In a move that buoyed big oil but enraged environmentalists, the Obama administration has given the green light for Royal Dutch Shell to resume offshore drilling in the remote Arctic waters, off Alaska’s northwestern coast.
Monday’s decision, which is conditional on Shell’s getting approval for remaining drilling permits for the project, is a major win for Shell and other petroleum companies, which have sought for years to drill in the harsh waters of the Chukchi Sea, which is believed to hold vast reserves of the world’s undiscovered oil and gas.
Shell’s Arctic drilling program and the Keystone XL pipeline to funnel Canadian oil sands crude across the United States have been the top two targets for environmental groups seeking to hold U.S. President Barack Obama to his pledge to cut greenhouse-gas emissions causing climate change. Although Mr. Obama has pursued an ambitious environmental agenda, he has also tried to balance that by opening up untouched federal water to new exploration.
Shell’s return to the Arctic has significant implications for Canada. A repeat of mishaps that the company experienced there in 2012 could further set back long-stalled plans to unlock resources in the Canadian Beaufort Sea, undermining industry safety claims.
When Shell last drilled in the Chukchi Sea three summers ago, a series of embarrassing failures left its colossal drilling ship Kulluk drifting out of control before it ran aground off Sitkalidak Island. Those setbacks only redoubled the efforts of environmental groups to keep major oil companies from drilling in the Arctic where fierce storms and remoteness from emergency responders in the case of spills pose significant threats.
“It’s outrageous how our own government appears determined to sacrifice our precious Arctic Ocean for Shell’s profits,” said Marissa Knodel, a spokeswoman for Friends of the Earth. There’s a “75-per-cent chance of a large oil spill [in] this … the largest, loudest and dirtiest exploration plan ever proposed in the American Arctic Ocean,” she added.
Monday’s approval by the U.S. Bureau of Ocean Energy Management sets the stage for new confrontations over Arctic drilling.
Last month, in a brazen stunt, Greenpeace activists scaled Shell’s Polar Pioneer drilling rig as it headed across the Pacific. Mass protests are planned for this weekend as activists in flotillas of kayaks will stage a “Festival of Resistance” in an attempt to keep the drilling rigs, Polar Pioneer and the Noble Discoverer, from berthing in Seattle.
Shell plans to drill half-a-dozen exploratory wells in relatively shallow water about 100 kilometres northwest of Wainwright, Alaska. The two Shell rigs would be able to provide relief well capacity for each other in the event of a blowout.
The Obama administration has pushed ahead with opening up offshore drilling to the dismay of environmentalists. Last month, U.S. Secretary of State John Kerry told Canada and other Arctic nations that Mr. Obama wanted to put the environment first during the two years in which the United States chairs the Arctic Council. Mr. Obama’s focus, he said, would be “promoting responsible environmental stewardship, conflict prevention and strong international co-operation” in the Arctic.
No drilling is planned this summer in the Beaufort Sea, north of Canada and Alaska where environmental concerns and a disputed boundary have dogged efforts for decades.
Hopes for a return to Arctic drilling in Canada’s north suffered another setback late last year when Chevron Corp. shelved plans for deep-water drilling in the Beaufort Sea, citing exorbitant costs and collapsing oil prices. California-based Chevron had applied for an exemption to a key requirement of Canada’s National Energy Board that companies demonstrate the capacity to drill a relief well during the same drilling season as a producing one to avoid the spectre of a winter-long blowout beneath the ice.
The regulator is now reviewing a similar proposal by Imperial Oil Ltd. and its joint venture partners, Exxon Mobil Corp. and BP PLC. The partners are eyeing a possible 2020 start to drilling about 175 kilometres offshore.
Environmentalists and aboriginal groups have raised concerns about the potential for a devastating spill in the frigid waters, questioning the industry’s ability to corral an out-of-control well in harsh northern conditions.
Arctic drilling in Canada has been dormant for a quarter-century, sidelined by high costs, infrastructure constraints and competing investments in southern regions. Imperial’s plan would involve some of the deepest wells drilled in the Beaufort to date, with water depths up to 1,500 metres.
But Shell’s new approval raised hopes among some development advocates in Canada.
“The message I’ve been hearing from companies here in Houston is they are still very bullish on the Arctic,” David Ramsay, Northwest Territories Minister of Industry, Tourism and Investment, said in an interview last week from Texas, where he attended an offshore energy conference.
The Arctic Basin’s undersea reserves are huge, estimated by the U.S. Geological Survey at 26 billion barrels of recoverable oil and 130 trillion cubic feet of natural gas.
PAUL KORING, JEFFREY JONES AND JEFF LEWIS
WASHINGTON and CALGARY — The Globe and Mail
Published Monday, May. 11 2015, 4:01 PM EDT
Last updated Monday, May. 11 2015, 9:57 PM EDT