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US Says Shell Is Not Yet Allowed To Drill In Arctic

Public Policy

The U.S. Interior Department on Wednesday granted Royal Dutch Shell two final permits to explore for crude in the Arctic this summer, but said the company cannot drill into the oil zone until required emergency equipment arrives in the region.

The department’s Bureau of Safety and Environmental Enforcement (BSEE) conditionally granted Shell permits for exploration in the Chukchi Sea off Alaska, in a season which sea ice limits from July until October.

But Shell must have emergency equipment to contain a potential blown-out well deployable within 24 hours before drilling into the oil zone, the office said. Shell discovered weeks ago that the Fennica icebreaker that holds the required equipment, called a capping stack, had a three-foot (1-meter) gash in it.

“Without the required well control system in place, Shell will not be allowed to drill into oil-bearing zones,” BSEE Director Brian Salemo said.

Shell last week sent the Fennica, which it is leasing, to Portland, Oregon, for repairs. Fixing the gash and sending it back could take weeks more.

Shell spokeswoman Kelly op de Weegh said the Fennica’s “stay in Portland will be determined by the time it takes to make a safe, permanent repair.” It is likely the icebreaker will return to the Chukchi before the preliminary drilling reaches the oil zone, expected sometime in August.

“Once we have determined the area is clear of sea ice, support vessels are in place, and the Polar Pioneer (rig) is safely anchored over the well site, drilling will begin,” op de Weegh said.

Shell has spent about $7 billion on Arctic exploration for before producing any oil or gas. If it finds the region to be rich in economically recoverable oil, production would not begin for at least a decade.

Environmentalists have criticized Shell’s drilling plans in the Arctic, which is home to sensitive populations of whales, walrus and polar bears.


3 Comments on "US Says Shell Is Not Yet Allowed To Drill In Arctic"

  1. Makati1 on Wed, 22nd Jul 2015 9:28 pm 

    It’s OK. Shell is partnered with Russia and can operate there.

    And timelines tell us that that oil will never be recovered anyway. In 10 years, there will be no financial system to support it or consumers that can afford it. Not even in 5 years.

  2. rockman on Thu, 23rd Jul 2015 6:38 am 

    There was a time when I thought of Shell Oil as one of the more astute operators. But that was decades ago. Their toe stubbing in the Arctic is very much out of character for them. Maybe the old farts in charge like the Rockman have become senile or maybe they’ve been replaced by book smart/experience light management.

    They look like rookies out there at the moment.

  3. Bob Owens on Thu, 23rd Jul 2015 12:49 pm 

    This is a clear indicator that any Arctic drilling is over! Between the permits, expenses, safety equipment, environmentalists, borrowing costs, losses, the game is over. All the other oil majors are watching this and noting all the problems. It is over!

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