By Shiva Polefka

Today, Saturday, April 20th, marks the third anniversary of the explosion aboard BP’s Deepwater Horizon oil rig that killed 11 workers and set off the largest accidental spill in the oil industry’s history. The ruptured Macondo well spewed nearly 5 million barrels of crude oil over the course of the summer, ultimately fouling more than 1,000 miles of Gulf of Mexico coastline and bringing the vast fishing and tourism industries of the region to a standstill, before the Macondo well was finally sealed and “killed” on September 19, 2010.

Following the Deepwater Horizon blowout, President Obama appointed a panel of experts that convened as the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling. Its final report, issued in January 2011, revealed the irresponsible practices of BP and its contractors, uncovered a lack of federal oversight, and provided a comprehensive set of policy reforms that would make the offshore energy industry safer.

Earlier this week, members of the Commission, now acting independently as a group called Oil Spill Commission Action (OSCA), released their second “Report Card” on the progress major actors were making to implement their recommendations.

So, three years after the catastrophe, what has changed? Have we acted on the painful lessons taught by Deepwater Horizon? Are government and industry leaders taking steps to reduce the risk of another destructive spill or blowout? The answers are decidedly mixed.

Department of the Interior and Industry

OSCA awarded the Obama administration a B, in recognition that the Department of the Interior has enacted some of the safety reforms recommended within the official report, and brought about a 15 percent increase in offshore rig inspections occurring in the Gulf.

OSCA gave the oil industry a B-, noting that it has voluntarily contributed in meaningful ways to the reduction of risk future oil spills in response to Deepwater Horizon, by implementing new safety standards and readying four oil well capping systems for the Gulf of Mexico like the one ultimately used to stanch the Macondo well’s blowout. Before Deepwater Horizon, no such systems existed.

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A top exec at Russia’s second largest oil company — and the largest non-governmental driller — has no interest in taking a gamble on high-risk Arctic Ocean drilling.

In an interview with the Financial Times this week, Lukoil vice-president Leonid Fedun said it would be much cheaper and less risky for oil companies to pursue Russia’s onshore shale reserves than offshore drilling in its Arctic oceans, citing Shell’s high-profile setbacks in the region as a warning sign.

“If someone asked me to invest money in Arctic exploration and development, I wouldn’t give a kopeck,” he said. “We have many more investment opportunities that carry less risk.”

Lukoil is not the first major oil company to publicly back away from Arctic offshore drilling. Last year, Total S.A., the fifth-largest oil and gas company in the world, announced last year that it wouldn’t seek to drill in the Arctic because an accident there would be a “disaster.”

And after watching Shell’s string of mishaps from the sidelines, Norway-based oil and gas company Statoil said last month that it would consider walking away from its Arctic offshore leases if exploration proves too risky and expensive. Tim Dodson, Statoil’s executive vice president of global exploration, acknowledged the numerous challenges associated with Arctic offshore drilling and reiterated his company’s cautious approach to exploration in the region, saying, “We’ve [said] we wouldn’t drill before 2015. Whether that means we drill in 2015, or maybe not until 2016 or whether we’d drill at all, I think maybe the jury’s still a little bit out on that.”

Other corporate voices have weighed in as well. Insurance giant Lloyd’s of London issued a report warning companies that responding to an oil spill in a region “highly sensitive to damage” would present “multiple obstacles, which together constitute a unique and hard-to-manage risk.” German bank WestLB also announced last year that it would refuse financing to any offshore oil and gas drilling in the region because “the risks and cost are simply too high.”

The risks of Arctic Ocean drilling are multifaceted and stem from an overwhelming lack of knowledge, preparedness, infrastructure, and technological capabilities. The unpredictability of this remote and isolated region is only compounded by the onslaught of climate change, which is affecting the region more than any other place on Earth and further complicating the ability to make informed decisions — and smart investments.

Shell has invested seven years and more than a few kopeks (about $5 billion, to be exact) into its Arctic drilling endeavor and came up with nothing but damaged equipment and a bruised ego. Shell’s multiple failures and the concern expressed by fellow corporations clearly demonstrate that the current level of risk in Arctic offshore drilling outweighs the potential reward. Thus, the question remains: How many more influential private sector voices will need to voice their concerns before the government responds and halts Arctic offshore drilling?

