A study suggests the equivalent of 112 billion barrels of oil lies undiscovered underneath the sea ice and frigid waters of North America's Arctic, adding new urgency to the debate over control of those resources.

The report released Wednesday by the United States Geological Survey has for the first time put some hard numbers behind the energy potential of the North.

Total undiscovered global reserves north of the Arctic Circle are estimated at 412 billion barrels of oil equivalent most off the coast of Russia. That's about one-third of the world's undiscovered gas and about one-sixth of its undiscovered oil.

"That's huge," said William Lacey, director of FirstEnergy Capital, a Calgary energy analysis firm. "It's massive in terms of the resource."

"It highlights why there's some potential boundary disputes in the North."

The reserves off North America are likely to be composed of 49 billion barrels of oil, 340 trillion cubic feet of gas and another two billion barrels of natural gas liquids.

"Most of the Arctic, especially offshore, is essentially unexplored with respect to petroleum," the report says. "The extensive Arctic continental shelves may constitute the geographically largest unexplored prospective area for petroleum remaining on Earth."

The geological survey divided the Arctic into 33 zones. The geology of each was studied and 25 of those zones were considered to have a greater than 10 per cent probability of holding at least 50 million barrels of oil or equivalent.

Those 25 zones were then more carefully assessed by type of rock and formation. Estimates were arrived at by comparing them with other, more well-understood basins in southern latitudes.

"It's all by geologic comparison," said Ken Bird, one of the report's authors. "Most of the time we've got a lot more information."
International boundary disputes

Two of the largest fields off North America lie in waters subject to boundary disputes. About 72 billion barrels of oil equivalent are expected to lie under the Beaufort Sea, where Canada and the United States have a dispute about the border extending north from between Alaska and the Yukon. Another 17 billion barrels lie between Baffin Island and Greenland through waters in which Denmark and Canada are still trying to draw a line.

But the report is likely to cool disputes over who controls resources in the High Arctic. There isn't much to fight over, said Bird.

"In terms of the deep portion of the Arctic Ocean basin, we've estimated relatively little oil and gas potential. I think that will reduce the intensity of concern."

Most of the resources are on or near continental shelves, which are mostly within existing jurisdictions.

Still, the survey's findings make recent huge investments in the Arctic by major energy companies look smart, said Lacey.

"They already had a pretty good feeling as to what the potential was. Otherwise they wouldn't be making that sort of commitment."

"[The study] validates it to the broader market."

Earlier this year, BP bid almost $1.2 billion for exploration rights in Canada's Beaufort Sea. In February, Shell paid the U.S. government $2.1 billion for oil and gas leases in the Chukchi Sea, and last summer ExxonMobil Canada bid $585 million for other exploration rights off the coast of the Yukon and Northwest Territories.

All the reserves included in the estimate can be developed with current technology. A study of the economics of the various basins is in the works, Bird said.

The estimates do not include unconventional hydrocarbons such as gas hydrates.

Most of the oil and gas will be found offshore in shifting sea ice and extreme temperatures, making them difficult and expensive to develop. But Lacey said energy companies will be increasingly willing to go to those lengths.

"There's lots of energy out there. You just have to go farther and deeper and to more remote areas to find it."

Yay... Oil still has a future