Arctic oil spill cleanup costs could reach $9.4B over 5 years, says risk analyst

A new risk assessment on the consequences of a potential oil spill in the Rankin Inlet region shows that a disaster of that sort could cost more than $9 billion if no intervention is made after five years.

The effects on the environment and community would also be ‘devastating,’ says lead author of study

In the 'worst case scenario,' an oil spill in the Arctic could cost more than $9 billion after five years with no intervention, says a new study led by Mawuli Afenyo. (Sean Kilpatrick/The Canadian Press)

As global temperatures rise, ice in the Canadian Arctic is melting at an unprecedented rate. This means the Northwest Passage will see more ship traffic — which increases the potential for an oil or fuel spills in the region.

A new risk assessment on the consequences of a hypothetical oil spill in the Rankin Inlet region of Nunavut posits that the cleanup and socioeconomic costs of such a disaster could climb to $9.4 billion ($7.5 billion US) in five years under a worst case scenario.

The worst case scenario is where no attempt is made to clean up or otherwise mitigate the spill. While non-intervention is unlikely, the report says considering such a worst case situation is "the best scenario to use in making decisions for insurance, resource allocation, and contingency planning."

The Arctic can also be a harsh environment which gives only a short window for open-water response to an environmental disaster. As such, a delayed response to a fuel spill in the Arctic is plausible.

The study, as part of the GENICE project, also showed that the impacts of an Arctic oil spill would be devastating for Inuit and the environment.

"It's a low probability, high consequence event, which means that it happens once in a while, but when it does happen, the consequences are really, really high," said Mawuli Afenyo, a postdoctoral fellow at the University of Manitoba Transport Institute with a PhD in oil and gas engineering and the lead author of the study.

Cost increases each year

To estimate the consequences of a spill, Afenyo and his colleagues simulated the Exxon Valdez oil spill of 1989, in which 11 million gallons of crude oil were spilled into an inlet on the Gulf of Alaska.

The simulated spill in their analysis took place in the Rankin Inlet coastal region. There have been no real oil spills in this area.

Using a "unique" method they developed for this research, the researchers determined that each year, there is a gradual increase in socioeconomic impact — such as damage to flora and fauna, disruption of hunting and negative psychological effects — as well as cost.

The method uses conditional probability and combines subjective and objective data to produce results in terms of dollar values. Additionally, new information can be updated to predict the reality of a scenario at any time.

Mawuli Afenyo is a researcher at the University of Manitoba and the lead author of a new study outlining the financial consequences of a potential Arctic oil spill. (Submitted by Mawuli Afenyo)

The first year recorded approximately $630 million ($500 million US) in impacts. By the fifth year, the cumulative cost grew to $9.4B ($7.5 billion US).

Afenyo says this is why rapid intervention of oil spills is especially important in the Arctic.

Importance of rapid intervention

The lead author explains that the Arctic is a difficult area because it's remote and the environment is harsh. 

"If we don't have rapid intervention, first of all, what's going to happen is the oil is going to either go under the ice, is going to get absorbed, it actually could get absorbed in snow," said Afenyo.

Afenyo adds that oil could also get trapped in between the ice, making it extremely difficult to deal with compared to open water. 

This makes clean-up of an oil spill in the Arctic significantly more expensive than in other regions.

"If we don't get there on time and use the methods we are supposed to use, what will happen is it becomes even more complex, more difficult, more expensive to deal with the ice and the impacts and the consequences will just increase."

Effects on Inuit communities

While Afenyo is an expert on the risks of Arctic shipping, he was more interested in looking into the effects of a potential oil spill on nearby Inuit communities.

It was the Exxon Valdez disaster that inspired him. He says he read that the spill caused family dysfunction and affected community make-up, and he wanted to know exactly how.

"What happens to the people? What happens to the community? That question was still unanswered."

Afenyo says the effects would be devastating for Inuit, especially if fishing is their livelihood. This is why it's important for Inuit to be involved in the conversation about Arctic shipping from the very beginning.

"The Arctic [Ocean] is not just a piece of water, but it's actually an integral part of the life of the people living there," said Afenyo.

Moving forward, Afenyo hopes to continue collecting data and developing their method to create an app for calculating the financial risks associated with shipping spills.


Karina Zapata

Donaldson Scholar

Karina is a 2021 Joan Donaldson Scholar, currently working with the CBC North - Yellowknife newsroom. You can find her at


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