In May 2012, Greenpeace published Out in the Cold which analysed in depth the financial risks faced by Shell - and therefore by their investors - in attempting to drill in the Arctic. These risks are practically legion – but can be summarised:
1) Questions about the commercial viability of some proposed Arctic projects
2) Inadequate spill response plans: Shell has not yet tested the well capping or containment systems to be used in Arctic conditions and has stated to a UK parliamentary committee that it has no plans to do so.
3) Lack of disclosure on the financial impact of a worst-case scenario oil spill.
4) Lack of transparency in their arctic operations and potential exposure to poor safety and environmental practices of partners and contractors.
Shell’s disastrous summer in the Chukchi sea has proved every one of those risks as real and present threats to investors in Shell – with $5 billion already spent, and substantial further costs to be incurred over 2013, and no returns in sight. Inadequate and faulty equipment, poor operational management, disastrous lack of compliance with local and federal regulators, and looming Federal and criminal investigations have forced Shell to pull the plug on drilling for the remainder of 2013.
It’s increasingly clear that drilling in the arctic can’t be done safely – the environmental risks have always been obvious – now the commercial risks are inescapable as well.
