THE BLOG
08/06/2013 12:35 pm ET Updated Oct 06, 2013

The Other Final Frontier: Energy Development in the Emergent North

The closing of the American West just over a century ago was thought to be the end of a long chapter of human exploration that was as inspiring and enriching as it often was destructive and painful. New evidence that the far northern reaches of the globe are becoming increasingly passable and habitable means that the last 100 years may be seen as just a break in the story of development and settlement.

"The ice was never supposed to melt this quickly," CargoMetrics Managing Director and Arctic Circle foundation co-founder Scott Borgerson wrote in a recent article for the Council on Foreign Relations magazine Foreign Affairs. The recent meeting of the U.S. Association for Energy Economics in Anchorage, as coverage on Breaking Energy makes clear, was rightly focused on the future of the Arctic Circle's energy prospects. The opportunities in the "emergent north" are vast, and as Borgerson points out, are largely located in the sphere of influence of developed countries with significant financial and governmental resources to hopefully mitigate the risks.

But there is no "treaty of the North," no common understanding of how development should proceed. It isn't quite the wild west, but it isn't exactly coaxing more out of established West Texas fields either.

So in the absence of coordinated international response, energy giants are going their own way in the Arctic. As it has become apparent that no single system for managing the vast wealth and opportunity set is likely to emerge, the industry is putting to the test the limits of the stakeholder model long practiced in the international aid world. Governments, companies, investors, local communities, environmentalists and shipping firms are all working in a sometimes fractured seeming process that is new, different and moving forward.

Through the Arctic Council, various bilateral agreements and limited "frameworks" like the Ilulissat Declaration of 2008, national governments and their resource development authorities are responding to the desire of energy firms to access and develop resources in the emergent north. Large oil companies, based in the very countries that border the Arctic -- the U.S., Canada, Norway, Russia and even the UK -- have largely lost access to reserves in the "emerged south" -- Africa and Latin America -- and are thinking of their futures and their all-important reserve ratios.

"None of this cooperation required a single new overarching legal framework," Borgerson wrote in Foreign Affairs. "Instead, states have created a patchwork of bilateral and multilateral agreements... By reaching an enduring modus vivendi, the Arctic powers have set the stage for a long-lasting regional boom."

In an era of global financial crises and coalitions of the willing, the sharp end of international law and resource development is largely still a function of power and national interest. The long-held resistance of the U.S. to signing the 1982 UN Convention on the Law of the Sea is not without logic, however twisted: international treaties can hamstring the responses of the largest global powers, often in unanticipated ways. In his epic history of modern Europe postwar, Tony Judt argued that it was the seemingly innocuous human rights provisions in the Helsinki Accords that acted as a wedge to bring down Communist regimes in Eastern Europe, a warning for national governments worried about unintended consequences in the literally uncharted territory of settling the far North. Former Senator John Kyl and and Hudson Institute fellows Douglas Feith and John Fonte have written extensively against the implementation of international law even when it comes to rights for the disabled, part of a growing awareness of what such commitments might mean for national sovereignty.

But events are overtaking them. The ice is melting and the drill rigs are getting ready to move in.

There is a lot of talk of a new multipolar world, of a stakeholder approach better able to handle the pressures of market-led development without risking the benefits of a civil society. The Arctic's energy sector may be the first large-scale test of these new models, in the hope that humanity can harvest the profit promised by the undiscovered with less of the environmental and human pain incurred by the last round of frontier settlement.