After six years of planning to drill in the Alaskan Arctic, Shell finally moved into the region to try to begin drilling for oil this summer.
The past six years haven’t just been spent planning though; Shell has, to date, spent $4.5 billion on its planned Alaskan Arctic offshore drilling. This includes the cost of licenses and permits to drill of Alaska. Yet in spite of the time and money invested, this summer produced only frustration for Shell, as they encountered problems with their equipment, with the American regulatory authorities and almost inevitably with the Arctic itself – in the form of dangerously unpredictable ice.
Delayed by ice from reaching the site in early July – in spite of assurance from Shell Chief Executive Jorma Ollila at the 2012 Annual General Meeting that the site would be ice free during operation this summer- Shell had to suspend operations after only 36 hours of drilling – as a 30-mile by 12-mile block of ice was blown towards the drill site.
These were only part of the problems Shell faced. From their drill ship slipping anchor in the in sheltered waters of Dutch Harbour, to the failure to receive vital environmental performance and emissions certification for the oil spill containment barge and the failure to test adequately the oil spill capping device in realistic conditions. It came after that same barge was damaged while being deployed in the relatively benign waters of Puget Sound, several thousand miles south of the Arctic waters where it would need to be used.
The company’s problems don’t just pose environmental risks – they could also threaten shareholder value. Shell hasn’t answered the questions raised by Greenpeace, Fair Pensions and others before they arrived to drill in the Arctic this year, and their performance this summer has raised still more.
