Photo credit: ConocoPhillips

Melting Arctic ice caps are springing forth a new frontier for global commerce. New sea lanes are starting to open and more activity is coming to the region. This changing landscape has some suggesting that the last frontier for oil and gas companies might soon be more accessible.


With these changes come new challenges. It's not just global oil companies that are interested in exploring this final frontier. Countries like China and Russia are looking to stake claim to the region, which could one day prove to be an issue for national security. That is why this transformation will need to be handled with care to protect the already fragile environment and relationships with those nations seeking to extract the region's natural resources.

Still, the opportunities are intriguing. According to estimates, the Arctic holds 13% of the world's undiscovered oil reserves and 30% of undiscovered natural-gas resources. That's billions of dollars of oil and gas riches just waiting to be reached. So far though the industry has struggled in its early attempts to access these resources.

Royal Dutch Shell , for example, has spent more than $5 billion on its Alaskan Arctic program with nothing to show for it. Because of this, Shell and peers like ConocoPhillips cooled on the thought of drilling in the region. Both companies had suspended drilling programs until recently.

That changed earlier this month when Shell submitted new plans to restart its exploration program next summer. The new plan is a slimmed-down version of its earlier one, which included drilling in both the Chukchi Sea and Beaufort Sea. The new plan will focus only on the Chukchi Sea.

This time around Shell has signed a contract with Transocean on a rig that starts in July. Previously, Shell had used its own rig, Kulluk, and one owned by Noble Corp. . It was the Kulluk that ran aground in 2012 and basically shelved Shell's quest for oil in the Arctic. With a new plan being submitted and a new contract with Transocean in place that runs for three years, Shell is ready to try again. Still, the company is taking a big risk of coming up dry again. The new Transocean rig isn't appropriately named the Polar Pioneer for nothing. But with Shell laying out $602,000 per day for the rig during the summer-drilling season, it shows how important the Arctic's oil is to global oil and gas companies.

That said, ConocoPhillips' Arctic drilling plans in the Chukchi Sea are still on hold at the moment, even as it continues to prepare for eventually starting its exploration program there. In fact, earlier this year the company made history by launching the first commercially approved drone flight in Alaska. The hope is that through expanded usage of technology, ConocoPhillips can monitor both ice and wildlife and avoid the some of the risks that saw Royal Dutch Shell spend billions without seeing any return.

With so much of the world's oil still underneath the Arctic, it's only a matter of time before oil companies figure out the best way to access it. Still, it's fraught with risk. Not only is there a major possibility that billions will be spent without earning a dime in return, but the potential is real for a catastrophic environmental disaster. That's why investors need to pay close attention as these companies pursue this new frontier -- the risk is so great that it could put a chill into their portfolios if something goes wrong.

America's energy is booming elsewhere

Record oil and natural gas production is revolutionizing the United States' energy position. Many companies are profiting from this boom, which is one reason why there hasn't been a big push to access the arctic's oil and gas. If you'd like to join them and profit from this boom, check out the special free report, "3 Stocks for the American Energy Bonanza." Don't miss out on this timely opportunity; click here to access your report -- it's absolutely free. 

 

The article Is the Last Oil Frontier About to Open Up? originally appeared on Fool.com.

Fool contributor Matt DiLallo owns shares of ConocoPhillips. The Motley Fool owns shares of Transocean. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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