Kiley Kroh is the Associate Director for Ocean Communications at the Center for American Progress

Royal Dutch Shell drilling rig Kulluk aground off Alaska 1/2/13. Image: U.S. Coast Guard

Kiley Kroh and Howard Marano via CAP.

In order to avoid the catastrophic consequences of climate change, enormous fossil-fuel reserves will need to remain in the ground untouched.

2012 was supposed to be a banner year for Royal Dutch Shell, as the company planned to embark on the first Arctic offshore exploratory drilling activity in decades and set itself up to make billions of dollars prospecting for oil in the far-flung region off Alaska’s North Slope. But that’s not how things turned out.

Instead, beginning with efforts to prepare for operations, the company experienced one setback after another. Shell struggled to meet the government’s safety requirements for its oil spill response equipment, experiencing multiple technical failures and permit violations. Mother Nature weighed in and kept the drilling sites choked with sea ice. Yet despite these setbacks and others, Shell received permits from the federal government in August to begin preparatory drilling, albeit not deep enough to actually strike oil in Alaska’s Beaufort and Chukchi Seas.

The coup de grace came on New Year’s Eve when Shell’s Kulluk rig ran aground near Kodiak, Alaska — a fiasco that required a 500-plus person response effort, led by the Coast Guard, working for more than a week in dangerous conditions to secure the rig. This final calamity prompted the Obama administration to launch a high-level 60-day review of Shell’s entire Arctic drilling program, and after assessing its equipment and determining that both Arctic drilling rigs were too damaged to operate in 2012, caused Shell to announce on February 27 that it would not seek to drill in the remote and challenging region in 2013.

In presenting the results of the Department of the Interior’s review on March 14, outgoing Secretary of the Interior Ken Salazar admitted, “The government still has a lot to learn. The Arctic is a very difficult environment to operate in. … Shell is one of the most resource-capable companies in the world (and) they encountered a whole host of problems in trying to operate up there.” The review concluded that Shell would have to develop a “comprehensive plan” for its operations before it would be allowed to move forward. This begs the question: What exactly did the permit process consist of before all these mishaps?

Shell spent seven years and an estimated $5 billion getting ready for its chance to tap the reserves of fossil fuels thought to be stashed beneath the Arctic seabed, and the result was irrefutably a failure. Neither the oil and gas industry nor its regulators are adequately prepared for Arctic offshore drilling operations.

Furthermore, climate change is already wreaking havoc in the region, melting it at an alarming rate and setting off a domino effect that will ripple through the entire global system. The trends so plainly on display in the Arctic are merely a preview of what awaits the rest of the planet if serious action isn’t taken soon to aggressively curb our carbon emissions. If we allow corporate interests to tap the reserves of additional fossil fuels that have been exposed by the rapid onset of global climate change, we’re missing the clear message about the future of our environment on a planetary scale. Slowing the devastating steamroll of climate change requires slashing the amount of greenhouse gases we put into the atmosphere, not opening up vast new sources of carbon.

In President Barack Obama’s most recent State of the Union address, he reiterated his commitment to addressing the urgency of climate change for the sake of future generations. The president’s will, however, is matched by the utter intransigence of Congress and what has been called the most antienvironmental House of Representatives in history. Looking forward, the Obama administration will face some big decisions early on in the second term: the fate of the controversial Keystone XL pipeline, regulating pollution from existing coal-fired power plants, and whether or not to move forward with offshore drilling in the fragile Arctic.

America’s Arctic outer continental shelf will be undisturbed by drilling rigs in 2013, but the battle over oil and gas exploration in its frigid waters is far from over. Shell made clear that it sees this latest announcement to pause operations as a hiatus, not a cancellation of its plans to tap the Arctic Ocean’s reserves. Marvin Odum, Shell’s director of Upstream Americas, said, “Our decision to pause in 2013 will give us time to ensure the readiness of all our equipment and people following the drilling season in 2012.”

The Obama administration will also need to decide on ConocoPhillips’ applications to begin exploratory drilling in 2014. The company said its plans remain on track and it will submit remaining information to the Department of the Interior this spring, despite Shell’s problem-filled year.

