The Minister of State, Foreign and Commonwealth Office (Lord Howell of Guildford)
My Lords, this has been a short but expert debate, with a lot of extremely well informed contributions to what is a fascinating and probably rather undiscussed phenomenon of our times. It is a very fast-developing situation, as the noble Lord, Lord Jenkin, pointed out, with rapidly melting ice packs and ice floes in the Arctic region. The House is grateful to the noble Lord, Lord Jay, for letting us focus briefly on this; it may be the sort of issue that we will come back to in much greater detail in future.
The phenomenon is all the more striking because of the possibilities that it raises. Greenland is becoming greener, or so we are told. Indeed, there is evidence of areas becoming habitable again in Greenland, which have not been available for five or six centuries. There is a certain irony in the whole situation that, as the ice melts, the hydrocarbons are becoming more accessible. While we want to combat global warming, which is widely believed to be closely associated with excess use of fossil fuels, we have a situation which is making access to fossil fuels all the easier, although perhaps easier is too strong a word. It is certainly less difficult and more possible than it has been in history.
There is the hydrocarbon situation and the fascinating prospect of opening the north-west passage, which my noble friend Lord Rotherwick referred to, and the possibility of solar routes. I want to come to both of those in a moment, but let me begin by answering the central question: what are our key aims in the Arctic and what are we in the UK doing to meet these challenges? Let me sum up the answers to those questions briefly before coming to more detail about hydrocarbons and many other aspects of the Arctic phenomenon.
Our aims are to promote peace and good governance in the region, increase UK influence by maintaining good bilateral and multilateral relationships with the Arctic states, and to support the work of the Arctic Council and other international and regional bodies. The noble Lord, Lord Jay, asked about our status in relation to the Arctic Council We are an observer and we have presented a very strong case for our continued observer status. Frankly, we would like to see this whole issue raised by the Arctic powers of who should be observers and how that should work in the future. We want that to be as settled as possible and believe that we can make a powerful contribution to the continued work of the Arctic Council.
Our second aim is to protect crucial UK energy supplies from the region and promote UK business interests. Thirdly, we want to ensure access to fisheries and transport routes in the region, including the ones that may open up in the future—not just in summer but in winter. Fourthly, we want to promote wider UK Government objectives with regard to sustainable development, environmental protection and climate change.
Let me move from the general to the particular. I have noted already the irony that the melting of the ice means that all sorts of possibilities open up for access to the huge hydrocarbon resources in the region. We need to remember that this is not virgin territory. We have the Stockman field, to which my noble friend referred, Snohvit, the Norwegian development, Prudhoe Bay and the vast Alaska resources operated by BP, so oil and gas—particularly gas—is being extracted from the area in substantial quantities already. They are small compared with what is estimated to lie in the region, and all kinds of vast figures are thrown around. The US authorities estimated some years ago that 30 per cent of the world’s gas reserves and 13 per cent of the world’s oil reserves lay under the Arctic ice, or in the Arctic region. One has to be careful with these figures because they are assessments of what has not been discovered, so they have a guessing element to them. But there is no doubt that colossal reserves are there and the question arises as to how they can be got out economically and in line with all the other restraints that the world wants, including respect for the environment.
There are then the shipping aspects, which are potentially very interesting, to which my noble friend Lord Rotherwick referred. In a way, although one may be eliding the timescales a little, many would say that today travelling through the Gulf of Aden has become considerably more hazardous with the unfortunate growing piracy elements. Insurance premiums have gone up enormously for taking the traditional routes between the West and the East, and the north-west passage is many thousands of kilometres—and miles—shorter. If the passage became available in the summer, and at least parts of the winter, the gain would be enormous and of great interest to the great shipping and transport companies of the world. Those are the possibilities. They are undoubtedly exciting and real because the melting is taking place. Scientists argue about the precise nature and speed of the causes and whether we are talking about a cyclical, historical or permanent trend. That is a debate that we do not want to enter into this evening. However, the melting is a fact.
Against that, it has to be accepted that extracting oil and gas in the area could lead to oil spills and environmental hazards. The conditions are very difficult and, even with the melting of the ice, we are dealing with appallingly cold conditions. Deep-sea drilling, as we know from the tragedies in the Gulf of Mexico, is full of hazards. The world is watching closely to see that these things are controlled very carefully. The noble Viscount, Lord Waverley, was concerned about the guidelines for the extraction of hydrocarbons. We fully support the Arctic Council guidelines. They must be adhered to rigidly.
Secondly, there is the question of straightforward economics. At what price a barrel of crude does it begin to look realistic to develop the technologies to extract from under the ice and to develop the kind of offshore sub-sea stations that can draw oil and gas horizontally on to land-based refining and receiving stations? The costs are very high. All sorts of estimates fly around. There is no doubt that if the price of crude was as low as it dipped two years ago—or as low as it dipped back in the 1980s—the attractions of any kind of extraction in this area would be very small. There are major environmental issues and major fisheries interests to be safeguarded. There are the interests of the indigenous peoples to be looked after.
Against that, the politics of the whole region has begun to be not as dismaying and deterring as perhaps it seemed in the past. The littoral five—Russia, Norway, Denmark, Canada and the USA—and the other three members of the Arctic Council—Iceland, Finland and Sweden—are now co-operating more closely than they have in the past. The long debate between Russia and Norway about demarcation lines looks like being settled. It is yet to be completely signed but the spirit is one of co-operation and is constructive. The noble Lord, Lord Teverson, brought us a hint of the good news from his interlocutor. The major political problems and quarrels that might have tarnished the whole scene as it unfolds look like they are being tempered by a degree of co-operation, which is very good news.
The noble Lord, Lord Alderdice, asked about security. There are concerns that various countries have sent patrol vessels to the area. Everyone became very excited when the Russian authorities decided to place a sub-sea titanium flag on the North Pole. Again, one hopes that the spirit of co-operation that is evident in the Arctic Council will prevail.
That is the scene. We are involved with it and watch it very closely. The possibilities are undeniable and there are also dangers. I hope that noble Lords will feel that Her Majesty’s Government are alert to this new development. We are not closing our eyes to something of great importance. We are not an Arctic power but we tend to be close to it. The possible implications for our coastline, if the climate developments continue in the way some fear, and certainly for our energy security, are real.
I hope that this debate has helped the noble Lord, Lord Brett, warm up a little from his cold start this morning. I have not answered in detail about the flooding matters., but I will write to him about them. They are part of a more general concern that we all have about flood protection. I thank the noble Lord, Lord Jay, very warmly for initiating such a fascinating, interesting and important debate.