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Arctic Technology Conference, 24-26 October, St. John's, Newfoundland and Labrador, Canada

Prt. Technical and Legislative Risks Associated With Arctic Development Case Study - Russia and Norway. 2016.
Oppong R., Benson L. A., Талипова А. С.

Arctic territory today is the most perspective territory for oil and gas companies. It is not only resource based or in other words, Arctic boarding countries that should engage in arctic exploration as it requires completely new technological advancement, calling for intense attention to its field development. Following the USGC research developed in 2008 year, more than 80% of perspective Arctic territories are located in offshore. This fact inevitably conveys technical and legislative risks which are not experienced onshore or conventional offshore fields. Technical risks are associated with severe climate conditions, sensitive ecological situation and a lack of field development experience on these territories. Legislative risks depend on the arctic country in question. Legislative also include taxation system that directly affects the efficiency of field development. All this makes it actual to study technical and legislative risks associated with arctic offshore field development. Practically, the work consists of two parts: analysis of influence of technical risks and legislative risks (including taxation system) on field development in different Arctic Seas and two cases in Russian Barents Sea and Norwegian Barents Sea were studied. Analysis of technical and legislative risks in these countries are determined by similar conditions of state participation and strategic meaning of Arctic territories for both countries. In the frame of technical analysis risk classification system according to different Arctic Sea conditions was worked out. Probability for each technical risk was assessed in expert way and included in the field development project evaluation, which in turn was made using real option valuation and stochastic modeling approaches. In order to receive synergetic effect, valuation model of filed development with technical risks were then incorporated into economic model, which includes legislative restriction and taxation. These conditions differ according to territory in Russia which is the opposite in Norway, allowing us to create territories with similar climatic conditions and geological perspective, analyzing technical and legislative risks.

Arctic Technology Conference, 24-26 October, St. John's, Newfoundland and Labrador, Canada