As CAP’s John Podesta and Carol Browner articulated in a recent Bloomberg op-ed, Shell’s string of mishaps and failures provide overwhelming evidence that the oil and gas industry is not prepared for the enormous challenge and incalculable risk that accompanies any operations in the Arctic. In light of that reality, they wrote, “The Obama administration shouldn’t issue any new permits to Shell this year and should suspend all action on other companies’ applications to drill in this remote and unpredictable region.”

Below we examine in further detail the risks and potential consequences of offshore drilling in the Arctic region.

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Today, the Wall Street Journal editorial board published a gem of an editorial titled “Drill, Barack, Drill.” You might be able to guess what it’s about from the title.

It takes a report from the Congressional Research Service about drilling on public lands, engages in some flagrant cherry picking, shoots out some outright falsehoods, and concludes that the Obama Administration has been standing in the way of fossil fuel development on federal lands.

The truth, while sobering, is very different from the creative accounting performed by the Wall Street Journal ed board. Here’s the reality.

WSJ Says: “All of the increased [oil] production from 2007 from 2012 took place on non-federal lands.”

That’s one cherry to pick. There’s a whole tree though. Looking at the whole CRS report gives you the full story:

When comparing fiscal year 2010 with 2007, growth in the federal share of production was about 82 percent of the total.

That’s a lot of growth in production not on private and state lands. The report also says that crude oil production will continue to be significant, and “could remain consistently higher than previous decades.”

WSJ Says: “Federal share of total U.S. oil production has slid under Mr. Obama to 26% in fiscal year 2012 from 31% in fiscal 2008.”

In fact, oil production from federally owned places was higher in every one of the past four years compared to 2008, when oil hit a record high price of $142.50 per barrel. In fiscal year 2008, total crude oil production was 1,550 thousand barrels per day. The rate of production for the next four years has been: 1,731, 1,989, 1,715, and 1,627 thousand barrels per day. The Wall Street Journal may be trying hard here, but none of those numbers is smaller than 1,550.

The domestic boom is driven by ample tight oil (shale oil) and shale gas resources on private lands. In 2012, Adam Sieminski, the Administrator of the Energy Information Administration testified before the House Energy and Commerce Committee that:

Because the shale resource basins are largely outside of the Federal lands, so too is shale production. In this case, the geology is working in favor of non-Federal landowners.

The rapid increase in natural gas production from shale resources, found largely outside the Federal lands, over the last 5 years has significantly reduced natural gas prices and the relative attractiveness of conventional natural gas resources, including those of Federal and Indian lands. (EIA)

Also, most oil and gas shale plays in the contiguous U.S. are on private lands:

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Kulluk oil rig after running aground. Photo: U.S. Coast Guard

By Kiley Kroh

This week a top executive with Norway-based Statoil said it would be willing to walk away from Arctic offshore drilling if exploration in the harsh and remote environment proves too risky.

In an interview at the IHS CERAWeek conference in Houston, Tim Dodson, Statoil’s executive vice president of global exploration, acknowledged the numerous challenges associated with Arctic offshore drilling and reiterated his company’s cautious approach to exploration in the region.

After spending $23 million on Chukchi Sea leases in 2008, Statoil had planned to begin drilling in 2014, but delayed those plans by a year after watching Shell’s struggle to comply with safety and environmental standards and navigate the challenging conditions — all before drilling into any oil-bearing zones. Now, Dodson said, that may be pushed back even further:

We’ve [said] we wouldn’t drill before 2015. Whether that means we drill in 2015, or maybe not until 2016 or whether we’d drill at all, I think maybe the jury’s still a little bit out on that.

One key reason for Statoil’s reluctance to rush into Arctic offshore operations is the cost involved. Shell has spent approximately $5 billion on equipment and preparations, only to see its state of the art oil spill response equipment “crushed like a beer can” in a routine test off Puget Sound. And both of the company’s specialized Arctic drilling rigs were so badly damaged in accidents last year that Shell will tow them to Asia for substantial repairs — delaying its own exploration plans until at least 2014.

In the aftermath of Shell’s debacles, the Department of the Interior is nearing the end of a 60-day review of the company’s Arctic Ocean drilling program, the results of which are expected as soon as the end of this week.

