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Shell Seeks 5 More Years for Arctic Drilling

Bill DiBenedetto headshotWords by Bill DiBenedetto
Investment & Markets
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Despite spending eight years and $6 billion — with no oil production to show for its efforts — Royal Dutch Shell is asking the U.S. government for another five years to drill in the Arctic.

Earlier this year, Shell sent a letter to the Department of the Interior and its Bureau of Safety and Environmental Enforcement (BSEE), requesting that its Arctic leases — which expire in 2017 — be paused for five years while the company regroups and attempts to restart drilling operations. The letter was made public late last month by the environmental group Oceana, after obtaining it through a Freedom of Information Act request. Oceana and other groups have sued to block the Arctic exploration.

Shell’s record in the Arctic to date, featuring a string of accidents, is lackluster to the say the least. The Natural Resources Defense Council has noted that Shell’s efforts “illustrate like nothing better just how dangerous it is to drill in the Arctic”:


  • July 2012: Shell Oil's Noble Discoverer drill ship drags anchor and nearly drifts ashore in Dutch Harbor, Alaska.

  • September 2012: Caught off guard by sea ice, Shell is forced to halt drilling just one day after it started.

  • September 2012: In an initial test in Puget Sound, Washington, Shell's Arctic oil spill containment system is "crushed like a beer can."

  • October 2012: The CEO of French oil giant Total says drilling in the Arctic is too risky.

  • November 2012: The Noble Discoverer catches fire.

  • Dec. 31, 2012: The Kulluk drilling rig breaks loose from tow lines five times in heavy storm and runs aground off Kodiak Island, Alaska.

According to a recent Bloomberg news report, Shell says setbacks and legal delays could push the start of drilling past the 2017 expiration of some leases. The oil major’s letter to the Interior Department said “prudent” exploration before leases expire is now “severely challenged.”

“Despite Shell’s best efforts and demonstrated diligence, circumstances beyond Shell’s control have prevented, and are continuing to prevent, Shell from completing even the first exploration well in either area,” Peter Slaiby, vice president of Shell Alaska, wrote to the regional office of the BSEE.

“Ultimately, Shell has no one to blame but itself,” said Michael LeVine, Pacific senior counsel for Oceana, based in Juneau, Alaska. “The government should not bend the rules to accommodate Shell or any other company just because that company spent a lot of money."

Bloomberg’s article continued that Shell has left open the possibility of returning to Arctic drilling as soon as next year. Spokesman Curtis Smith said that timeline remains on the table. “We’re taking a methodical approach to a potential 2015 program,” Smith said in an e-mail.

The U.S., which is revising drilling safety regulations for the Arctic, has ordered that any drilling in the Arctic end each year before Oct. 1, when ice starts forming.

Shell estimates that the Arctic holds around 30 percent of the world’s undiscovered natural gas and 13 percent of its yet-to-find oil. “This amounts to around 400 billion barrels of oil equivalent, 10 times the total oil and gas produced to date in the North Sea. Developing the Arctic could be essential to securing energy supplies for the future, but it will mean balancing economic, environmental and social challenges.”

With those numbers beckoning it’s easy to see the lure of the Arctic for Big Oil, but it’s also easy to see from the billions that Shell has foolishly wasted there that it’s way too risky.

Image: From “Shell in the Arctic” webpage

Bill DiBenedetto headshotBill DiBenedetto

Writer, editor, reader and generally good (okay mostly good, well sometimes good) guy trying to get by.

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