Nunatsiaq Online
NEWS: Around the Arctic April 28, 2014 - 3:13 pm

Commercial use of the Arctic? Don’t hold your breath, U.S. agency says

"The primary reason for the limited number of Arctic cruises is a lack of demand"

NUNATSIAQ NEWS

Whether it’s cruise ship tourism or offshore oil and gas production, commercial activity in the U.S. Arctic is unlikely to grow much over the next 10 years, the U.S federal government’s spending watchdog said in a report.

The Government Accountability Office, which performs work that’s roughly similar to that of the Auditor General of Canada, issued the report earlier this month to provide a discussion of the U.S. government’s Arctic spending needs.

And despite the hype that often attends predictions about the future of the Northwest Passage and other Arctic maritime regions as sea ice shrinks, the GAO found it’s unlikely that commercial activity will increase substantially in Arctic waters over the next decade.

For commercial shipping, the agency said “some shippers” are interested in the Northern Sea Route north of Russia but few have any interest in the Northwest Passage.

“Few of the shipping companies we spoke with have used the Northwest Passage or have plans to use it in the next 10 years,” the report said.

That’s because per-unit shipping costs are still higher when transporting goods through the Arctic, the increased risk and uncertainty created by unpredictable weather, and the need for more stringent vessel and crew requirements.

And don’t bet on any big increase in Arctic cruise ship sailings.

“Cruise industry representatives we spoke with expect cruise tourism in the Northwest Passage to remain limited to adventure cruises for the next 10 to 15 years,” the report said.

That’s because there’s low demand in the U.S. for Arctic cruise tourism.

This means it’s a business that for the foreseeable future, will appeal only to a small niche portion of the adventure cruise market, usually served by smaller vessels that carry fewer than 200 passengers.

By comparison the mainstream cruise vessels that ply the waters off southeast Alaska and northern British Columbia carry more than 1,000 passengers each.

And cruise industry representatives told the GAO that better maps, charts, icebreaker support, and search and rescue capabilities wouldn’t help much.

“According to representatives from a cruise association, the primary reason for the limited number of Arctic cruises is a lack of demand from the mainstream cruise consumer base,” the report said.

And one reason for that is that Arctic cruise vessels often have to sail for long periods through areas where the scenery isn’t very interesting for tourists.

As for offshore oil and gas exploration and production, the GAO does not predict much new activity over the next decade.

“It’s is unknown when and whether U.S. Arctic offshore oil production will begin,” the report said.

Although three oil companies hold leases in the Beaufort and Chukchi Seas, these sites “may be decades away from production,” the report said.

Royal Dutch Shell did begin a drilling program in 2012, but called a halt to exploratory activities after a series of screw-ups.

“Recently, oil companies have made some investments to develop offshore oil resources in the U.S. Arctic. These development efforts, however, are generally on hold and increases in oil exploration activity are expected to be limited,” the GAO report said.

The report also discusses recent debate over whether the the U.S. government should build a deep sea port somewhere in the Arctic regions of northern Alaska, but makes no recommendations on the idea.

Right now, Alaska has no Arctic deep sea port. And the U.S. government has only two functioning icebreakers to patrol the area, although the U.S. Coast Guard has begun planning work on a new polar class icebreaker that could come into service in the early 2020s.

The estimated cost of building such a ship ranges from $850 million to $1 billion.

 

 

 

 

 

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