Over the weekend, Shell quite literally ran into further problems with its near-farcical attempts to drill in the Arctic when its dilapidated drillship Noble Discoverer appeared to run aground after slipping its anchors in Dutch Harbour, Alaska, in what was described as a “stiff breeze.” Whilst Shell denied its vessel had grounded, eyewitnesses painted a very different story, with one local saying that “the stern certainly struck bottom and any report to the contrary is a pure fabrication bordering on outright lies.” Either way, the bizarre scene of a giant rig floating aimlessly towards the shore in such sheltered waters does not say much for the ability of Shell to operate safely in the much more extreme conditions of the icy Polar north...
Despite spending the GDP of a small country in preparation to drill in the pristine waters off Alaska this summer, the wheels suddenly seem to be coming off for Shell’s Arctic oil plans.
In fact, you could even say that the company, which has ploughed well over $4bn into this northern foray, spearheading a dangerous new Arctic oil rush in the process, is starting to watch its plans unravel into the sort of organisational chaos more commonly associated with the Keystone Cops.
Earlier this month, we got the first inkling that Shell’s multi-billion dollar plan to drill in the Chukchi and Beaufort Seas off Alaska was starting to hit the skids. The reason, we were told, was because of that fast-disappearing Arctic commodity, ice.
The problem was that unprecedented amounts of summer ice were choking the Arctic seas around Alaska, providing a natural barrier to Shell and its drilling fleet. It does rather beg the question just what sort of ice-class vessels Shell has hired when they seemingly can’t be operated in ice. Maybe they got them from this bloke. Who knows? Either way, the company intended to spud the first of up to five exploratory oil wells by mid-July, but because of ice, it now admits that drilling in the Burger, Torpedo and Sivulliq prospects will not start until the first week in August at the earliest.
Whilst we’re glad Mother Nature stepped in to provide a bit of a helping hand to keep the Arctic off-limits to big oil, I can’t help feeling that maybe there’s a little bit more to all this than meets the eye.
The seeds of this suspicion were sown when I read two bits of news this week. The first concerned the Arctic Challenger, a rather antiquated ship that was meant to be part of Shell’s Arctic armada currently at anchor in Dutch Harbour, Alaska, whilst the second was the revelation that air pollution levels of the Shell drillship Noble Discoverer were found to be above permitted levels.
A few days back it was announced that a key part of Shell’s oil spill response fleet hadn’t been allowed to sail to the Arctic because it did not meet US Coast Guard safety standards. The ship, Arctic Challenger, is a 36-year old barge used to drag safety equipment through sea ice. But US authorities are not happy with what they’ve seen on-board and didn’t feel confident the Arctic Challenger could withstand the extremely harsh Arctic environment. Originally Shell agreed that the ship would be able to withstand a 100-year storm, but company engineers are now saying that it is “no longer appropriate” for the barge to meet such onerous standards (because by their very nature, one hundred year storms never occur).
To dodge the problem, Shell came up with the cunning ruse of trying to get the Arctic Challenger reclassified as a ship that requires less stringent safety rules. Whether the Coast Guard will fall for this one remains to be seen, but we’re watching very closely.
And then we heard that ammonia and nitrous oxide levels on the Noble Discoverer have been found to be above permitted levels. Shell’s response has been to try and get this permit watered down, at the same time also trying to get a “permit modification” for their drilling rig the Kulluk as well.
So what, you might ask, is so suspicious about all this? Surely it’s prudent not to rush in to ice-choked waters? Aren’t minor changes to official permits part and parcel of life at sea?
Well, yes, to a degree, but that rather misses the point.
Because it seems to me that the presence of ice in the Chukchi and Beaufort could be a bit of a red herring. After all, it’s a little odd that ice-class vessels are being delayed because of, er, ice. Either it doesn’t say an awful lot for their operational capability or else something fishy is going on.
I suspect that the real issue could be that Shell’s own drilling fleet and support logistics are entirely unprepared to operate in the Arctic. Because if Shell is really Arctic ready, why all this last minute panicking? Why is it making all these attempts to fix the rules?
Shell claims it has a “world-class” operation in the Arctic and has gone on record as saying its spill plan is “second to none.” Whether investors would agree that trying to water down safety regulations and using a decrepit barge only considered state-of-the-art the year VHS videos were invented is quite so watertight remains to be seen. On top of the company’s refusal to test its new containment system in icy conditions, it is pretty clear all is not well with Shell’s stuttering Arctic ambitions, which is hardly what you want from an oil company that intends to drill in the planet’s most hostile environment.