Costs and benefits of countries and TNCs exploiting energy resources

Examine the costs and benefits of countries and TNCs exploiting energy resources in technically difficult and environmentally sensitive areas (15) There are both benefits and consequences when extracting energy resources. Humans still need energy to function in day to day life as well as to keep global markets and the economy going, so it is beneficial and necessary to obtain it, and with the USA alone importing 10 million barrels of oil a day, new sources need to be discovered and recovered. However, there are controversial issues when it comes to energy. It is an expensive and complex process to extract resources from the ground and can have damaging effects on the environment, particularly in untouched national parks and extreme sensitive areas.

The Arctic National Wildlife Refuge (ANWR) is a remote area in Alaska owned by the USA. It was stated a national monument in 1996 by Bill Clinton after the Exxon Valdez oil spill in 1989 caused environmental damage in the Arctic Circle. It was named ‘Area 1002’ being the USA’s last wilderness, but there are talks over whether it should be used to drill oil. This is an environmentally sensitive area as being an untouched wilderness there are many indigenous or reliant species in this habitat. The Caribou is one species who migrate here and would be affected if the area became a drilling site and there was environmental degradation from oil leaks, CO2 emissions from the rig etc. The USGS have estimated 4.3-11.8 billion barrels of oil are recoverable, and this would only contribute between 0.4% and 1.2% of the world’s oil market, so the large costs would potentially be for little benefit.

However, benefits will come with drilling in the area. There will be a tax base for the local government which would benefit local residents, and it would provide employment and generate income. There could be funding for water and sewer systems, schools etc, and increased scientific research on the area would increase understanding of arctic ecosystems and coexistence. Furthermore, because the government would be responsible for allowing this area to be drilled, it would be a controversial media issue so they would probably ensure extra care was taken to avoid environmental degradation and with this would come evolved drilling and production techniques, benefitting environments across the globe from now and in the future.

A technically difficult area to drill would be in Alberta, Canada. Here there are the Alberta Tar Sands, yet the extraction and separation of the oil from the sand is difficult and expensive. Natural gas itself needs to be used for the separation, using 40% of Alberta’s gas. As there are no keystone species here, it gets overlooked environmentally so this is a negative as the species who are there will suffer greatly such as bird populations. Costs of drilling here include toxic waste, causing toxic pools, CO2 and SO2 emissions polluting the air and affecting birdlife, destroying the surround boreal forest home to animals and also using up water resources to extract the oil; 3 barrels of water are needed to extract 1 barrel of oil. 1 litre out of every 160 litre toxic pool leaks, disrupting and contaminating the water cycle and food chains.

Furthermore, the mining is open cast and the Bitumen is only 75cm underground in most areas, meaning a lot of land needs to be used and degradated. Again, there are benefits to extracting resources here. There are close political links between the USA and Canada so this could mean energy security for the USA’s heavily consuming population, and security in the looming future energy crisis.