Royal Dutch Shell has plans to return to Arctic drilling. The company has revealed its intentions while presenting the fourth quarter 2014 results.
Shell’s Chief Financial Officer Simon Henry said that the company would spend around $1 billion for drilling in Alaska: “For this year, we’re planning on drilling in Alaska in 2015, subject to getting the permits and legal clearance, with higher spending there.
He added: “But at the same time we are keeping overall spending on conventional exploration flat again at 2014 levels, at around $4 billion, as part of the capital ceiling in the company. This means spending outside of Alaska will be less than $3 billion in 2015 – a reduction from 2014 levels – and this has required some deferrals, for example in the Gulf of Mexico, China offshore and Malaysia.”
Shell had suspended its offshore Alaska operations in 2012 following an incident-stricken campaign one of the drilling units, the Kulluk ran aground off the coast of Unalaska when it broke free from its tow in bad weather.
The other, a drillship named the Noble Discoverer, was dead-ship towed from Dutch Harbor to Seward due to failures with its main engine and other equipment. The company had planned to drill in Alaska in 2014, but backed away from that due to legal issues.
The announcement of Shell thinking of drilling in Alaska again has sparked opposition from environmental groups.
Charlie Kronick, campaigner at Greenpeace said: “Despite announcing cuts Shell hasn’t taken the opportunity to cut its most high-cost high-risk project. Shell is taking a massive risk doggedly chasing oil in the Arctic, not just with shareholder value, but with the pristine Arctic environment. A spill there will be environmentally and financially catastrophic. It’s time for investors to recognise that it’s impossible for Shell to justify its continued pursuit of offshore Arctic oil.”
“The threat of oil spills from risky exploratory drilling threatens Alaska’s Arctic seas and the people who depend on them”
“Shell’s Arctic ambitions have been on the rocks since its rig ran aground in 2012. The more we discover about the mistakes Shell made three years ago, the clearer it becomes that it cannot be trusted to drill in the Arctic. No company is able to operate safely in this remote, fragile ocean where the nearest rescue fleets are hundreds of miles away. These expensive, long term oil projects make no sense as governments around the world become increasingly serious about climate change. It’s time for Shell to scrap this hapless project for good.”
The World Wide Fund for Nature has reacted too, saying that Shell is making the attempt despite the lack of proven technology to drill safely in the Arctic, and the lack of proven effective tools and techniques for cleaning up spills in icy waters.
“The threat of oil spills from risky exploratory drilling threatens Alaska’s Arctic seas and the people who depend on them”, says Margaret Williams, managing director of US Arctic program. “After the series of accidents and errors during its first foray of Arctic exploration, today’s news from Shell raises serious concerns.”
New Jobs in Alaska
If given the necessary permits, Shell would employ around 2,000 workers and contractors this summer, Alaska Dispatch News has quoted a Shell Alaska spokesperson as saying. The newspaper says that Shell had employed 750 Alaskans for its 2012 operations in the area. An estimated 15 billion barrels of oil and 77 trillion cubic feet of natural gas are thought to be in place beneath Alaska’s shallow Arctic waters.