The locals, scientists and green groups have been saying it for years but when a globally respected insurance company comes out and warns investors of the dangers of drilling in the fragile Arctic you’d have to have a hole in your head to consider speculating on it as a sound business venture.
One of the world’s leading insurers, Lloyds of London, who set the global gold standard for risk assessment, is warning investors that a spill in the Arctic would constitute "a unique and hard to manage risk." You can read Lloyd's report: Arctic opening: Opportunity and Risk in the High North.
In the Guardian, Lloyds and the respected UK think tank Chatham House reported that the Arctic oil rush risks ruining a fragile ecosystem.
For the oil industry - particularly the international oil companies (IOCs) like Shell - the Arctic is the last frontier. With the end of easy to extract oil, the only places left to go are environmentally risky, technically challenging and financially crippling, like the ultra deepwater of the Gulf of Mexico, the Canadian tar sands and now the Arctic.
And digging into the details of the risk that a company like Shell is running in the Arctic is even more worrying. Arctic offshore exploration is a priority for Shell: its Alaskan project alone accounted for about one-seventh of Shell’s total exploration spending in 2011. Yet at the same time that they’re spending huge amounts of their investor’s money to find oil, they’ve also admitted that they actually haven’t calculated the financial impact of a worst case spill scenario in the Arctic. It’s important to remember, any spill in the Arctic runs the risk of being a worst case scenario – according to studies of Shell’s response plans in the Canadian Arctic, it would be impossible to stop a spill for seven or eight months of the year.
This is just tip of the iceberg. A detailed examination of Shell’s business plan for the Arctic in the US, Canada and Russia reveals a series of dangerous gambles, both with the fragile environment and with the savings of the members of the pension funds worldwide who own shares in Shell. Even if Shell isn’t worried about the risks they’re running, we are. And investors should be too.
>> Take action: demand that Shell stop its Arctic drilling program now.