Royal Dutch Shell wants the U.S. government to give it another five-year crack at drilling in the Arctic.
Back in July, the oil giant sent a letter to the Department of the Interior and its Bureau of Safety and Environmental Enforcement (BSEE), requesting that its leases — which will expire in 2017 — be paused for five years while the company regroups its attempts to start drilling operations. The letter was made public on Monday by the environmental group Oceana, after they obtained it through a Freedom of Information Act request. According to Bloomberg, Shell has already spent eight years and $6 billion in its current efforts to drill in the Beaufort and Chukchi Seas north of Alaska, with no oil production to show for it so far.
Leases from the U.S. government to drill in the Arctic typically expire after ten years if they have not been put to use, unless the lease holder can demonstrate that they’ve made serious progress towards the start of drilling. The BSEE has the authority to stop the clock on the leases, and in Shell’s case it’s already done so once in response to court decisions and other delays.
“The government should not bend the rules to allow the company to continue business as usual,” said Susan Murray, Oceana’s deputy vice president, in a statement. “Shell deserves no special treatment and, to the contrary, has a track record of irresponsible choices that warrants close scrutiny and the highest standards.”
In the letter, Vice President of Shell Alaska Peter Slaiby cites “circumstances beyond Shell’s control” to justify the request for a new delay. These include a case brought by environmental groups to the 9th Circuit Court of Appeals, which found in January that the government’s analysis of the economically recoverable oil in the region was “arbitrary and capricious,” grinding Shell’s efforts to a halt. The company also cited a pending revision by the U.S. government to drilling safety regulations for the Arctic, difficulties it had accommodating legal obligations towards Native whaling communities, a dust-up over air quality permits, the “unusually long lead times required to mobilize activities in Alaska,” an undersupply of “arctic-viable” drilling rigs among the reasons for the delay. Then there’s the drilling season in the Arctic, which is limited to just three or four months thanks to the cold and harsh conditions.
What the letter does not mention is the almost comical string of multi-year accidents, mishaps, and self-inflicted wounds Shell has encountered while trying to conquer those same conditions. In July of 2012 the company briefly lost control of one of its rigs, then failed to obtain proper Coast Guard certification. In September of that year, massive drifting ice packs forced it to suspend preparatory drilling. In December, the test of the containment dome Shell intended to use to prevent oil spills ended in disaster. Finally, that same month, matters climaxed when Shell’s second drilling rig, the Kulluk, ran aground on the Alaskan coast.
The company also received a string of warnings from government agencies, other oil companies, and major banks and investors about the dangers of drilling in the region. All this drove Shell to suspend its Arctic efforts in 2013, and then again in 2014 following the 9th Circuit court case.
“Though the government bears some responsibility for authorizing leasing and drilling without accurate analyses of impacts, Shell invested heavily despite the deficient government analysis, and despite the high risk and uncertainty of operating in remote Alaska waters with sea ice, rough seas, high winds and dense fog,” Murray continued.
“The company relies on difficult logistics and a lack of infrastructure to try to justify a departure from normal rules for leases while arguing to the White House that Arctic-specific safety and prevention regulations are unnecessary and too costly.”
Concerns over safety and the harsh conditions notwithstanding, the U.S. government estimates that 23 billion barrels of technically recoverable oil lie off Alaska’s northern coast. Going after that oil “is plainly in the national interest,” Shell said in the letter.
According to a statement yesterday from Nicholas Pardi, spokesman for the BSEE, the Interior Department “has received Shell’s request, which is currently under consideration.”