Shell admits it hasn’t shown progress in Arctic, asks Feds for more time

by Mark Floegel

November 5, 2014

Shell Oil (in a July letter that remained undisclosed for three months) asked the Department of the Interior to disregard the ten-year time limit oil companies have under federal rules to show progress on an oil lease.

Note that the standard is not produce oil or even find oil, but show progress. Pretty low threshold, even when one considers that its a) the federal government b) attempting to regulate the oil companies.

Shell bought their leases offshore, in the Arctic Ocean north of Alaska, no less in 2008. In the nearly seven years since, despite spending $6 billion (yes, thats billion with a B), Shell has been unable to show progress on its leases.

Peter Slaiby, vice president of Shell Alaska, argued in the letter to the Bureau of Safety and Environmental Enforcement (BSEE) that Shell deserved more time to exploit its leases.

Despite Shells best efforts and demonstrated diligence, circumstances beyond Shells control have prevented, and are continuing to prevent, Shell from completing even the first exploration well, he wrote.

Greenpeace and Shell dont agree on much, but we agree Shells best efforts are unequal to the task at hand. Shells solution? Bend the rules. Greenpeaces solution? Stop Arctic drilling.

Some of the circumstances beyond Shells control include legal action that has required the Bureau of Ocean energy Management (BOEM) to twice redo the Environmental Impact Statement (EIS) for the offshore lease sales (were in the midst of the second re-do now).

Federal regulators, however, stopped the clock on Shells obligations to account for those delays. (BTW, the fact that it takes federal regulators three attempts so far to write an acceptable EIS does not inspire confidence in their ability to safeguard our nations most fragile ecosystem.)

Mr. Slaiby didnt mention the primary reason Shell has been unable to show progress in its offshore Alaska leases: incompetence.

Incompetence is a serious charge; in this case, its well-earned. In its one full-on attempt since 2008 to actually sail north of Alaska and put a drill in the seabed, Shell managed to run both its drilling rigs aground. One rig Noble Discoverer in addition to its grounding, had an engine explode. A Coast Guard inspection found over a dozen deficiencies on Noble Discoverer, many dealing with main engines and fire prevention/suppression. In early 2013, both Noble Discoverer and the other drill rig, Kulluk, were ignominiously barged from Alaska. Shell spent over a quarter-billion dollars refitting Kulluk to drilling the Arctic and wound up sending it to the scrap yard before it ever fired up its drill.

Last week, in a call with financial analysts and reporters Simon Henry, Shells chief financial officer, said, Its not that difficult to drill up there, which amounts to pretty bold talk from a man whose company keeps unintentionally ramming Alaska with its vessels.

Shells oil spill response equipment if it can be called such with a straight face failed spectacularly while being tested in the calm waters of Washingtons Puget Sound. The containment dome, which is meant to stop a well blowout like the one caused by BP in the Gulf of Mexico in 2010, was crushed like a beer can in the words of BSEE Regional Director Mark Fesmire. None of this ham-handed mismanagement is mentioned in Mr. Slaibys letter to BSEE, asking for more time to drill.

The letter, in effect, asks the federal government (thats me and you) to indemnify Shell against its own inability to operate in a safe and responsible manner. Theres a reason companies that lease tracts from the government have a ten-year window in which to show progress. Its to protect public resources and, more important, an environment already endangered by burning too many fossil fuels.

The UNs Intergovernmental Panel on Climate Change has just issued its sternest report to date, saying most of the oil weve already found must remain in the ground or we doom humanity to runaway climate change. Theres no point twisting the rules to allow Shell to look for more. Its time to stop drilling both onshore and off in the Arctic. The last thing we need to is to extend amateur hour up there.

Mark Floegel

By Mark Floegel

Mark Floegel is the Research Director with Greenpeace USA. A former journalist, he's been working in public interest advocacy for 30 years, with Greenpeace since 1989. In his current role, Mark helps determine long-range strategic direction for Greenpeace and the execution of Greenpeace campaigns.

We Need Your Voice. Join Us!

Want to learn more about tax-deductible giving, donating stock and estate planning?

Visit Greenpeace Fund, a nonprofit, 501(c)(3) charitable entity created to increase public awareness and understanding of environmental issues through research, the media and educational programs.