Shell Announces Plan to Return to Arctic

//

The past couple of years have been, to put it mildly, an embarrassment to Shell’s plans to drill for offshore oil in the Alaskan Arctic. In 2011 and 2012, the company’s drilling efforts in the Chukchi and Beaufort Seas suffered a catalog of errors, including, noted the FuelFix blog:

the drifting of Shell’s contracted drillship Noble Discoverer near Dutch Harbor, Alaska [in 2011]. Later, Shell’s first-of-its-kind spill containment barge was damaged during certification tests. Finally, weeks after drilling was done for the year, a fire broke out on the Discoverer’s rig stack, and safety and pollution-control system deficiencies were discovered on the ship in November.

PHOTOS: Svalbard: Norway’s ‘Galapagos’ in the North

It all came to an ignominious head at the end of 2012, when the drilling rig Kulluk (pictured top) ran aground off an Alaskan island last New Year’s Eve. That was one Keystone Cops misadventure too far; in February, Shell announced that it would not be returning to the Alaskan Arctic in 2013.

In April, ConocoPhillips went one step further and announced it had suspended its plans to go drilling in 2014. That led to some industry and media speculation that both companies might be setting the stage for a longer-term absence from the region — that the combination of operational difficulties, regulatory challenges, and the higher profitability of shale gas meant that attempting to drill for oil in the Arctic Ocean simply wasn’t worth while.

ANALYSIS: Arctic Thawing Could Cost $60 Trillion

A Reuters report in May argued that, “the high Arctic, once the irresistible frontier for oil and gas exploration, is quickly losing its appeal as energy firms grow fearful of the financial and public relations risk of working in the pristine icy wilderness.” EnergyWire quoted Lois Epstein of The Wilderness Society predicting that, ”On Arctic Ocean development, I wouldn’t be surprised if Shell withdraws when they find an appropriate time. And then the other dominoes will fall after that.”

Such optimism (or, depending on your point of view, pessimism) may have been misplaced, with FuelFix now reporting that Shell intends to return to Arctic waters in 2014, albeit on a reduced scale. According to the blog, Shell plans to “soon file a broad Chukchi Sea drilling blueprint with federal regulators at the Interior Department. The company will not seek to resume drilling in 2014 in the shallower Beaufort Sea, where the floating Kulluk had operated last year.” A company spokesperson noted that Shell had not yet committed to a return – and FuelFlex listed a number of logistical and regulatory hurdles that would have to be cleared — but that it was “putting the building blocks in place.”

ANALYSIS: The Arctic Is Open For Business

In response, Greenpeace’s Ben Ayliffe stated that, ”In 2012 Shell proved that it is completely unfit to drill in the remote Arctic, a place of unrivaled beauty where any spill would be an environmental disaster. In April it signed a joint deal with Russia’s state owned giant Gazprom, one of the world’s most polluting oil companies with a record of serious negligence. Shell has run out of options, and is prepared to gamble its reputation on projects and partnerships that other oil companies have dismissed as far too risky.”

Image: Royal Dutch Shell floating drill rig Kulluk in place over their Sivulliq N. U.S. Federal continental shelf petroleum lease in the Beaufort Sea, Arctic Ocean, approx 12 miles off the Alaska Coast, on Oct. 7, 2012. Credit: Corbis