August 30th, 2010
02:11 AM GMT
An historic journey is happening now...and no surprise, it's to feed China's appetite for energy.
The SCF Baltica is a large tanker that has just made it safely through the Arctic Circle to deliver 70,000 tons of gas condensate (a natural gas extract) from Russia to China. This is the first time a tanker of this size has been able to make the journey through the Northern Sea Route. It's now headed for its final port destination just south of Shanghai.
There are two interesting angles to this story:
1) This route through the Arctic cuts down the distance traveled by almost a half. The route from Murmansk, Russia to Ningbo, China covers 7,000 nautical miles. This is down from the 12,000 nautical miles it takes on the traditional route through the Suez Canal.
Sergey Frank, CEO of SCF Group, is taking the journey on board his tanker. I spoke with him via satellite phone and asked him how much money the shortcut is saving his company. He says, "That depends on the freight market but today, the freight market in the tanker business is not great. But anyway, the one day capital cost is $20,000 to $25,000. Any day of savings from these logistics is definitely improving the economics of the business."
2) Global warming. You only have to connect the dots: A huge oil and gas tanker can make it through ice fields in the Arctic today because of the effects of global warming. And even then, the SCF Baltica tanker is being escorted by two nuclear-powered ice breakers. Sam Chambers, journalist and author of "Oil on Water," tells CNN, " It is unquestionable that this route has only become possible thanks to global warming, as sailors have been trying to - and failing - to find an Arctic route for centuries. Just a couple of weeks back Canadian authorities found an old sunken British ship in the far north that had met its end attempting the elusive Arctic passage."
Whether we like it or not, the Arctic is the new frontier for oil and gas transport. According to SCF Group, the information collected on this historic voyage will be entered into a database to plan future Arctic crossings with larger ice-class tankers.
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