Environmental groups concerned about the potential damage to the Arctic environment suffered another blow after the U.S. Environmental Protection Agency granted a temporary air permit for Shell to work off the coast of Alaska. The company has already asked federal regulators to extend the drilling season in the Chuckchi Sea because its feels ice would remain at bay into late fall. Groups like Greenpeace have staged high-profile demonstrations in an effort to highlight their growing concern about the industry's move toward arctic waters. With millions of barrels of oil potentially lying beneath the ice, environmentalists may lose out to national energy security interests.
Actress Lucy Lawless in February was arrested after her and six other Greenpeace activists scaled the 174-foot drilling tower of the Noble Discovery drillship as it sat in a New Zealand port. Groups like hers have expressed concern that an event like the Deepwater Horizon accident in 2010 would cause irreversible harm to the pristine arctic environment. Nearly six months to the date, however, the drillship left its port in Dutch Harbor, Alaska, unimpeded on its way to the frigid waters of the Chuckchi Sea.
Shell spent more than $4.5 billion on its program in Alaska, dolling out some $2.1 billion in 2008 to acquire the licenses to operate in the Chuckchi Sea, an expanse situated between Alaska and the eastern frontier of Russia. The company states that its oil-spill response capability in the region is "unprecedented" and unique to the industry. "No other company" has the onsite response systems in place that Shell does, it says. In terms of its track record, the company states that during the 10-year period ending in 2006, only around 2 barrels out of 73 million barrels were spilled during operations in nearby Sakhalin Island.
With global weather patterns changing, Shell called on the U.S. Bureau of Ocean Energy Management to extend the amount of time it's allowed to work in the Chuckchi Sea by 18 days. The BOEM calls on Shell to suspend its operations into known hydrocarbon plays by Sept. 24 because of the threat posed by reforming sea ice. Last week, however, the National Snow and Ice Data Center reported that sea-ice cover further north in the Arctic Ocean broke the 2007 record low for the year and Shell says that trend is in part reason to extend the drilling season.
The U.S. Interior Department estimates there are more than 15 million barrels of recoverable oil in the Chukchi Sea. That's more than six times the amount of oil in the Eagle Ford shale play in Texas, one of the more active drilling sites onshore in the United States.
Environmental activists concerned about arctic oil and natural gas exploration say the White House is "bending over backward" to let Shell continue its campaign in the region. Campaigners nevertheless lost their recent bid to prevent the permit process for Shell from moving forward. Elsewhere in arctic regions, Cairn Energy had limited success in its exploration efforts off the coast of Greenland, however. Shell already scaled back its ambitions in the region, suggesting that, given the number of rigs in service, the potential for a Deepwater Horizon-scale event is unlikely.
The last time pollsters examined the issue, most Americans -- more than 80 percent -- expressed support for tougher environmental regulations, though 57 percent said it was a primary issue for them. In the wake of the 2010 accident in the gulf, it appears that 15 billion barrels of oil and billions of dollars in investments from one of the world's largest oil companies has trumped the best of what environmental groups have to offer for the time being.
By. Daniel J. Graeber of Oilprice.com