Fourth Largest Publicly Traded Oil Company Calls Arctic Offshore Oil Drilling A Potential ‘Disaster’
"Fourth Largest Publicly Traded Oil Company Calls Arctic Offshore Oil Drilling A Potential ‘Disaster’"
by Kiley Kroh
Total SA, the fourth largest publicly traded oil and gas company in the world, has become the first major oil producer to admit that offshore drilling in Arctic waters is a risky idea, telling the Financial Times yesterday that such operations could be a “disaster,” and warning other companies against drilling in the region.
The company’s CEO, Christophe de Margerie, said the risk of a potentially devastating oil spill was too high and that “a leak would do too much damage to the image of the company.” His note of caution marks the first time a major oil company has spoken out publicly against offshore exploration in the remote and fragile region.
Total’s message to a growing list of influential voices publicly expressing their opposition to offshore drilling in the Arctic Ocean.
- Last week a British parliamentary committee called for a halt to drilling in the Arctic Ocean until necessary steps are taken to protect the region from the potentially catastrophic consequences of an oil spill. “The shocking speed at which the Arctic sea ice is melting should be a wake-up call to the world that we need to phase out fossil fuels fast,” said committee chair Joan Walley MP. “Instead we are witnessing a reckless gold rush in this pristine wilderness as big companies and governments make a grab for the world’s last untapped oil and gas reserves.”
- German bank WestLB announced it would not provide financing to any offshore oil or gas drilling in the region, saying the “risks and costs are simply too high.”
- Insurance giant Lloyd’s of London issued a report warning that responding to an oil spill in a region that is “highly sensitive to damage” would present “multiple obstacles, which together constitute a unique and hard-to-manage risk.”
After spending nearly $4.5 billion and over five years pursuing exploratory drilling off Alaska’s northern coast, Shell Oil announced earlier this month that it would be forced to postpone exploratory drilling until next year after a series of mishaps with equipment and unpredictable sea ice in the region. But the debate is far from over. The company plans to use the remainder of the season drilling preparatory wells in order to resume exploratory operations as quickly as possible in 2013.
Though Total plans to continue with its natural gas ventures in the Arctic, saying gas leaks are easier to contain than oil spills, de Margerie’s warning should not be taken lightly. In addition to severe and unpredictable weather and the gaps in our scientific knowledge about oil spills there, the region also lacks the basic infrastructure necessary to respond to a disaster.
Watch a short documentary on the lack of infrastructure:
If the challenges posed by the fragile and untested Arctic — coupled with the warnings of major insurers, financiers, and legislative bodies — aren’t enough to hit the pause button on exploratory drilling in the Arctic Ocean, then perhaps a fellow oil company expressing its concern is final proof that the risks are too great to rush into drilling the world’s last unspoiled frontier.
Kiley Kroh is the Associate Director of Ocean Communications at the Center for American Progress.