Example of Rational Solution in the Barents Sea
The global warming leads the situation in the Barents Sea to important consequences, such as easier process of oil and gas drilling. As a result, it may raise the discussions on disputed shelf zones with fossil fuels’ deposits, especially near to Norway-Russia sea border.
We construct a model, which highlights potentially disputed territories, analyzes preferences of the countries interested in different types of resources.
The book presents an analysis of the current state of the climate in the Barents Sea in 1979–2005. Using mathematical modeling for 2030–2039, 2050–2059, and 2090–2099. According to the global scenarios of climate change RCP4.5 and RCP8.5, a detailed comprehensive assessment of changes in the climatic parameters of the atmosphere and ocean is given. The most complete basic abiotic information was obtained to assess the impact of climate change on the ecosystems of the Barents Sea in the 21st century. For climatologists, geographers, biologists, as well as readers interested in the nature of the Barents Sea ecoregion and the prospects for its maintenance.
Historically, extreme remoteness and cold have left the Bering Strait region sparsely populated and economically undeveloped. Costs are very high and infrastructure is minimal. Economies are undeveloped, and based primarily on mining and government. Population densities are very low. A high proportion of residents are Natives for whom subsistence hunting and fishing remain important sources of food. In the future, environmental, economic, political and technological factors are likely to bring increased economic activity to the region—although the timing and scale of future economic change are difficult to predict. Economic activities most likely to grow include marine transportation; onshore and offshore mineral and hydrocarbon development; land-based and cruise ship tourism; commercial fishing; and government services and infrastructure needed to support economic and population growth. The nature, timing and scale of growth will depend on a wide range of factors including change in ice conditions, the extent of future resource discoveries; and the extent to which governments make development of the region an economic and strategic priority. Significant economic activities in the Bering Strait region for which shared governance issues are currently or likely to become important include marine subsistence, marine transportation, offshore oil and gas development, commercial fishing, and cruise ship tourism.
The oil and gas industry growth has increased rapidly in the Barents Sea during the last few years. The Arctic zone is considered to be a relatively clean area. However, there is a certain number of “hot spots” in the Arctic due to the activities of extracting companies.
We studied the problems connected with production of these two types of fossil fuel and carried out simulation model. This model shows the results of oil or gas flowing accident related to drilling complex, taking into account sea currents. By using this model, we can highlight areas in the Barents Sea with the highest potential of the disaster so that preventive measures could be taken. In addition, this model helps to organize elimination of fossil fuel flowing consequences.
Risk Management approach is an essential part of the project. Large industries and particular companies incorporate RM Culture. Statistics shows, that companies with Project Management (PM) Structure reduce cost ineffectiveness up to 20%. In oil and gas industry PM Risk Analysis (PRMA) has been widely used for the last years. Various models and procedures have been developed to manage projects of different scale. Nonetheless, Offshore Projects (OP) complexity, high uncertainty of technical, financial, market and government factors, as well as different sea conditions, still makes sense to improve general PRMA models according to the oil and gas OP features. Traditional RM tools and techniques are not appropriate to cope with complex projects in the Arctic. Companies will have to modify risk assessment process or look for new methods. The paper suggests OPRMM, where the attempt to implement PM tools and techniques together with mathematical modeling and expert assessment is made and institutional factors are included. Practically, it is founded on the comparison between offshore field development in the Barents Sea and the Kara Sea. The reason for research is debates around future Arctic oil and gas projects and their commercial potential. Several large projects with participation of major international companies in the Barents Sea and the prospectivity of the Kara Sea Projects in conditions of technology difficulties are under discussion and have not reached the investment project phase yet. OPRMM starts with identifying the key factors, which could affect offshore field development. Inside the investment regime modified real option value (ROV) model for OP is developed: stop option and scale transformation option. Basing on the binominal trees and Monte Carlo Simulation it is possible to see the perspectives of the OP at an early stage in the conditions of high uncertainty. Incorporating the ROV model into investment regime allows operator to choose the territory to explore. The research shows, that offshore projects in the Arctic offshore is not only under the pressure of internal corporative factors, but also under influence of external institutional factors. New tools and approaches will be required in Arctic projects where no one wants to be looking in the wrong place.
As a result of the global warming, the situation in the Barents Sea leads to several important consequences. Firstly, oil and gas drilling becomes much easier than before. Therefore, it may raise the level of discussions on disputed shelf zones where the deposits are located, especially near to Norway-Russia sea border. Secondly, oil and gas excavation leads to potential threats to fishing by changing natural habitats, which in turn can create serious damage to the economies.
We construct a model, which helps to highlight potential disputed territories and analyze preferences of the countries interested in fossil fuels and fish resources. We also compare different scenarios of resource allocation with allocation by current agreement.