While the potential for reward may be great, the risk of Arctic offshore drilling is tremendous. First, the remoteness of the region and its glaring lack of infrastructure necessary to respond to a potential oil spill or marine accident significantly complicate the industry’s ability to prove its preparedness. Next, the volatile conditions in which any company would be operating — including long periods of darkness, fog, hurricane-force winds, massive swells, and ice-infested waters for the majority of the year — further compromises safety and preparedness.

And the private sector has taken notice. Insurance giant Lloyd’s of London released a report last year warning companies that responding to an oil spill in a region “highly sensitive to damage” would present “multiple obstacles, which together constitute a unique and hard-to-manage risk.” German Bank WestLB announced last year that it would not provide financing to any offshore oil or gas drilling in the region, saying “the risks and costs are simply too high.” And Total SA, the fifth largest oil and gas company in the world, announced it wouldn’t seek to drill in the Arctic because an accident there would be a “disaster.”

Despite Shell’s temporary hiatus and Statoil’s caution, the debate over oil and gas exploration in the U.S. Arctic Ocean is far from over. Both Shell and ConocoPhillips have affirmed their intention to begin exploratory drilling in 2014. As the Center for American Progress’ Chair John Podesta stated in reaction to Shell’s recent announcement, “One company hitting the pause button will not mitigate the risks involved; the Department of the Interior should hit the stop button to prevent any oil and gas drilling from taking place in the Arctic Ocean.”

Kiley Kroh is the Associate Director for Ocean Communications at the Center for American Progress.

By Kiley Kroh

After a year full of mishaps and failures in its quest to drill for oil off the coast of Alaska, Royal Dutch Shell announced today that it would not pursue exploratory drilling activity in the Arctic Ocean this year.  The decision comes as the Obama administration nears the end of its high-level, 60-day review of Shell’s troubled Arctic drilling program, which was announced on January 8.

Last year was fraught with problems for Shell as the company attempted the first Arctic offshore exploratory drilling activity in decades. Technical failures, permit violations, struggles with the harsh and unpredictable Arctic conditions, and warnings from a wide range of voices all combined to discredit the company’s claims that such operations could be carried out safely and responsibly.

Shell made clear it sees this announcement as a hiatus, not a cancellation of its plans to tap the Arctic reserves. Marvin Odum, Shell’s Director of Upstream Americas said, “Our decision to pause in 2013 will give us time to ensure the readiness of all our equipment and people following the drilling season in 2012.”

Following mishaps this year, both of the company’s Arctic drilling rigs, the Kulluk and Noble Discoverer, require substantial repairs and will be towed to Asia.  The Kulluk was damaged when it was grounded near Kodiak, Alaska on New Year’s Eve and the Noble Discoverer was recently cited for multiple safety and environmental violations – now the subject of an investigation that was handed over to the Department of Justice this week.

As articulated in the recent op-ed co-authored by John Podesta and Carol Browner, the Center for American Progress was open to the possibility of offshore drilling in this remote region provided the Administration took significant steps to strengthen safeguards and improve response capacity, and the industry could demonstrate it was prepared for the extreme risk. Instead, Shell proved precisely the opposite – the oil and gas industry is not prepared for the enormous challenge of drilling in the Arctic Ocean.

As we’ve detailed numerous times, there is a tremendous and incalculable risk associated with any offshore operations in the Arctic. First, the region lacks even the basic infrastructure that would be necessary to mount a large-scale response to an oil spill or other major incident – roads, major airports, ports, a permanent Coast Guard facility, adequate facilities to house and feed responders. These obstacles, coupled with the extreme and volatile conditions in which companies would be operating, led the insurance giant Lloyd’s of London to warn companies that responding to an oil spill in a region “highly sensitive to damage” would present “multiple obstacles, which together constitute a unique and hard-to-manage risk.” And Total SA, the fifth largest oil and gas company in the world, announced it wouldn’t seek to drill in the Arctic because an accident there would be a “disaster.”

Rushing into Arctic offshore drilling is not an imperative and thus should not be attempted unless and until independent auditors determine the industry and the government are capable of acting responsibly and responding to a true worst-case scenario. No operation is foolproof, but when even the most carefully watched drilling operations repeatedly fail to attain safety certification, then are hit with routine air pollution violations, and marred by twice letting major pieces of equipment be cast adrift, the American people have no reason to continue taking oil companies at their word when they tell us they can operate safely and responsibly in this remote and dangerous region.

