For the past couple of years, Greenpeace has been ringing the bell, taking action and highlighting the risks and dangers of drilling for oil in the Arctic, the last great wilderness on Earth, and one of the most fragile ecosystems on the planet. Drilling there will almost certainly lead to oils spills, and would be devastating for the people, polar bears, walrus, seals, caribou or any of the other amazing creatures who lives depend on the arctic environment.
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.
We’ve exposed the financial risks for the tar sands (see here and here) and now it looks like Lloyds of London - who set the gold standard for risk assessment - are getting in on the act, but this time for the Arctic. In the Guardian, Lloyds and the respected think tank Chatham House have reported that the Arctic oil rush risks ruining a fragile ecosystem. A spill there, in general terms, would constitute “a unique and hard to manage risk”. You can read Lloyd's report - Arctic opening: Opportunity and Risk in the High North - here (pdf).
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 the City should be too.
Please ask environmental fund providers to ditch Arctic drillers like Shell, now »