Shell’s Arctic drilling plan delayed by environmental concerns

Shell Oil drilling ships are standing by at sea, ready to sink exploratory wells into Arctic Alaskan waters. But they’re running out of time.

The oil giant bought permits to drill in the Beaufort and Chukchi Sea more than five years ago. Since then, Shell has faced many hurdles with regulators, lawsuits and a federal moratorium on offshore Arctic drilling after BP’s Deepwater Horizon disaster.

Even with their ships up in the Arctic, Shell is struggling to get final approval to drill. Alaska Dispatch reporter Alex DeMarban said Shell has already reduced the number of wells they plan to drill this year because of unexpected problems with sea ice.

“It’s lingering longer than usual. It’s still, at this point, blocking access to their Beaufort Sea site so they still have not yet even begun to send up ships yet to the Beaufort Sea. And they’re still having regulatory issues, as well,” DeMarban said.

Currently, Shell doesn’t have approval for a containment barge, which is needed to capture and clean oil in the event of an oil spill. The company also doesn’t have approval from Interior Secretary Ken Salazar, or its well permits. Shell needs approval for each well they plan to drill before it can move forward. However, a company spokesman told the Wall Street Journal Wednesday that Shell is still working with U.S. officials on a schedule for inspections and deployment of the converted barge, which needs to be in place before drilling can start

Environmental and Alaska native groups have objected to the oil exploration in the Beaufort and Chukchi seas. DeMarban said they’re worried about a possible spill. He said their primary concern is that they don’t believe there are enough resources to respond to a spill if one occurs.

“We don’t even have a deepwater port within hundreds of miles of where Shell will be drilling,” DeMarban said. “There’s no Coast Guard station — the closest one is 900 miles away. So assistance for Shell in the event of a spill could be a long time coming.”

A spill in one of the seas could kill animals such as the polar bear, which is already considered threatened because of climate change. DeMarban also said a spill could severely damage the subsistence cultures on Alaska’s coast, which rely on the bowhead and Beluga whales in the fall and spring.

Shell has already drilled 30 wells, most of them back in the 1980s and 1990s. DeMarban estimates the overall amount of potential oil in the Arctic is currently at least 25 billion barrels of oil.

“It is a lot. But when you consider the vast U.S. consumption, it would go rather quickly if it provided all of that U.S. consumption … two years or less is my understanding,” he said. “So, they need at least one billion barrels of oil to make it economically feasible … is one rule of thumb. So the economic hurdles are going to be huge because they’ve still got to figure out how to get the oil to market and, given that there’s nothing up there, the cost for that is going to be tremendous.”

According to DeMarban, no pipeline has been set up in the areas near the Beaufort and Chukchi seas. Offshore, pipelines would need to be built under the ocean for 70 miles to bring oil from Chukchi onto shore in Alaska. That’s in addition to the miles of pipeline it would take to get the oil across Alaska to the single pipe that runs across the state.

Still, there are other costs and concerns to consider. In order to get the oil to a shipping facility, hundreds of miles of pipeline would need to be built in a very complicated region filled with underwater ice floes that can slash through pipes.

However, Shell is ready to move forward. And DeMarban says they won’t be the last company to move.

“I think some of the companies on deck are ConocoPhillips and Stat Oil. They’re watching Shell closely to see what’s discovered. If there’s a large discovery, that’s going to compel them to move more quickly,” DeMarban said. “They’re hoping to begin development in the next couple of years at some sites in the Beaufort and Chukchi Sea, as well. And, certainly, if Shell finds something huge, it’s expected that there’ll be a sort of oil rush to the Arctic,” he said.

According to the Wall Street Journal, Shell has until Sept. 24 to wrap up drilling for oil in the Chukchi Sea and until the end of October for Beaufort. The Shell spokesman said wells in that area can take anywhere from 25 to 40 days to drill.

DeMarban said there’s a very good chance that Shell will put in at least one test well in Chukchi before things freeze up again this year, and the company may even request an extension.

“They can still meet their original goal of drilling up to ten wells in two years as long as they can get enough preparatory work in this summer,” he said.