Related Resources:

• TIMELINE: Documenting Shell’s 2012 Arctic Drilling Debacle
• Putting a Freeze on Arctic Ocean Drilling
• VIDEO: The Risks of Drilling in Alaska’s Arctic Ocean

– Kiley Kroh is the Associate Director for Ocean Communications at the Center for American Progress

Kulluk oil rig after running aground near Alaska. (Photo: U.S. Coast Guard)

By Kiley Kroh

As the question of whether to move forward with high-risk Arctic offshore drilling in 2013 looms large, there’s a chance Shell Oil may take that decision out of the Obama administration’s hands. In another costly setback to its long and problem-filled quest to drill for oil off Alaska’s shores, Shell said yesterday that the company will be towing its two Arctic drilling rigs to Asia for major repairs, instead of Seattle as was originally planned.

The announcement comes as the company’s Arctic drilling program is the subject of a high-level review by the Department of the Interior – the biggest question now being whether the vessels could even be ready to resume drilling operations this year.

Despite a year full of technical problems, permit violations, and failures to meet safety standards, company spokesman Curtis Smith said in an email to Forbes:

“The pace of our Alaska operations will always be dictated by safety. The lessons learned from 2012 will be applied to all future exploration programs. Having said that, the drilling program we executed in 2012 was safe and successful. We look forward to building on that progress in the future.”

The Kulluk oil rig sustained damage to its hull and electrical systems during the New Year’s Eve grounding of the vessel, after it encountered a massive storm while being towed from Dutch Harbor.

Smith said Shell’s second rig, the Noble Discoverer, has problems with its propulsion system and could require a full engine replacement. In July, Shell briefly lost control of the Discoverer as it nearly ran aground in Dutch Harbor. And in November, it was damaged by an explosion and fire while in port in the Aleutian Islands. Critics have long been skeptical of whether the aging vessel — built in 1966 and converted from a log carrier — was capable of operating in harsh Arctic conditions.

The grounding of the Kulluk in January was only the latest in a litany of mishaps and struggles with Mother Nature that characterized Shell’s entire 2012 Arctic drilling season. The company’s own troubles were added to a growing number of entities voicing their opposition to Arctic offshore drilling, due to the extreme risk and cost accompanying any operations in the fragile and remote area.

As the Center for American Progress has detailed numerous times, the region lacks even the basic infrastructure — roads, railroads, ports, a permanent Coast Guard facility, adequate facilities to house and feed responders — that would be necessary to mount a large-scale response to an oil spill or other major incident. These obstacles, added to the extreme and volatile conditions in which companies would be operating, led the insurance giant Lloyd’s of London to warn companies that responding to an oil spill in a region “highly sensitive to damage” would present “multiple obstacles, which together constitute a unique and hard-to-manage risk.” And Total SA, the fifth largest oil and gas company in the world, announced it wouldn’t seek to drill in the Arctic because an accident there would be a “disaster.”

These concerns, coupled with Shell’s repeated demonstrations that the oil and gas industry is not prepared to meet the enormous challenge of Arctic offshore drilling, led CAP’s John Podesta and Carol Browner to call on the federal government to take its cautious approach to Arctic Ocean drilling a step further. In a recent Bloomberg op-ed they stated:

“The Obama administration shouldn’t issue any new permits to Shell this year and should suspend all action on other companies’ applications to drill in this remote and unpredictable region.”

If Shell’s rigs cannot be repaired in time to resume exploratory drilling operations this July, it may give the administration the breathing room it needs to consider the myriad risks that were exposed last year. Rushing into Arctic offshore drilling is not an imperative, and the decision to move forward must be based on a clear demonstration that the industry is fully prepared for the realities of Arctic operations. Right now, the American people have no reason to continue taking oil companies at their word when they tell us they can operate safely and responsibly in this far-flung and dangerous region.

Kiley Kroh is the Associate Director for Ocean Communications at the Center for American Progress.

by Kiley Kroh and Michael Conathan

This week’s grounding of Shell’s enormous Kulluk drilling rig near Kodiak Island, Alaska has not inspired confidence in its preparedness to drill for oil in the Arctic Ocean.

