Russian Oil Exploration — And Why The US Will Be Playing Catch-up

by BWK ~ July 11, 2008

I told you so.

While the U.S. dawdles, hems and haws over offshore drilling, the Russians are committed to developingthe Arctic.

And the Russians are going to do it. They will conquer the resources of the Arctic, just as their Czarist forebears gained control for Russia over Central Asia in the 18th and 19th Centuries. (Fortuitously for the U.S., the Russians “sold” Alaska to the U.S. in 1867 for a mere $7.2 million.)

The Russians are now shaping events in the Arctic in their own, characteristic way.

At a recent meeting with top oil executives, Russian Prime Minister Vladimir Putin said Russia’s declining oil production meant the industry was at a “critical juncture.” Putin proposed to cut taxes and slash bureaucracy to encourage new oil development in Arctic regions.

The Russians are leveraging two key advantages right now.

1. They have money to devote to building the best Arctic explorations systems that the human mind can devise.

2. They have some of the best human minds in the world, focused on this task.

The reports are that the secret city of Severodvinsk is the home to the next generation of Arctic drilling exploration platform.

One giant platform measures 413 x 413 feet, well over the size of an 3 football fields.

The constructors are Sevmash, the short-hand name for Severodvinsk Machine Building Co.

Sevmash has long experience in powerful oceanic vessels. Sevmash built many of the immense, double-hulled nuclear submarines for the former Soviet navy. The yard still builds submarines for the Russian navy.

These impressive ships include the gigantic, all-but-indestrictible Typhoon- (pictured above) and Oscar-class vessels.

The only Oscar ever to sink was the Russian submarine Kursk, destroyed in August 2000 by an internal explosion when the warheads of almost all the torpedoes in one compartment cooked-off due to an onboard fire. After a massive effort, the Russians recovered the ruined Kursk and brought the vessel to drydock.

Based on media reports and other information released by the Russian navy, Western analysts were astounded at the strength of construction of the vessel.

Now this same level of naval architecture is being applied to developing futuristic offshore drilling systems for Arctic applications.

According to Russian Member-of-Parliament Artur Chilingrov, “The Arctic zone is a guarantee of Russia’s economic power. Oil, gas, gold, diamonds and phosphates — it’s all there. … We need to find new oil fields … We need to go offshore.”

And so they will…

BWK

Note: Byron King is a frequent contributor to the free e-letter Whiskey & Gunpowder. To receive daily insights into energy, oil, commodities and other natural resources sign up here!

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