Royal Dutch Shell , the megalithic energy company announced this week that it was curtailing all Arctic operation for the year 2013. After staying away from the Arctic for more than a decade, Shell returned in 2012 to drill two wells in the Beaufort and Chukchi Seas, only to have as many ships suffer serious accidents in the process of moving to and from the oil fields. The Kulluk damaged its hull when it ran aground on Sitkalidak Island in stormy seas, after the company had just spent $300 million upgrading the ship. Meanwhile, the Noble Discoverer dragged its anchor, nearly running aground in July, and was later damaged by an explosion and fire while at port in the Aleutians. The two ships are being towed to locations in Asia for repairs.
These events underscore the challenges and risk underlying exploration in these waters, which pose at least as many risks, given the perils of ice, as drilling in the Gulf of Mexico.
The company has spent over $4.5 billion in leases and equipment along with a massive lobbying effort, apparently successful, if ill-founded, aimed at persuading government officials that drilling in the treacherous waters of the Arctic Ocean, did not pose undue risks. According to the NY Times, the company “now acknowledges that the venture has been much more difficult than it anticipated.”
In a press release, Marvin Odum, Director Upstream Americas, said, “We’ve made progress in Alaska, but this is a long-term programme that we are pursuing in a safe and measured way. Our decision to pause in 2013 will give us time to ensure the readiness of all our equipment and people following the drilling season in 2012.”
The Coast Guard’s nearest presence is 1000 miles away, making enforcement of regulations difficult to say the least. But when the Noble Discoverer returned to port in Seward, the Coast Guard inspected it and found 16 violations. When testing the floating rig’s containment dome, they found “it breached like a whale,” shooting to the surface, where it was “crushed like a beer can.”
The original plan was to drill ten wells, but circumstances prevented this. For one thing, Federal regulators put the brakes on when they found that the company did not have adequate spill prevention and cleanup resources on hand.
Lois Epstein, Arctic program director for the Wilderness Society was not surprised, saying, “Shell has had numerous serious problems in getting to and from the Arctic, as well as problems operating in the Arctic.” Furthermore, she claimed, “Shell’s managers have not been straight with the American public, and possibly even with its own investors, on how difficult its Arctic Ocean operations have been.” Epstein also serves on the Ocean Energy Safety Advisory Committee for the Department of the Interior’s Bureau of Safety and Environmental Enforcement.
“Although Shell calls this simply a ‘pause’ in its plans for Arctic drilling, we think it ought to be a permanent stop.” So says, Rebecca Noblin, Alaska director and Staff Attorney for the Center for Biological Diversity. “Drilling in the Arctic can never be made safe for polar bears, whales and ice seals or the fragile ecosystems where they live. President Obama ought to use the opportunity to rethink his support for Arctic drilling and take if off the table forever.”
To which, Cindy Shogun, of the Alaska Wilderness League, added, “Shell has shown that it cannot be trusted to safely drill in America’s Arctic Ocean.”
Not so fast, says Odum. “Shell remains committed to building an Arctic exploration program that provides confidence to stakeholders and regulators, and meets the high standards the company applies to its operations around the world. We continue to believe that a measured and responsible pace, especially in the exploration phase, fits best in this remote area.”
Those high standards are apparently not so high as to have prevented the above-mentioned violations in Alaska. The company was also taken to task, just last week, for safety violations at its Draugen field platform in the Norwegian Sea.
When viewed in the context of last week’s disclosure about the under-representation of costs associated with shale gas and oil reserves, there emerges what appears to be a pattern of dishonesty when it comes to the industry’s attempts to develop these difficult energy resources, that have long been known about, but had historically been considered not economically recoverable.
RP Siegel, PE, is an inventor, consultant and author. He co-wrote the eco-thriller Vapor Trails, the first in a series covering the human side of various sustainability issues including energy, food, and water in an exciting and entertaining format. Now available on Kindle.
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