The Arctic This Week Take Five: Week of August 7, 2017

US Treasury slaps Exxon for Russia sanctions violation; Exxon strikes back

On July 20, the US Treasury Department Office of Foreign Affairs Control (OFAC) served US energy giant ExxonMobil a $2 million fine for violating trade sanctions with Russia in 2014 business dealings with Rosneft president Igor Sechin (Global Trade). While Rosneft isn’t off-limits, as a “Specially Designated National,” Sechin is: and the bone of contention for OFAC is that there were eight “legal documents” that he had signed off on with Exxon in his capacity as president (Global Trade). In return, Exxon has promptly sued OFAC, calling the fine “unlawful” and arguing that the sanctions’ wording “did not preclude dealings with Rosneft or with Mr Sechin in his representative capacity as an officer of Rosneft” (Legal Newsline, Financial Times).

TAKE 1: $2 million is a slap on the wrist for a company like Exxon, which posted $3.35 billion in profits last quarter alone (Reuters). It’s not about the money: it’s about the politics. Between the ongoing FBI investigation and a new round of sanctions against Russia, Washington has been engaged in a show of strength. Yet the OFAC fine thickens the plot even more: when the legal documents in question were signed, none other than present Secretary of State Rex Tillerson was at the helm of Exxon.

Flood hits one of Russia’s largest diamond mines

An underground shaft at Mir, a diamond mine in Yakutia, flooded suddenly on August 4th, causing 133 workers to be evacuated and leaving nine missing (Hindustan Times). The cause of the flooding was from the sudden collapse of a crater containing more than 120 Olympic-size swimming pools’ worth of water, which itself was due to “unexpected geological processes” (RFERL). As of August 5th, one of the trapped miners has been rescued (RFERL).

TAKE 2: Diamond mining in Russia goes back to the Soviet era. While Mir has been operating since just 2009, it is actually beneath another, older mine that is also named Mir, which has the distinction of not only having been central to funding the Soviet Union’s post-WWII rebuild, but also the world’s second-largest excavated hole (it’s an open pit mine) (Gizmodo). Alrosa, the mine’s operator, is behind 95% of Russia’s diamond production and says that last week’s flood won’t affect their performance overall (TASS).

Is the Arctic Ocean the next South China Sea? Depends who you ask

Trying to spur the US into Arctic action, Coast Guard commandant Admiral Paul Zukunft stated recently his concerns that the Arctic “looks eerily familiar to what we’re seeing in the East and South China Sea,” citing Russia’s North Pole claims and China’s increasing activity in the region (Defense One). But many experts disagree, citing dissimilarities like shipping traffic (the South China Sea sees far more and will continue to) and different national interests (China has no territorial claims in the Arctic, and present determinations of how the Arctic Ocean seafloor might be parceled out between claimants including Canada and Denmark is going through the painstakingly long process set out by UNCLOS) (Breaking Defense).

TAKE 3: Zukunft does make a good point, however, in pointing out that because it hasn’t ratified UNCLOS (the UN Convention on the Law of the Sea), the US could be placing itself in dicey waters in the not-too-distant future in terms of seafloor claims because it means it’s left out of the Arctic Ocean pie-slicing that’s underway: and another country (say, China) could argue that the continental shelf the US could have claimed is an international commons.

New turbines closer to turning harsh Arctic winds into electricity

Scientists from South Ural State University in Russia have been working on “super-tough” turbines that will be able to withstand the Arctic’s harsh, blustery environment, and the technology is close to being able to go into production. In places that get high winds, the researchers say that existing turbine technology doesn’t work because the winds can actually cause the equipment to break, or at the very least pose a safety hazard (Arctic.ru). The new turbines, however, have a mechanism that will slow them down when the wind gets too brisk, ensuring they won’t self-destruct (Sputnik).

TAKE 4: Obviously, this is great news for the many Arctic communities relying on diesel fuel for energy: besides the environmental benefits, the researchers say that the turbines can cut electricity costs down from 80 rubles ($1.33 USD) per kilowatt hour to 5-10 rubles (8-16¢)/kWH (Sputnik). At the same time, with low oil prices leading the way, Russia is also making a push for renewable energy. However, because of strict legislation that requires for 40% of wind turbine equipment to be locally manufactured, the industry’s hands have been tied since there are no companies that make them in Russia (Bloomberg). But this might all change very soon: the scientists behind the project say they have plans to do just this (Sputnik).

Solar-powered success in Northwest Territories

Two small communities in Canada’s Northwest Territories are reaping the benefits of solar-powered energy—and even with being at high latitudes which get little (or no) sunlight in the winter. The Dene hamlet of Colville Lake was the first Northern community to replace its diesel generator with a solar-diesel hybrid last year, and in that time, it’s been declared a success, having generated 1/5 of its electricity and saving 37,000 liters of diesel fuel (The Spectator, National Post). Further to the south, the Lutsel K’e Dene First Nation (LKDFN) also launched its solar project last year and is likewise enjoying success. Because it owns its power station, after having reached an agreement with the territorial power supplier, LKDFN has the distinction of being the first independent power supplier in the Canadian territories, meaning that the community can now see a financial benefit (Bullfrog Power).

TAKE 5: Colville Lake and LKDFN are both inspiring examples of what is possible, and the future for renewables like solar in the Arctic seems bright (literally). Unfortunately, startup costs remain prohibitively steep: for example, the Colville Lake project cost $8 million (CAD), with the government pitching in $1.3 mil—a hefty sum for most municipalities, let alone a hamlet of 150 (The Spectator). And while the Canadian federal government’s budget released earlier this year has money specifically earmarked to help Northern communities get off diesel and on renewables, it’s only $10.7 million over the next two years (CBC).