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Shell's Arctic problems should serve Obama as warning

By Bob Downing Published: March 18, 2013

From the Alaka Wilderness League:

Interior assessment of Shell’s Arctic operations should serve as a warning to President Obama

Now that the Department of the Interior has released its assessment of the 2012 offshore drilling activity in the Beaufort and Chukchi Seas, it is time for the Obama administration to uphold its commitment to “rigorous oversight of the oil and gas activities in the Arctic” and recognize that the oil industry is simply unprepared to operate in one of the most remote and dangerous environments in the world.

More than three months have elapsed since the Kulluk, one of two arctic drilling rigs owned by Royal Dutch Shell, broke loose of its tow and ran aground near Kodiak Island in the Gulf of Alaska. Shell’s 2012-13 arctic drilling program was positioned to herald a new era of Arctic exploration for oil companies, but instead a combination of striking mishaps, weather-related accidents and equipment failures forced Shell to cancel its 2013 drilling plans, and has left the oil industry reevaluating the costs and risks associated with offshore drilling in the Arctic.

Last year, Total Oil became the first major oil company to go public with reservations about drilling in the Arctic, when Total CEO Christophe de Margerie said that the risk of an oil spill in such an environmentally sensitive area was simply too high. More recently, Statoil has hinted that it may abandon its drilling prospects in the Chukchi Sea, stating that it has no intention of drilling if it can’t be done safely and sustainably. At the very least, Statoil has pushed back plans to drill in the waters above Alaska until 2015 at the earliest.

Oil industry concerns have been echoed by the financial community as well – a 2012 report released by Lloyd's of London, the world's largest insurance market, pointed to the vulnerability of Arctic ecosystems and the huge environmental consequences that would result from an oil disaster in Arctic waters. The institution pointed to the near certainty of disturbing ecosystems already under stress from climate change, and stated that cleaning up any Arctic oil spill, particularly with sea ice present, would face “multiple obstacles, which together constitute a unique and hard-to-manage risk.” German bank WestLB voiced similar concerns when it announced last year that it would not provide financing to any offshore oil or gas drilling in the Arctic region. These financial concerns, when combined with Shell’s failures in 2012, led Interior Secretary Ken Salazar to order an “expedited, high-level assessment” of the 2012 Arctic Ocean drilling season.

The Obama administration has promised to hold Shell and Arctic drilling to the highest of standards. During a conference call discussing the Shell review, Secretary Salazar stated that Shell will not be allowed to resume drilling activities in the Arctic until it has finalized a comprehensive operations program and management plan.

“Shell screwed up in 2012, and we’re not going to let them screw up whenever their pause is removed unless they have these systems in place,” Secretary Salazar said while discussing the assessment. “Before Shell is allowed to move forward, they’re going to have to show to the Department of Interior that they have met the standards that have been required.”

Yet, there are still substantial questions remaining about how the government handled the decision making process, and granted permits that allowed a demonstrably unprepared industry to operate in one of the most remote and dangerous places in the world. Despite the promise of “an unprecedented level of openness in government,” and “a system of transparency, public participation and collaboration,” the administration has conducted most of its business behind closed doors – the Department of the Interior has not provided all public information when asked and has not responded fully to Freedom of Information Act requests. This report should be just the first step in a broader evaluation of Interior Department and Coast Guard rules and regulations, and how the government is conducting business with the public, in general.

The Interior Department has made recommendations to address challenges and lessons learned in the Arctic, but now is the time to rethink the prudence of drilling in the Arctic altogether. Please use your editorial voice to call on the Obama administration to stop future drilling in the Arctic. The risks are too high, and Shell’s premature rush to drill has proven that not only is no oil company ready to drill in the Arctic Ocean, but that the appropriate government rules and regulations are not currently in place that will prevent such hasty industry action. In an area that is prone to hurricane force storms, 20 foot swells, sea ice up to 25 feet thick and little supporting infrastructure - drilling simply cannot be done safely and sustainably at this time.


 

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