaking at a conference in London on the Arctic and climate change, said the complications of drilling in many parts of the area were significant but could be overcome.
“I think what we have to realise is that the challenges our industry face in the Arctic are at least as significant as we thought they were just a couple of years back, but they’re not insurmountable,” he said on Thursday.
One of the biggest challenges was the cost of drilling at exploration levels in some of the less accessible areas of the Arctic, the price of which Dodson described as mind-boggling.
“There’s almost no prospectivity on this planet that can support drilling exploration levels for half a billion dollars each. And that’s what we’re talking about, half a billion dollars for some of these wells.”
Dodson said for Arctic drilling to be a success, collaboration across the oil industry was key and Statoil was working with its peers to share information.
“What we’re facing is, from my perspective, an industrial challenge, it’s not a company challenge. If one of us fails, we all fail,” he said.
In 2014, Statoil plans to drill wells at two sites 400 km off the Norwegian shore, the furthest north ever drilled in the country, in what Dodson described as laboratories and stepping stones for future drilling.
Environmental groups say Arctic drilling threatens a unique nature reserve, and firms scaled back exploration plans after the grounding of a Royal Dutch Shell drilling rig off Alaska last year caused a public uproar.
Greenpeace says Statoil’s plans threaten the Bear Island, a wildlife sanctuary and home to polar bears. It has labelled the company an “Arctic aggressor”.
Dodson did not comment on this but Statoil said earlier this month that it understood the concerns of green groups and that it was sure about the safety of its work. (Editing by Henning Gloystein and Pravin Char)