The rig was being towed from Dutch Harbor, Alaska to Seattle when its tow vessel lost control of the massive platform during a harsh winter storm. After numerous attempts to secure the equipment failed, it settled near the shore of uninhabited Sitkalidak Island in the western Gulf of Alaska on Monday night and remains there – with nearly 150,000 gallons of fuel and other fluids on board. The Coast Guard is coordinating a 500-plus person response to assess the damage, but neither they nor Shell has any idea when or how they will regain control of the foundering giant.

Adding insult to injury, on Thursday, the Alaska Dispatch reported that the reason Shell was working so feverishly to move the rig in such harsh conditions was to avoid paying millions of dollars in state taxes it would have owed if the rig was still in Alaska waters on January 1.

Far from an isolated incident, the latest fiasco is just the most recent in a litany of technical failures and struggles with Mother Nature that continue to accentuate Shell’s lack of preparedness to operate in the region. As Christopher Helman writes in Forbes, “It would be a comedy of errors, if the stakes weren’t so high.”

Each of these mishaps, warnings and troubling revelations would individually be reason for pause. Taken together, they offer overwhelming evidence that the oil and gas industry is not prepared for the enormous challenge and incalculable risk of offshore drilling in the remote and volatile Arctic Ocean. Exploiting Arctic offshore reserves is not an imperative and, in fact, is an absurd response to the devastating effects of climate change that are enabling offshore drilling in the first place. Despite investing more than $5 billion into an Arctic venture that includes top-notch crews and state-of-the-art equipment, Shell has stumbled every step of the way.

Here is a look back at some of the major mishaps Shell incurred and warnings they received during 2012:

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by Kiley Kroh

A season full of setbacks in Shell’s quest to drill for oil in the Arctic Ocean isn’t over yet.  More than a week after preparatory drilling operations ended for the season, the company is struggling to get all of its equipment out of the Beaufort Sea as winter ice encroaches.  As Popular Mechanics reports, as of Tuesday night, the company’s Kulluk rig was still moored in the Beaufort Sea where temperatures have dropped below zero.

While the conditions don’t pose any immediate danger, they underscore the immense challenge of operating in the severe and unpredictable Arctic.  Due to the extremely harsh winter conditions and lack of a major port facility in the region, Shell’s rigs and support vessels must begin the 1,000-mile journey back to Dutch Harbor before the route becomes too ice-choked to traverse.  As the Popular Mechanics reporter on board the rig describes, just unmooring the Kulluk has proven to be a logistical nightmare:

First, there were 83 men on board, a number that was supposed to go down to just 17 for the trip south. By Alaska standards, the weather remained stable, yet flights between the rig and the company’s facilities on land at Prudhoe Bay were delayed for days at a time. Shell had contracted with PHI, Inc., a helicopter services company that is ubiquitous in the Gulf of Mexico. But the company’s Sikorsky S-92 helicopters had not been prepared with de-icing equipment, and the pilots I spoke with lacked experience flying on the North Slope.

A second issue concerned the Aiviq tug’s fuel reserves. Shell had committed to laying a containment boom out on the ocean surface during vessel-to-vessel refueling, but the seas had been too rough to do that. The tug needed to refuel before starting to haul the Kulluk.

Finally, the Kulluk was required to offload its wastewater to another vessel for eventual disposal on land, but those operations also proved vulnerable to disruption by rough seas.

The latest challenges add to a long list of hurdles Shell has faced in a drilling season plagued with technical failures, struggles with Mother Nature, and an array of voices expressing serious concern about our lack of preparedness to operate in the region. Here’s a quick review:

• In February, an independent report issued by the Government Accountability Office identified a slew of environmental, logistical, and technical challenges associated with Arctic offshore drilling and concluded Shell’s “dedicated capabilities do not completely mitigate some of the environmental and logistical risks associated with the remoteness and environment of the region.”
• In April, insurance giant Lloyd’s of London issued a report on Arctic offshore drilling, 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.”
• German bank WestLB announced it would not provide financing to any offshore oil or gas drilling in the Arctic, saying the “risks and costs are simply too high.”
• In July, Shell briefly lost control of its Noble Discoverer rig, which came dangerously close to running aground in Dutch Harbor.
• In September, 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.
• Total SA, the fourth largest publicly traded oil and gas company in the world, became the first major oil producer to admit that offshore drilling in Arctic waters is a risky idea, saying such operations could be a “disaster” and warning other companies against drilling in the region.
• After repeatedly failing to receive Coast Guard approval for its containment barge, a critical piece of oil spill response equipment, Shell was forced to postpone exploratory drilling operations until 2013 and settle instead for only drilling two preparatory wells.
• Then just one day after beginning its long-awaited preparatory drilling operations, Shell suspended drilling due to a massive ice pack covering approximately 360 square miles drifting toward the site.

Despite the harsh realities the company faced this season, Shell has spent six years and nearly $5 billion on Arctic offshore drilling and won’t be giving up anytime soon.  Shell Alaska spokesman Curtis Smith told the Washington Post the company considers this season a success and is “looking forward to revisiting these wells as soon as we can next year.”

It is critical to note, however, that the glaring deficiencies in infrastructure and scientific knowledge that could severely impede our ability to respond to an oil spill in the area won’t be addressed for quite some time – and certainly not by next year.

Watch a short documentary on the situation:

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by Katie Valentine

Federal regulators have issued the most permits for deepwater drilling in the Gulf of Mexico this year since 2007.

That’s according to data from the Bureau of Safety and Environmental Enforcement, as reported by the New Orleans Times-Picayune.

So far this year, the government has issued 90 new drilling permits for wells deeper than 500 feet — more than the last two years combined and more than each of the two years before the Deepwater Horizon oil spill in 2010.

The news comes on the heels of President Obama and Governor Romney’s heated exchange about energy development during the second presidential debate last week. It further refutes Romney’s claims that new licenses and permits for drilling are down under the Obama administration, and backs up a report from Representative Edward Markey, which finds oil and gas companies have 3,684 idle leases in the Gulf of Mexico.

Oil production from existing federal leases in the Gulf of Mexico is also increasing, according the Times-Picayune:

Nearly 1.3 million gallons of oil were produced per day in July, up from 1.2 million gallons the year before, according to the U.S. Energy Information Administration. That’s still down from 1.7 million gallons in 2009, the year before the spill.

That number is projected to grow to 1.4 million gallons per day by the end of 2013, according to federal estimates.

Andy Radford, a senior policy analyst with the American Petroleum Institute, expects deepwater drilling will continue to pick up, as additional rigs become available and operators become accustomed to the regulations and resumed pace of permitting.

Many operators are now trying to build up a cache of permits so that when drilling rigs become available, they can make a move, Radford said, which shows that operators are bullish on the outlook of drilling in the Gulf.

In fact, U.S. oil production is at its highest level since 1997, according to government figures. Though Republicans often tout domestic production as the key to lower gas prices, current and historical experiences shows that isn’t the case: fuel prices are still high today, in spite of record production levels, because the price of oil is determined by the global market.

An Associated Press analysis of 36 years of data on oil production and gasoline prices found “no statistical correlation between how much oil comes out of U.S. wells and the price at the pump.”

The surge in new drilling permits has to do with better communication of new rules and regulations between oil companies and government officials, industry analysts say. The Obama administration suspended deepwater drilling in the Gulf of Mexico for six months following the Deepwater Horizon spill, a decision that was criticized by the oil industry and Gulf coast officials, who said it was excessive and would hurt the industry and the Gulf economy.

After lifting the moratorium early in October 2010, administration officials said the time period had been necessary put into place new rules and requirements that would reduce the risks of drilling enough to prevent another disaster.

More than two years later, the consequences of the Deepwater Horizon spill are still playing out.  Oil has been leaking from a 100-ton containment device on the seafloor near the site of the Macondo well blowout since at least September 16 of this year, when a sheen was discovered at the site. The leak is occurring at a rate at a rate of 100 barrels per day, and tests have confirmed the oil matches that which flowed from the Macondo well in 2010.

August’s Hurricane Issac  brought about 565,000 pounds of oiled material to the surface, more than had been collected in eight months before the storm. It’s estimated that up to 1 million barrels of oil from the spill remain beneath the ocean’s surface – oil that is affecting marine life in ways scientists still don’t know for sure.

In addition, scientists have discovered shrimp with no eyes or eye sockets and fish with deep lesions in the region.

Katie Valentine graduated from the University of Georgia with a degree in Journalism. She is currently an intern on the international climate policy team at the Center for American Progress.